Doing business in Austria - PKF

at the full rate of 25%. Income tax is reduced to half the normal rate if
the partnership interest has been held for a minimum of seven years
and the disposal is made upon retirement. Otherwise, capital gains
are subject to the full tax rate, but may be spread evenly over three
years after a holding period of seven years.
The following capital gains from the disposal of privately held assets
are also subject to tax:
Capital gains from the disposal of:
• Shares (1% or beyond at any point of time within the last five
years)
• Shares or other movable assets (within 12 months after their
acquisition)
• Real estate (within 10 years after its acquisition)
• A partnership interest.
Interaction with International Tax Regime
Austria has concluded a considerable number of double taxation
treaties providing for relief from double taxation, whereas many
Austrian treaties follow the OECD Model Tax Convention. In the
absence of a tax treaty, according to the domestic Austrian provisions
relief from double taxation can basically be obtained if the respective
foreign income is subject to taxation comparable to Austrian income
tax of at least 15% on average.
In certain instances, the relevant double taxation treaty may also
impact the determination of where an item of income is sourced. For
example, business income, income from property, dividend, interest
and royalty income can be impacted by terms of the double tax treaty.
The existence of a permanent establishment in Austria results in the
liability of the foreign investor to pay (corporate) income tax in Austria.
22 PKF - Doing business in Austria - Taxation