1E9Ct5D

ivJurisdictions That Grant Tax Incentives to Offshore andQualified Holding CompaniesIn respect to jurisdictions that grant tax incentives to offshore and qualified holdingcompanies, dividends and capital gains from these jurisdictions may not be tax exempt underthe participation exemption if the anti-avoidance test is met, i.e., the overall tax burden doesnot exceed 15 per cent of the profits and the main resources of the subsidiary are dedicatedto passive business (see above). There is a higher duty of co-operation with the Austrian taxauthorities.vJurisdictions That Provide Tax Exemptions for Manufacturingand Processing ExportsIn regard to jurisdictions that provide tax exemptions for manufacturing and processingexports, if these exemptions result in an overall tax burden not exceeding 15 per cent of theprofits, the participation exemption for dividends and capital gains may be lost. There is ahigher duty of cooperation with the Austrian tax authorities who will examine the activities ofthe foreign subsidiary, in particular whether the subsidiary’s main resources are actuallyapplied to manufacturing. If so, the anti-avoidance test will be met and the participationexemption will apply.viJurisdictions That Provide Tax Reductions for InternationalCompanies with Privileged Offshore Financial StatusIn respect to jurisdictions that provide tax reductions for international companies withprivileged offshore financial status, if these exemptions result in an overall tax burden notexceeding 15 per cent of the profits and the main resources of the subsidiary are dedicated topassive business, the anti-avoidance test will not be met and the participation exemption fordividends and capital gains may be lost. There is a higher duty of co-operation with theAustrian tax authorities.III Tax Treaty RegimeIn GeneralAustria has income tax treaties with 90 countries, additional tax information exchange treatieswith four offshore centres and treaties on interest with 15 offshore centres. Most of thesefollow the Organisation for Economic Co-operation and Development (OECD) Model Treaty.iCharacteristic Provisions and Treatmenta. Persons coveredBoth individuals and companies are covered by double-taxation treaties, as a standardfeature of the Austrian tax treaty regime.b. CitizenshipAs a general rule, citizenship or “domicile” has no relevance. However, in a residencytest under a double-taxation treaty, citizenship may be eventually decisive in case ofdual-residency.c. Dual-Resident IndividualsIn respect to dual-resident individuals, citizenship may provide the final test ofresidency, as provided for in various tax treaties.Under a regulation issued by the Austrian Federal Ministry of Finance, individuals do notestablish a tax residence in Austria for the purpose of income tax, irrespective of a homebeing available in Austria, if the following conditions are met:- 24 -