Austria

Dividend WHT

Under Austrian domestic law, there is generally a 23% WHT for corporations (24% in 2023, 25% until 2022) and 27.5% WHT for other recipients on dividends (profit distributions) paid to a foreign parent company. The WHT has to be deducted and forwarded by the Austrian subsidiary to the tax office.

To end up with the reduced WHT rate as defined under the DTT applicable, Austrian tax law provides for the following alternative methods of WHT relief: refund method or exemption at source method.

Refund method

The Austrian subsidiary generally has to withhold 23% WHT (for corporations) or 27.5% WHT (for other recipients) on profit distributions to the foreign parent company, and the parent company has to apply for a refund (of the difference between 23% or 27.5% WHT and the lower DTT rate). In the course of the refund process, the Austrian tax administration analyses whether the foreign shareholder can be qualified as beneficial owner of the dividends paid. If the refund is approved by the Austrian tax authority, dividend distributions within the following three years can be done without deduction of WHT (for distributions of a comparable size and provided the foreign holding structure did not change in the meantime).

Exemption at source method

Relief at source is available only if the direct parent company issues a written declaration confirming that it is an ‘active’ company carrying out an active business that goes beyond the level of pure asset management (holding activities, group financing, etc.) and has its own employees and office space at its disposal (substance requirements).

WHT on dividends paid to EU companies

With regard to dividends paid to EU resident corporate shareholders, Austria has implemented the EU Parent/Subsidiary Directive according to which domestic WHT is reduced to zero. The requirements for the reduction are that the EU resident parent company, which also has to meet the substance requirements mentioned above (see Exemption at source method) at the moment of the dividend distribution, must directly own at least 10% of the share capital of the Austrian subsidiary for a period of at least one year. In case of foreign EU shareholders being qualified as pure holding or passive asset management companies, the Austrian tax administration does not allow an exemption at source but claims the application of the refund method.

Provided the requirements according to the EU Parent/Subsidiary Directive are not met, Austrian WHT has to be deducted. If an EU parent company cannot credit the Austrian WHT deducted against the CIT of its resident state (e.g. because the foreign dividend income is exempted from the CIT or due to a loss position of the shareholder), it is entitled to apply for a refund of the Austrian WHT. This application has to include a confirmation/documentation that the Austrian WHT could (fully or partly) not be credited at the level of the parent company.

Repayment of equity

The tax-wise equity of a company has to be reported annually to the Austrian tax authority as part of the CIT return (equity account, so-called ‘Evidenzkonto’). This equity can be repaid to the domestic or foreign shareholders without triggering Austrian WHT. However, the tax-wise classification of a dividend as ‘capital repayment’ has to be shown in the company’s equity account and be reported in a separate tax return.

For repayments and dividend distributions, the taxpayer has the possibility to choose whether a dividend for tax purposes should be treated either as dividend distribution or as repayment of equity. The execution of the option for treating dividends as dividend distribution requires a sufficient level of retained earnings while a classification as equity payment requires a positive level of tax-wise 'disposable' equity (in addition to the formal requirements outlined above).

Interest WHT

Interest payments to non-resident companies are currently not subject to WHT (under Austrian tax law, irrespective of any DTT being applicable).

Interest on Austrian bank deposits received by individuals resident in the European Union is not subject to WHT, as Austria agreed on the automatic exchange of information (according to directive 2014/107/EU).

Interest (accrued) on Austrian bank deposits or Austrian bonds received by non-resident individuals, where the paying/depositary agent is located in Austria, is subject to 23% WHT (27.5% WHT for Austrian bonds). A tax exemption applies if an automatic system regarding the exchange of information is available and WHT has to be withheld.

Royalties WHT

On royalties paid to a non-resident company, Austrian WHT at a rate of 20% has to be deducted. This tax rate can be reduced under an applicable DTT or under the application of the EU Interest Royalty Directive, which was implemented in Austrian Tax Law (please see Refund method and Exemption at source method under Dividend WHT above for further details).

WHT for residents

The following table lists the WHT rates for resident recipients.

Notes

1. If the recipient holds a participation of less than 10% in the distributing company, the dividends are subject to 23% WHT (24% in 2023, 25% until 2022). Since dividends distributed by an Austrian corporation to another Austrian corporation are generally not subject to taxation, the WHT is credited against CIT upon assessment of the recipient corporation for the respective tax year.
2. Interest on cash deposits in euros or foreign currency in bank accounts, on fixed interest-bearing securities in foreign currency (issued after 31 December 1988), and on fixed interest-bearing securities denominated in Austrian schillings or euros (issued after 31 December 1983) are subject to 23% WHT. Companies receiving interest payments may obtain an exemption from WHT if they provide the bank or other custodial agent with a written confirmation from the recipient that such interest payments constitute a part of the recipient’s operating revenues (exemption statement).
3. WHT on dividends from Austrian companies is final, i.e. no further income tax is collected from the recipient (provided it is an individual).
4. Interest on Austrian bank deposits (or Austrian bonds), where the paying/depositary agent is located in Austria, is subject to 25% WHT (27.5% WHT on Austrian bonds). If the recipient is an individual, this WHT is final (no further income taxation and inheritance taxation). 

WHT for non-residents 

The following table lists the WHT rates for non-resident recipients if no tax treaty is applicable.

Notes

1. 23% WHT for corporations (24% in 2023, 25% until 2022) and 27.5% WHT for other recipients.
2. Interest payments to non-resident corporations without a PE in Austria are generally not subject to WHT (provided the loan is not secured via Austrian land property). For interest payments between affiliated companies, the regulations stipulated by the EU Interest Directive have to be taken into consideration.

3. Interest on Austrian bank deposits received by individuals resident in the European Union was subject to 35% EU WHT on the basis of the Austrian EU Withholding Tax Act. However, the EU Withholding Tax Act was abolished as of 1 January 2017 (for new bank accounts as of 1 October 2016). Subsequently, interest on Austrian bank deposits received by individuals resident in the European Union are no longer subject to WHT. The background of this law amendment is that Austria agreed on the automatic exchange of information (according to Directive 2014/107/EU).
   
   Interest (accrued) on Austrian bank deposits or Austrian bonds received by non-resident individuals, where the paying/depositary agent is located in Austria, is subject to 25% WHT (27.5% WHT for Austrian bonds).

Tax treaties

The table below lists the countries that have signed a DTT with Austria and provides details of the amount of Austrian WHT for the most common payments of dividends and royalties/licences. Please refer to specific treaties to ensure the values are up-to-date and ensure you have considered the potential impact of the Multilateral Instrument (MLI).

Furthermore, please note that the following table reflects current values/WHT rates, and its accuracy concerning past events is limited. Please also be aware that the table below may serve as a preliminary guide by providing an initial overview. However, it is essential to refer to the respective DTT for any specific provisions or special conditions.

Dividends

As mentioned above, the WHT rate stipulated under domestic law can be reduced if dividend distributions fall within the scope of a DTT. The applicable WHT rate varies depending on the jurisdictions involved and can be found in the respective DTT. 

Under certain treaties, the amount of the WHT depends on the extent of the proportion of the issued share capital held by the recipient. Therefore, dividend distributions from substantial holdings are often taxed at a lower rate than portfolio dividends. In order to qualify as a substantial holding, a certain minimum shareholding is required. The threshold deviates depending on the respective DTT and amounts to either 10% or 25% in most cases. The applicable threshold is shown in the table below. 

Dividend distributions attributable to a prior release of paid-in surplus or other shareholder contributions (classified as capital reserves) are deemed to be a repayment of capital, i.e. no WHT is incurred. At the shareholder's level, dividends received and those classified as contribution refund will reduce the tax basis assessment for investments. To the extent to which the tax basis would become negative, such dividends are treated as taxable capital gain (unless taxation is eliminated by a tax treaty).

Royalties/licences

As mentioned above, the WHT rate stipulated under domestic law can be reduced if royalty payments fall within the scope of a DTT. Many DDTs provide for a complete exemption from WHT, while others reduce the WHT rate. In most cases, a rate of 5% or 10% is applied. While most treaties apply a uniform tax rate, some apply different tax rates depending on the specific source of the royalties. 

For royalty payments between affiliated companies, the regulations stipulated by the EU Interest Directive have to be taken into consideration. 

Interest

Interest payments to non-resident corporations, under domestic tax law, are currently not subject to WHT. Therefore, they are not included in the table below. 

Notes

1. The DTT was recalled by Argentina in 2009. Austrian tax citizens are protected by section (§) 48 BAO (Bundesabgabenordnung [Austrian Fiscal Federal Code]) against double taxation.
2. 5% is applicable if, in addition to the minimum shareholding requirement, the participation exceeds 250,000 United States dollars (USD) or an equivalent amount in any other currency. If the participation exceeds USD 100,000, a rate of 10% is applicable.
3. 5% for industrial licences and know-how that is not more than three years old; a rate of 10% is applicable in all other cases.
4. The rate is 0% unless more than 50% of the issued share capital of the company paying the royalties is held be the recipient, in which case a rate of 10% applies.
5. 10% for copyright licence fees in connection with literature, science, and art; 25% for trademarks licence fees; 15% in all other cases.
6. No WHT applies if the recipient is a company; in all other cases, a rate of 5% applies.
7. No WHT applies if the recipient is a company; in all other cases, a rate of 5% applies.
8. Generally, 10% WHT on royalties. No WHT on copyright royalties and other like payments in respect of the production or reproduction of any literary, dramatic, musical, or other artistic work, as well as on royalties for the use of, or the right to use, computer software or any patent, or for information concerning industrial, commercial, or scientific experience.
9. 5% for the use of, or the right to use, any industrial, commercial, or scientific equipment; 10% in all other cases.
10. Please note that a protocol amending the treaty was signed on 14 September 2023. Pursuant to this amending protocol, the WHT rate for dividends stemming from substantial holdings will be reduced to 5%. The WHT rate applying to portfolio dividends and royalties are not affected. The protocol is currently pending ratification and will enter into force on the 30th day after the contracting states have notified each other that the legal procedures for the entry into force have been completed.
11. 0% for copyright royalties in connection with the production of literary, dramatic, musical, or artistic work; 5% in all other cases.
12. 5% for licence income from copyrights, brands, plans, secret formulae or procedures, computer software, industrial, commercial or scientific use of equipment, and information; 0% for all other cases.
13. Generally, no WHT; 20% for films.
14. 5% for the use of industrial, commercial, or scientific equipment; 10% in all other cases.
15. The rate is 0% unless more than 50% of the issued share capital of the company paying the royalties is held be the recipient, in which case a rate of 10% applies.
16. In general, a WHT rate of 10% applies if the beneficial owner holds less than 10% of the shares; if the distributions are made by a real estate investment fund and the beneficial owner holds less than 10% of the shares of said fund, a rate of 15% applies.
17. The rate is 0% unless more than 50% of the issued share capital of the company paying the royalties is held be the recipient, in which case a rate of 10% applies.
18. No WHT if the holding amounts to at least 10% or if it is a pension fund fulfilling further conditions that are laid out in the treaty.
19. 2% for licence income from industrial, commercial, or scientific use, and 10% for other licences.
20. 5% for the use of commercial or scientific equipment; 10% in all other cases.
21. The treaty was signed on 16 September 2010. It has not yet been decided when it will enter into force.
22. 5% in case of direct (or indirect over a patent-realisation-company) payments of royalties by companies of the other member state (with an industrial establishment in the other member state), and 10% for other licences.
23. 5% in case of licence income from industrial, commercial, or scientific use, and 10% for other licences.
24. The rate is 0% unless more than 50% of the issued share capital of the company paying the royalties is held by the recipient, in which case a rate of 10% applies.
25. 15% for films.
26. 0% for copyright licence fees in connection with literature, art, and scientific use, and 10% for other licences.
27. 10% for the right of use of copyrights to artistic, scientific, or literary as well as cinematographic works, and 5% for other licences.
28. 5% for licence fees for the use of any copyright of literary, artistic, or scientific work; 10% for licence fees for the use of patents, trademarks, and information concerning industrial, commercial, or scientific experience.
29. 5% if the beneficial owner is a company (other than a partnership) that directly holds at least 25 % of the shares of the company paying the dividends; 10% if the beneficial owner is a company (other than a partnership) that directly holds at least 10% of the shares; 15% in all other cases.
30. The rate is 0% unless more than 50% of the issued share capital of the company paying the royalties is held be the recipient, in which case a rate of 10% applies.
31. The WHT rates correspond to the protocol signed in September 2023. The protocol shall enter into force as soon as the contracting states have notified each other through diplomatic channels that the legal procedures for the entry into force of the protocol have been completed.
32. 10% if more than 50% of the issued share capital is owned by the recipient; 5% in all other cases.
33. The treaty with Russia was partially suspended unilaterally by Russia by note verbale of 8 August 2023. On 6 December 2023, Austria announced that a significant part of the treaty is to be regarded as suspended, including the provisions on dividends, interest, and royalties.

34. 5% for the use of, or the right to use, any copyright of literary, artistic, or scientific work, including cinematograph films or films or tapes used for radio or television broadcasting; 10% for other licences.

35. Until a new treaty is established, the treaty with Czechoslovakia remains applicable.
36. 5% for the use of patents, trademarks, designs or models, plans, secret formulae, or processes, for the use of, or the right to use, industrial, commercial, or scientific equipment, or for the communication of industrial, commercial, or scientific experience.
37. The rate is 0% unless more than 50% of the issued share capital of the company paying the royalties is held by the recipient, in which case a rate of 10% applies.
38. The treaty was signed on 3 March 2009. It has not yet been decided when it will enter into force.
39. 15% for films.
40. 10% for the use of, or for the right to use, copyrights to scientific works, patents, trademarks, designs or models, plans, secret formulae, or processes, or for the communication of industrial, commercial, or scientific experience.
41. 15% if the dividends are paid by a relevant investment vehicle as defined in the treaty; 10% in all other cases.
42. 0% in case of a substantial holding or if the beneficial owner is a pension scheme.
43. 10% for films.
44. 5% if the recipient directly owns 70% of the company paying the dividends; 10% if the recipient owns 25%.
45. 7.5% in the case of fees for technical services; 10% in the case of royalties.

Currently, new DTTs or revisions with Australia, Bahrain, Brazil, China, Egypt, Indonesia, Iran, Ireland, Italy, Kuwait, Libya, Malaysia, New Zealand, Netherlands, Norway, Oman, Philippines, Qatar, San Marino, Saudi Arabia, Sri Lanka, Syria, Thailand, Tunisia, the United States, Uzbekistan, and Vietnam are under negotiation.

On 10 October 2017, the Council of the European Union adopted new rules on tax dispute resolution (Directive [EU] 2017/1852). This Directive lays down rules for a mechanism to resolve disputes between member states arising from the interpretation and application of agreements on the elimination of double taxation. The Directive applies to complaints submitted after 30 June 2019 on questions relating to tax years from 2018 onwards. The EU Tax Dispute Resolution Act (‘EU-Besteuerungsstreitbeilegungsgesetz’ or EU-BStbG), implementing the EU directive into domestic law, entered into force on 1 September 2019.