Relief from Austrian Withholding Taxes under Double Tax Conventions
This section provides detailed information on the requirements for being relieved from Austrian withholding taxes under double tax conventions (“DTCs”).
1. Non-Residents deriving Income from Austrian sources
A non-resident receiving income from Austrian sources may be subject to an Austrian withholding tax levied at source (capital yields tax, wage tax or special withholding tax for non-residents). The most important types of income of non-residents which are subject to Austrian withholding tax are income derived from e.g. sportspersons, other persons participating in entertainment, authors, lecturers, artists, entertainers and architects. Moreover, certain types of remuneration, such as royalties, payments for know-how and the like, directors’ fees, consultancy fees for commercial and technical advice, fees for hiring out labour, employment income, dividends and assimilated income, distributions of private foundations and income derived as a “silent partner” fall under the withholding tax regime.
Non-residents may be liable to pay tax on these types of income in their state of residence as well. In order to avoid double taxation, Austria has concluded DTCs with more than 90 countries in the world. In many instances, depending on the rules of each DTC, Austria may be obliged to grant relief from its source taxation either fully or partially.
Example 1: A non-resident gives a lecture at a conference in Austria. According to Austrian domestic Income Tax Law, the Austrian organiser has to withhold a 20 per cent tax on the remuneration paid to the lecturer. However, under a DTC following the OECD Model Tax Convention the taxing right is allocated to the state of residence of the taxpayer. As a result, the foreign taxpayer is entitled to claim full relief from the Austrian tax.
In order to obtain treaty relief two different procedures are available: the relief-at-source procedure and the refund procedure. In general, it is up to the paying agent to decide which procedure is the most appropriate one. The decision will be highly influenced by the fact of whether or not he has been provided with all the necessary documentation which, in a potential subsequent tax audit, enables him to give sufficient evidence that the recipient of the payment was actually entitled to get relief from withholding tax.
Example 2: The Austrian organiser of the conference has paid lecture fees without withholding the tax to a non-resident participant whose residence status remains unclear. In a subsequent tax audit, the organiser will be made liable for the tax not withheld at source if he is not able to give sufficient evidence that tax relief had to be granted under a specific DTC.
2. Treaty Relief at source
2.1. What is treaty relief at source?
The paying agent may directly apply the DTC when disbursing the payments. As a consequence, the withholding tax may, depending on the relevant DTC, be reduced directly at source according to the provisions of the respective DTC. The relief-at-source procedure is regulated in the Ordinance on DTC-Relief, Federal Gazette III No. 92/2005 as amended in Federal Gazette II No. 44/2006.
2.2. How to receive treaty relief at source?
The paying agent is obliged to keep the necessary documents to provide evidence that the legal preconditions under the tax treaty are fulfilled. In order to obtain relief at source form ZS-QU1 (for individuals) or ZS-QU2 (for legal persons) has to be filled in by the recipient of the respective payments.
The paying agent fulfils the documentation requirements, if form ZS-QU1 or ZS-QU2 is
- duly filled in by the recipient of payments,
- certified by the foreign tax authority of the state of residence of the recipient,
- accompanied by additional documents if required according to a specific DTC, and
- finally handed over to the paying agent.
Example 3: The lecturer fills in ZS-QU1, has it certified by the tax authority of his state of residence and sends it to the organiser of the conference. In this case, the organiser may pay the remuneration without deducting withholding tax in Austria.
Recipients neither having a secondary residence in Austria nor receiving more than EUR 10,000 per calendar year from Austrian sources, do not need to provide a certificate of residence by the foreign tax authority in form ZS-QU1 or ZS-QU2.
2.3. No Relief at source
Section 5 of the Ordinance on DTC-Relief specifies cases where no relief at source is available. Among these there are cases where the recipients are:
- pure holding companies
- letterbox companies
- investment funds
- legal entities whose place of effective management is not in the state where the legal entity was founded
- non-resident commercial personnel leasing companies if no notice of exemption has been granted (see more detailed the section “International hiring-out of labour”) or
- if the income consists of capital yields resulting from securities paid out by banks in their function of administering securities
TIP: Further information on the application of DTCs in cases of international hiring-out of labour by non-resident companies can be found in the section “International hiring-out of labour”
2.4.1. Fiscally Transparent Partnerships
If a partnership is treated as fiscally transparent under its domestic law, each partner has to claim relief at source. If the amount paid to a partner exceeds EUR 10,000, form ZS-QU1 or ZS-QU2 has to be certified by the tax authority of the state of residence. The paying agent is responsible for keeping the name and address of the partnership and the names and addresses of the partners in evidence.
2.4.2. Fiscally Non-transparent Partnerships
If a partnership is treated as a taxable entity under its domestic law (non-transparent or opaque partnerships), the partnership itself is entitled to claim relief at source irrespective of where the partners are resident.
3. Refund of Austrian withholding tax
3.1. How to receive refund?
If the paying agent has deducted tax but the respective DTC provides for a full or partial exemption, a refund of all or part of the Austrian tax can be claimed afterwards. The Tax Office Bruck Eisenstadt Oberwart, Neusiedler Straße 46, 7000 Eisenstadt, Austria, tel. +43 50 233 233 (private person) or +43 50 233 333 (entrepreneur) is responsible for all cases where relief is not obtained in an ordinary assessment procedure of the taxpayer.
As of January 1st, 2019 the claim for refund has to follow a specific web-based procedure. For this purpose please take the following steps:
- Choose the correct web-form (depending on your type of income, see below 3.3.), duly fill it in and submit it electronically (“advance notification”)
- Print out the advance notification as submitted (including the transaction number) and sign it
- Approach the tax authority of your state of residence and have the advance notification certified by them
- Send the advance notification (including the certification by your tax authority) by post to the Tax Office Bruck Eisenstadt Oberwart (transmission by facsimile is not permissible)
Example 4: If no relief at source has been granted, the foreign lecturer can claim a repayment of the 20 per cent withholding tax that was deducted by the organiser of the conference. The claim for repayment is effected by filing form “RÜCKSOV” electronically, printing it out and having it certified by the foreign tax authority. This form has to be forwarded to the Tax Office Bruck Eisenstadt Oberwart together with the corresponding documents and receipts.
When applicants use the web-based refund procedure for the first time, they receive an identification number (“withholding tax No.”) which has to be used for every claim for refund in the future. Please note that if you receive several types of income for which you would like to claim a refund of withholding tax, several forms have to be submitted, one for each type of income (see below 3.3.).
The advance notification can only be submitted as of the calendar year following the year when withholding tax was deducted (sec. 240a para. 1 of the Federal Fiscal Code (BAO)). In general, a refund can be claimed within five years following the year when withholding tax was deducted.
3.2. Who has to claim the refund?
The form has to be filed by the recipient of the income, i.e. the liable taxpayer (beneficial owner), and not by the paying agent.
If a partnership is treated as fiscally transparent under its domestic law, each partner has to claim a refund. If a partnership is treated as a taxable entity under its domestic law, the partnership itself is entitled to claim a refund.
3.3. Which web-form do I have to use?
Depending on the type of income you have received, you have to select a different type of web-form. All types are listed in the tables below which include links to the correct forms available in the “database of forms” of the Austrian Ministry of Finance. The web-forms are obligatory when claiming a refund. Differing forms or applications cannot be processed by the responsible tax office.
Please note that when you fill in the web-form you will have to indicate the legal basis upon which you base your claim. Generally, you will be able to choose between “due to the Austrian double tax convention” and “pursuant to sec. 98 of the Income Tax Act (EStG 1988) in conjunction with sec. 240 para. 3 of the Federal Fiscal Code (BAO) (limited liability to tax)”. If your claim is based on an exemption resulting from an effective DTC, select the first option. If your claim is based on the fact that you are not subject to limited tax liability in Austria based on the domestic tax rules, select the second option.
Example 5: A natural person resident abroad receives dividends from shares in an Austrian public limited company. On these dividends 27.5 per cent Austrian capital yields tax is withheld. According to the DTC applicable in the specific case, Austria is, however, only entitled to a withholding tax rate of 15 per cent (if the DTC follows Article 10 para. 2 of the OECD Model Tax Convention). Therefore, a refund of 12.5 per cent can be claimed (web-form “DIAG”). The remaining 15 per cent capital yields tax can usually be credited in the residence state.
For legal entities, additional domestic legal bases for a claim for refund of Austrian withholding tax are available, besides the DTC exemptions. These are:
- on the basis of the exemption for foreign pension funds as described in sec. 6 of the Corporate Income Tax Act (KStG 1988)
- pursuant to sec. 94 para. 10 of the Income Tax Act (EStG 1988) in conjunction with sec. 240 para. 3 of the Federal Fiscal Code (BAO) (limited liability to pay taxes) – for income paid to a(n) (real estate) investment fund
- pursuant to sec. 94 para. 2 of the Income Tax Act (EStG 1988) (exemption in line with the Parent-Subsidiary Directive)
- pursuant to sec. 21 para. 1 sub-para. 1a of the Corporate Income Tax Act (KStG 1988) (for companies resident in an EU/EEA Member State regarding dividend withholding tax which cannot be credited in the residence state based on a DTC)
- pursuant to sec. 99a of the Income Tax Act (EStG 1988) (exemption in line with the Interest-Royalties Directive)
3.3.1. Refund of capital yields tax (“Kapitalertragsteuer”)
|Type of income||Code
|Interest on savings accounts||ZISP||This covers interest derived from cash deposits with financial institutions. This interest is subject to a 25 per cent capital yields tax in Austria.||Interest derived from an Austrian savings account (“Sparbuch”), building savings contract (“Bausparvertrag”), fixed-term deposits|
|Interest on current accounts||ZIKO||This covers interest from current account contracts with financial institutions. This interest is subject to a 25 per cent capital yields tax in Austria.||Interest derived from an Austrian current account|
|Interest on debt securities||ZIFO||This covers interest derived from debt securities (securitised products). This interest is subject to a 27.5 per cent capital yields tax in Austria.||Interest derived from bonds (e.g. reverse convertibles, convertible bonds, …)|
|Interest on other non-securitised debt claims||ZINV||This covers any other interest income which is derived from a banking transaction and which is derived neither from savings or current accounts nor from debt securities. This interest is subject to a 25 per cent capital yields tax in Austria.||Granting of an interest-bearing loan to a bank|
|Other interest||ZISO||This covers interest which is not derived from debt securities but which is nevertheless subject to a 27.5 per cent capital yields tax.||Distributions and deemed distributions from real estate investment funds.|
|Dividends from shares||DIAG||This covers dividends and other distributions by public limited companies. These dividends are subject to a 27.5 per cent capital yields tax in Austria. See also below “further information”.||Dividends by an Austrian Aktiengesellschaft, “AG” (public limited company)|
|Dividends by limited liability companies||DIGMBH||This covers dividends and other distributions by limited liability companies. These dividends are subject to a 27.5 per cent capital yields tax in Austria. See also below “further information”.||Dividends by an Austrian Gesellschaft mit beschränkter Haftung, “GmbH” (limited liability company)|
|Income from profit participation rights||GEASU||This covers income derived from profit participation rights in public limited companies, limited liability companies and certain co-operative societies. They are treated as dividend income under Austrian domestic law (“Substanzgenussrecht”) and are subject to a 27.5 per cent capital yields tax in Austria.||Dividends from a profit participation right in an Austrian GmbH|
|Other profit shares||GEASO||This covers other income from shares in profits of certain co-operative and agricultural societies. This income is subject to a 27.5 per cent capital yields tax in Austria.||Dividends by Austrian Genossenschaften (cooperative societies) or Agrargemeinschaften (agricultural societies)|
|Realised increase in value (shares)||REWAG||This covers income derived from the realised increase in value of shares and occurs not only when shares are sold but also when e.g. the taxpayer changes residence, the shares are transferred to a different securities account, the company is liquidated, and equity is repaid. This income is subject to a 27.5 per cent capital yields tax in Austria.||Capital gains from the sale of shares|
|Realised increase in value (funds||REWFO||This covers income derived from the realised increase in value of investment funds or real estate investment funds. This occurs not only when fund units are sold but also when e.g. the taxpayer changes residence, the fund units are transferred to a different securities account, liquidation is effected, and equity is repaid. This income is subject to a 27.5 per cent capital yields tax in Austria.||Capital gains from the sale of fund units|
|Realised increase in value (other)||REWSO||This covers income derived from the realised increase in value of other financial products which lead to income from capital investments. Realisation can occur upon sale, change in residence, change in securities account, liquidation… This income is subject to a 27.5 per cent capital yields tax in Austria.||Capital gains from the sale of debt securities (e.g. bonds)|
|Derivatives (especially Derivatives (especially certificates)||DER||This covers all income derived from securitised derivatives. This income is subject to a 27.5 per cent capital yields tax in Austria.||Interest from certificates, cash settlements, option premiums, capital gains from the sale of derivatives (e.g. of certificates, warrants)|
|Distributions by private foundations||ZUPS||This covers distributions by private foundations, which are subject to a 27.5 per cent capital yields tax in Austria.||Distributions by an Austrian Privatstiftung (private foundation)|
TIP: Information by the Austrian Ministry of Finance regarding claims for refund of capital yields tax on dividends by taxpayers subject to limited tax liability.
3.3.2. Wage tax, cross-border workers, employment income
|Type of income||Code
|Employment income||LNSA||Claim for refund of wage tax for employment income|
|Employment income of cross-border workers||LGRENZ||Claim for refund of wage tax of cross-border workers (for German, Italian and Liechtenstein residents who qualify as cross-border workers under the respective DTC)|
3.3.3. Special withholding tax (“WHT”) for non-residents (sec. 99 of the Income Tax Act)
|Type of income||Code
|Royalties||LIZ||This covers income from the granting of rights which are registered or commercially used in Austria. Such income is subject to a 20 per cent special WHT (25 per cent in case of net taxation).||Income from granting rights to use brands or patents, copyright, know-how etc.|
|Hiring-out of labour||AKÜ||
This covers income derived from the hiring-out of labour, which is subject to a 20 per cent special WHT (25 per cent in case of net taxation).Further information can be found in the section “International hiring-out of labour”.
|Fee for the hiring-out of labour|
|Other income subject to special WHT||RÜCKSOV||This covers income which is subject to the special WHT under sec. 99 of the Income Tax Act and which is not covered by the web-forms LIZ and AKÜ.||Lecturers, commercial and technical consultants, income from real estate investment funds|
In case of questions regarding the web-based refund procedure please contact the tax ombudsman service (firstname.lastname@example.org).