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Tax Specialist Group
Corporate Tax Guide: Austria
Austria

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The information is valid for the entire country except where indicated. For example, in the case of Malaysia, Labuan is part of Malaysia but has a special tax regime, so this is noted.
Austria – entire country
The corporate tax rate shown is the typical corporate tax rate that a domestic corporation owned by non-resident persons would pay. The tax rate does not include withholding tax on dividends, but does include a distribution tax shown separately if applicable. Certain countries have a low corporate tax rate, but charge an additional tax when a dividend is distributed. Because this tax is paid by the corporation, and not deducted from the amount of the dividend itself, it is not a dividend withholding tax. As a result, it typically cannot be reduced by an international tax treaty.
25%
The basis of taxation for a corporation will typically be one of:
  • World income (i.e. income from all sources)
  • Territorial (i.e. only income from within the jurisdiction)
  • Territorial and remittance (income earned within the jurisdiction and income remitted into the jurisdiction)
Other basis of taxation are possible, and, if applicable, they are noted.
World income
Where non-resident corporation carries on business in a country, business profits may be subject to corporate tax. In addition, a branch profits tax may apply in lieu of dividend withholding tax. This branch profits tax applies to the after tax profits, typically at a fixed percentage. An international tax treaty may reduce the rate of branch profits tax, typically to the rate provided for dividend withholding.
Yes, profits of a permanent establishment are subject to 25% corporate income tax. There is, however, no tax on remittances of profits from a permanent establishment.
The common forms of business entity are noted. In addition, the entities which are flow through entities for U.S. tax purposes are indicated.
Stock corporation (Aktiengesellschaft), limited liability company (Gesellschaft mit beschränkter Haftung), general partnership (Offene Gesellschaft), limited partnership (Kommanditgesellschaft) and private foundation (Privatstiftung).
Capital gains may be fully taxed, partially taxed or not at all. In certain countries, an exemption, called the participation exemption, will apply to exempt from tax a capital gain from disposition of a substantial holding of shares of a subsidiary. Where a participation exemption is applicable, it is noted together with a summary of the main conditions.
Fully taxed at the normal tax rate of 25%. However, under the international qualified participation exemption (see #12 below) capital gains on foreign shareholdings are tax-exempt.
Certain countries allow group taxation, otherwise known as consolidated tax filing. Here the tax returns of a group of corporations in the country may be combined together, which can be useful. If group taxation is permitted, it is noted along with the main conditions.
Yes, upon application if the parent holds more than 50% in a subsidiary's capital and voting rights.
Countries offer various kinds of special exemptions and incentives. Examples are a reduced tax rate, a tax holiday, a tax credit on the purchase of equipment, special accelerated deductions for deprecation, incentives for R&D, and various others. Here the major items are noted.
Under the national participation exemption, the international qualified participation exemption and the international portfolio participation exemption (see #12 below), dividends are exempt from tax.

Under the international qualified participation exemption (see #12 below), capital gains also are exempt from tax.

Companies conducting qualified R&D activities are entitled to a 12% premium on eligible expenses.

Many countries have thin capitalization rules which limit or deny the deduction of interest expense in certain circumstances. For example, if debt exceeds three times equity, a proportionate amount of interest expense may not be deductible. Limitations take various forms, restricting the interest expense deduction to a percentage of profit, deeming the debt to be equity and the interest to be a payment of dividends, and various other rules which may blend of these principles. Where a country has thin capitalization rules, they are briefly described.
No statutory thin-capitalization rules. However, under case law, if a company's equity is inadequate, a portion of the indebtedness to shareholders may be regarded as equity. Interest paid on such debt may not be deducted from the taxable income and may be subject to withholding. In practice, debt/equity ratios of 4:1 are not uncommon.
Many countries have transfer pricing rules. They very often follow the OECD guidelines and the arms length principle. Some countries have specific rules which apply in certain cases. In addition, some countries allow for a selection of the most appropriate transfer pricing methodology in the circumstances, while other countries follow a hierarchy of methods, with the CUP method (comparable uncontrolled price) often ranking first. The transfer pricing rules are briefly explained.
Yes. The Austrian tax authorities in practice follow the OECD Transfer Pricing Guidelines. Under newer legislation, Austrian companies have to set up country-by-country reports, master files and local files.
Many countries tax passive income earned in controlled foreign corporations (CFC’s) on an imputation basis while active income is not taxed. Such CFC rules are usually complex and vary significantly in what is considered passive income, and how foreign tax paid is taken into account. Some countries approach CFC rules on the basis of whether or not the foreign corporation is resident in a low tax jurisdiction or a tax haven. This may be done through a black list of countries.
The general overview of CFC rules is described in simple terms.
Austria does not have CFC rules. The switch-over clauses in connection with the international qualified participation exemption and the international portfolio participation exemption (see #12 below) act as a kind of substitute to CFC rules.
Profits repatriated by way of dividends from a subsidiary to a parent company are typically taxed in one of three ways:
  • The dividends are exempt of tax.
  • The dividends are deductible from taxable income, but not fully (90%, for example, of the dividend is deductible).
  • The dividend is taxable, grossed up to the pre-tax amount, and a foreign tax credit claimed for foreign taxes paid.
The applicable method is noted.
Dividends received by an Austrian corporation from a subsidiary are exempt from tax in the following cases:
  • national participation exemption (Austrian subsidiary)
  • international qualified participation exemption (non-Austrian subsidiary, participation amounting to at least 10% and held for at least one year)
  • international portfolio participation exemption (non-Austrian subsidiary, mutual assistance agreed with jurisdiction of subsidiary)
Most countries allow a foreign tax credit based on a formula, typically net foreign income over the net income times taxes payable. This limits the foreign tax credit to roughly the domestic tax otherwise applicable to the foreign income. There are numerous variations and technical rules in the details of foreign tax credit calculations. Where a foreign tax credit is allowed, the general principles are described.
Yes. Relief for taxes on foreign income may be possible under income taxation treaties, as well as unilaterally if Austria has not concluded a double taxation treaty with the respective country.
14. Losses
Losses typically can be carried forwards for a period of years, and sometimes can be carried back. Losses may be segregated into capital losses and non capital losses.
Losses can be carried forward indefinitely. However, in any given year the utilization of such carried forward losses is limited to 75% of the income of the current year. A carryback of losses is not permitted. A corporation's tax loss carryforwards may be forfeited upon an ownership change.
It is not practical to list all of the tax treaties which a country has in a simple guide like this. Accordingly, a link is provided in each case to the tax treaties.
Some countries have entered into Tax Information Exchange Agreements (TIEA).
Treaties are more and more containing provisions that limit benefits (LOB provisions).
Yes. 87 income tax treaties and 7 TIEAs. Only a few income tax treaties have LOB provisions or similar anti-abuse provisions.
Withholding tax rates vary considerably from treaty to treaty, and countries may have domestic exemptions applicable in certain circumstances (for example copyright royalties, interest paid to arm’s length persons, etc.). A table shows the typical rates but cannot adequately summarize all of the details. The applicable treaty should be consulted.
TREATYNON-TREATY
Dividendsqualified5%27.5%
portfolio15%27.5%
Interest0% - 10%0%
Royalties0% - 10%20%

Under the rules implementing the EU Parent Subsidiary Directive and the EU Interest and Royalties Directive, dividends and royalties paid to other EU Member States are typically exempt from withholding tax.

Some countries allow for the selection of year-end while other countries specify a particular year-end which all business entities must have. Normally the taxation year cannot exceed 12 months. Where it can exceed 12 months, this is noted.
Generally, the calendar year. Corporations may apply to the tax authorities for permission to use a different tax year. Permission must be granted in case of non-tax considerations.
This is the due date for filing a tax return. Where extensions are available, this is noted.
The corporate income tax return must be filed electronically by June 30 of the year following the tax year. Taxpayers making use of tax advisors benefit from longer deadlines. An extension of the filing date is possible in justified cases.
The typical tax instalment requirements are noted.
Yes. Quarterly pre-payments of corporate income tax are due on February 15, May 15, August 15 and November 15. Such pre-payments are creditable against the final amount of corporate income tax assessed.
This is the date when the corporate tax owing for the year must be paid. It may be different from the tax return filing due date.
The balance between the amount of corporate income tax assessed and the pre-payments made is payable within one month after receipt of the corporate income tax assessment notice.
This is the period after which the tax department cannot in normal circumstances reassess a taxation year. It is sometimes referenced to the end of the taxation year and sometimes to the date of the first assessment of that taxation year.
Yes. In general, five years from the end of the calendar year in which the tax year ends. This period is extended through actions of the tax authorities asserting the tax claim. The absolute statute of limitations is ten years.
If a country has exchange controls, this is noted, together with the main requirements.
No.
23. VAT
A VAT tax system typically provides that the supply of goods and services is classified as taxable, tax exempt, or zero rated. Where a business is engaged in an activity which is taxable, it must charge VAT on its revenue, and can claim a refund of VAT on its expenditures. Where the activity is exempt, it does not charge VAT on its revenue, and cannot claim back VAT paid. Where the entity is engaged in activities which are zero rated (typically agriculture, food services and exports), then it can claim back VAT which it has paid on its expenditures, and does not charge VAT on its revenue.
If a country has a typical VAT system, this is noted. If a country has no VAT system but a sales tax system, this is indicated. Some countries may have a mixture, and taxes may apply at different levels (federal and state for example).
Yes. Standard rate of 20%, reduced rates of 10% and 13%.
Stamp duty, or land transfer tax, can apply on such things as the transfer of shares, land, or the issuance of bonds or debentures. This is described together with the applicable rates.
Stamp duties are, inter alia, levied on assignment, lease and surety agreements, but these can be avoided in many cases by way of careful structuring. Real estate transfer tax of generally 3.5% is levied on the transfer of Austrian real estate.
If capital tax is payable, this is described. Capital tax may apply in specialized industries, such as banking and insurance, even if a country does not generally apply a capital tax to corporations.
No.
Where significant, other taxes are noted.
Yes. Various payroll taxes, social security contributions, real estate tax, bank tax and excise duties (on electricity, natural gas, coal, motor fuel, alcohol, tobacco and airline tickets, as well as on the purchase and import of new cars).
Anti-Avoidance Rules take many forms, the most common ones are a general anti-avoidance rule, treaty shopping limitations, the requirement for economic substance (or a business purpose in carrying out transaction) and specific anti-avoidance rules for particular purposes. A very brief overview of the anti-avoidance rules is described.
Austrian law contains a general anti-abuse rule (Missbrauch) as well as various specific anti-abuse rules. Under Austrian tax law, there is no obligation to report aggressive or questionable tax positions.
Where a non-resident person holds shares of a corporation established in the country listed, the capital gain which results may be taxable or not taxable depending on the circumstances and, possibly, the existences of an international tax treaty. The general rules are noted.
Non-resident corporations selling shares in an Austrian corporation are subject to 25% tax on the capital gains, provided that the seller has at any point in time in the last five years held a stake in such subsidiary of at least 1%. Under double taxation treaties, Austria is often barred from levying such tax.
Where a corporation is acquired through the purchase of shares, sometimes a step up is allowed so that the cost of its assets can be revalued. The main rules are briefly summarized.
Yes, in case of asset deals.
In some countries, rulings are commonly used (and sometimes even required). In other countries the system is either unavailable or not commonly used except in special circumstances.
A legally binding formal tax ruling procedure exists in connection with transfer pricing, restructurings and group taxation.
31. Other
Other important aspects of the tax system are noted.
N/A