1. Double taxation relief
a) Unilateral relief
Austria prevents the double taxation of income by unilateral provisions or under the provisions of an applicable tax treaty. Unilateral relief is provided either by an exemption or ordinary foreign tax credit. Foreign tax paid may be credited against Austrian tax but the credit is limited to the amount of Austrian tax payable on the foreign income.
b) Tax treaties
Austria has a broad tax treaty network, with most treaties following the OECD model treaty. Treaties generally provide for relief from double taxation on all types of income, limit the taxation by one country of companies resident in the other and protect companies resident in one country from discriminatory taxation in the other. Austria’s treaties generally contain OECD-compliant exchange of information provisions. A reduced rate of withholding tax under a treaty may be applied directly at the time the payment is made if the income recipient completes specified forms and submits these to the Austrian income payer.
From 1 January 2017, interest payments made by an Austrian resident to nonresident individuals and corporations are only subject to withholding tax of 25%/27.5%, if either the recipient does not provide a certificate of tax residence or is resident in a non-EU country with which Austria has not concluded an agreement on the automatic exchange of information.
3. Taxes on individuals
Individuals in Austria are subject to personal income tax, withholding tax on passive income, social security contributions and real estate tax. For expatriates under certain conditions, a flat rate amount of EUR 10,000 can be considered as a deductible payroll expense to reduce the tax base, with no requirement to provide evidence of actual eFor tax purposes, a resident is defined as an individual who is domiciled in Austria or who has a habitual abode in Austria (presumed if the individual stays in Austria) for more than six months.
4. Taxable income
Taxable income includes income from employment (including certain fringe benefits), income from a trade or business, investment income and most capital gains. Most earned income is taxable and, as a rule, tax is withheld at source. However, interest from certain types of savings products is tax-exempt or exempt up to certain levels of interest. Capital gains are taxable and in most instances (although generally not for nonresident taxpayers), a special tax rate of up to 27.5% applies. Investment funds are treated transparent in Austria. A final 27.5% tax generally is withheld on distributions of investment funds deposited with an Austrian bank. Undistributed ordinary income and 60% of undistributed capital gains also are subject to this 27.5% final taxation.
The investment funds have to report the different income items arising each year to the Austrian Kontrollbank. Where the money is held in a (foreign) investment fund that is not registered with the Austrian Kontrollbank and, hence does not provide evidence of the amounts and composition of the actual income of the fund, capital gains are assessed on a lump-sum basis and taxed at 27.5% on the higher of 90% of the difference between the first and last redemption price in a calendar year and 10% of the redemption price at year-end.
The tax year for individuals is the calendar year.
Taxpayers that only derive employment income subject to wage tax withheld at source generally are not required to submit an annual income tax return. If such a taxpayer intends to claim additional expenses, a return must be filed within five years. Other income is selfassessed. The income tax return is due on 30 April following the end of the relevant calendar year (30 June for electronic submissions). Taxpayers represented by a tax advisor may file their tax returns until 30 April of the second year following the tax year if the tax office does not require an earlier filing.
Starting with the assessment for 2016, automatic tax assessments are issued to taxpayers where expenses have been reported by the recipient of the funds to the tax office (e.g. donations which from 2017 have to be reported to the tax authorities to be tax deductible), if: i) the taxpayer’s only source of income is employment income; and ii) where – based on the information available to the tax authorities about the taxpayer – it is unlikely that any deductible expenses will be claimed. Where there are additional expenses not reported to the tax office, the taxpayer can still file a tax return.