Issue 68


Austrian Ministry of Finance: Restrictions to withholding tax relief at source for distributions to intermediate holding companies

According to a legal opinion recently published by the Austrian Ministry of Finance (EAS 3422), in relation to non-EU countries, withholding tax exemption can only apply if the direct beneficial owner is active beyond mere asset management.


A US holding company (asset management only) holds 100% of the shares in a limited liability company (“GmbH”) based in Austria. The US holding company itself is fully held by the operating and listed US parent company.


Can a dividend payment by the “GmbH” to its US holding parent company be made without levying withholding tax (exemption at source)?

Legal opinion of the Austrian Ministry of Finance

In general, under the DTT Austria-USA, a withholding tax right of 5% applies (provided that the US holding company as the beneficial owner holds at least 10% of the voting shares in the GmbH). However, exemption from withholding tax at source can only be granted if the documentation requirements, as set out in the Austrian DTT relief ordinance (DBA-Entlastungsverordnung), are met. This requires proof of substance, including proof of an activity beyond mere asset management. Therefore, if the holding company performs mere asset management, no exemption at source is possible.


With this, the Federal Ministry of Finance draws a distinction in the treatment of non-EU cases and EU cases (application of the Parent-Subsidiary Directive):

In EU cases, the withholding tax exemption at source is accepted if the conditions for the exemption are met by the higher-level operating (grandparent) company. This seems to be based on ECJ case law, as the prohibition of an exemption at source cannot be justified by general suspicions of abuse.

Since this restriction does not apply in relation to non-EU cases, the Austrian tax authorities intentionally apply a stricter standard for such DTT cases.

Michael Wenzl
Christina Hirsch

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Austrian Ministry of Finance announces further change in tax law on wage tax withholding for employers without a permanent establishment in Austria

As of January 1, 2020, the Austrian Tax Amendment Act 2020 (AbgÄG 2020) extended the requirement to withhold Austrian wage tax to employers of individuals subject to unlimited tax liability in Austria even if the employer does not have a permanent establishment (PE) for wage tax purposes in Austria.

The new tax regulation has received criticism since it subjects foreign employers to wage tax withholding obligations, even in cases where the employee does not perform any work for the employer in Austria at all.

On November 26, 2019, the Austrian Ministry of Finance published information announcing the intention to amend this new legal provision soon. It is planned that wage tax withholding will be mandatory in these cases only if both the following conditions are fulfilled:

  • The employee physically carries out activities for the employer in Austria
  • The taxation rights on the employment income are allocated to Austria under the applicable double taxation treaty.

This view is also reflected in the non-binding Austrian wage tax guidelines issued on December 17, 2019. However, legal certainty will only be achieved once this further amendment has been passed and becomes effective.

If the legal changes are introduced as announced, employers without an Austrian wage tax PE will mainly be obliged to withhold wage tax for employees with unlimited tax liability in Austria in the following cases:

  • Employees sent on assignment to Austria for more than six months, if the employee has a residence or habitual abode in Austria.
  • Austrian resident employees working partly from a home office in Austria.

Alexandra Platzer
Benedikt Hörtenhuber

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Austrian VAT Guidelines - most important changes in the Amendment Decree 2019

This is a brief overview of the most important issues covered by the update of the Austrian VAT Guidelines to reflect the amendment of the Austrian VAT Act, recent case law and the Explanatory Notes of the EU VAT Expert Group.

Chain transactions

The transport or dispatch is attributed to the taxable person who bears the risk for accidental loss of the goods during the cross-border transport of the goods. If two taxable persons in the chain bear the risk for loss, the transport or dispatch will be attributed to the taxable person which either carries out the transport itself or makes the necessary arrangements with a third party.
The new rules also apply if the final recipient is a non-taxable person, as well as in relation to non-EU countries. From January 1, 2021, new rules will also apply to sales to consumers via online marketplaces.

Call-off stock arrangements

If the goods are not sold to the intended acquirer within 12 months of their arrival in call-off stock, a taxable transfer of goods will exist, and the taxable person will be subject to a registration obligation in the Member State in which the call-off stock is located (i.e. Austria). However, a registration obligation can be avoided by returning the goods to the Member State of transport or dispatch within the 12-month period and including this information in the register and the recapitulative statement.
If the intended acquirer is changed, each replacement must be included in the register and the recapitulative statement, otherwise the call off stock simplification will not apply. The 12-month period will not be extended as a result.
In the event of the destruction, loss or damage of more than 5% of the value or the amount of the goods in a consignment, the supplier must tax an intra-EU transfer on the day of the event in the Member State in which the call-off stock is located and include this in the recapitulative statement.

Prerequisites for tax exemption for intra-EU supplies of goods

The disclosure of the (valid) foreign VAT ID number of the acquirer and the submission of correct recapitulative statements are compulsory substantive legal prerequisites for the tax exemption of intra-EU supplies of goods.
If the acquirer does not provide the VAT number provided by another Member State, it will have no right to input tax deduction for the – in this case taxable – supply of goods. In the event of a subsequent notification of the VAT ID number of the acquirer, it is permissible to amend the invoice, provided that no indication of fraud or misuse is given.
In case of non-submission, incomplete information, or inaccuracy of the recapitulative statement, the intra-EU supply of goods will still be tax-exempt if the supplier can properly substantiate the omission (e.g. by having inadvertently used an old VAT number following a corporate reorganisation), and if the supplier corrects this or subsequently discloses this.

Fuel cards

A taxable person merely organising and managing fuel cards on the basis of an agreement on the management of fuel cards should not be seen as part of a chain with regard to the supplies of goods (fuel). However, under fuel card agreements, which govern the purchase and sale of fuels, a chain transaction exists from the oil company to the fuel card company and to the user of the fuel card.

Payments on termination of a contract

Fees determined in advance which a customer must pay in the event of early termination of a contract for a service with a minimum commitment period on reasonable grounds, and which correspond to the amount that the taxable person would have received for the remaining duration of the contract if the contract had not been terminated early, represent a supply of services for consideration (i.e. payment).

Rupert Wiesinger
Sara Ciarnau

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Copyright and Publisher: PwC Österreich GmbH Wirtschaftsprüfungsgesellschaft, Donau-City-Straße 7, 1220 Vienna, Austria

Editor: Christof Wörndl,

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