Capital yields in the strict sense

(“Income from capital transfer”)

Dividends and similar shares in profits (§ 27 II 1 EStG)

In particular, profit shares, interest and other remuneration from corporation shares, GmbH shares and similar capital shares which are paid out by a domestic (settling) entity are subject to a capital gains tax deduction to the amount of 27.5 % and are as a rule settled thereby (subject to final taxation).

Foreign dividends and similar foreign profit shares paid by a foreign (settling) entity are not subject to the capital gains tax deduction and must therefore be included into the tax return. However, the taxation is isolated from the other income, and this income does not lead to a progressive increase of the income tax rate for the other income either. Taxation is at the special tax rate of 27.5 %.

Dividends and profit shares are generally subject to limited liability to pay taxes if the debtor of the capital yields, i.e. the disbursing corporation, has its registered office or place of management in Austria. This generally applies both to individuals and to corporations subject to limited liability to pay taxes. Due to the requirements of the Parent-Subsidiary Directive, there is generally no capital gains tax deduction for corporations from other EU countries if the shareholding is at least 10 % and has existed for an uninterrupted period of at least one year. Moreover, an exemption from the deduction of capital gains tax or a refund claim may also be due on the basis of a double-taxation agreement. For further information on refunds click here.

Interest from savings deposits (§ 27 II 2 EStG)

Domestic savings and securities interest (interest from deposits with banks and from debt securities) are also subject to a capital gains tax deduction and are as a rule settled thereby (subject to final taxation).

Deposits with banks

Deposits with banks are in particular deposits on savings accounts (including premium savings accounts, savings bonds and capital savings accounts), as well as deposits at building societies, time deposits and demand deposits (giro accounts). However, the capital gains tax rate for interest from these products remains at 25 %.

Debt securities

Debt securities are, in particular, current-interest bonds, zero bonds, premium bonds, bonds with warrants, floaters, convertible bonds and income bonds, partial bonds, municipal bonds, mortgage bonds, treasury notes, medium-term notes.

Foreign savings and securities yields are not subject to the capital gains tax deduction and must therefore be included into the tax return. However, the taxation of this income is also isolated from the other income and therefore does not lead to a progressive increase of the income tax rate for the other income. Instead, taxation takes place at the special tax rate of 27.5 %.

Interest (including accrued interest, e.g. in the case of zero-coupon bonds) is as a rule subject to limited liability to pay taxes if the debtor or issuer is resident in Austria. However, there are extensive exceptions to the limited liability to pay taxes:

  • In general, persons who are not individuals (i.e. who are legal entities) are not subject to limited liability to pay taxes.
  • Furthermore, there is no limited liability to pay taxes on interest if the recipient – irrespective of whether this is an individual or legal entity – is resident in a state with which there is automatic exchange of information in relation to Austria. However, a certificate of residence of the respective state must be submitted to the party obliged to withhold capital gains tax as evidence of residency.

Moreover, an exemption from the deduction of capital gains tax or a refund claim may also result from a double-taxation agreement. For further information on refunds click here.

Yields from genuine silent partnerships (§ 27 II 4 EStG)

A genuine silent partnership exists if a person holds an interest in another’s business with a contribution of assets in return for a share in the profit or in the profit and loss, and there is no participation in the hidden reserves and goodwill of the company.

Profit shares of genuine silent partners (who are subject to unlimited tax liability) have not been subject to capital gains tax deduction since 1 April 2012. Rather, the profit shares are to be included into the income tax return and are subject to the progressive income tax rate.

Yields from participations as a silent partner are subject to limited liability to pay taxes if the participation is in a domestic company and thus withholding tax had to be withheld pursuant to § 99 of the Austrian Income Tax Act 1988. This withholding tax is as a rule 27.5 %.

Moreover, an exemption from withholding tax or a refund claim may result from a double-taxation agreement. For further information on refunds click here.

Private foundations (§ 27 V 7 to 9 EStG, § 13 KStG)

Private foundations do not have to serve exclusively altruistic purposes (in contrast to foundations within the general meaning of the term), but may distribute their yields to the founder himself/herself or, for example, to any beneficiary designated by the foundation council. As a rule, this appropriation leads to income from capital assets for the beneficiary and is subject to capital gains tax totalling 27.5 %, which at the same time has a final taxation effect.

Taxable appropriations of private foundations are generally subject to limited liability to pay taxes if the debtor of the capital yields, i.e. the distributing private foundation, has its registered office or place of management domestically. Moreover, an exemption from the deduction of capital gains tax or a refund claim may also be due on the basis of a double-taxation agreement. For further information on refunds click here.