A prosperous and sophisticated business center and a traditional trading bridge to Eastern Europe and the Balkans, Austria actively welcomes foreign investors. Austria’s tax policy is not to combat offshore countries but to make tax treaties with them- Belize, Hong-Kong, UAE (Dubai) to name a few. Sophisticated tax minimizing structures are designed for all types of businesses – general trading, holding, investment or royalty companies. With effective tax planning and restructuring, the effective tax rate can be as low as 3-5%.
- CORPORATE INCOME TAX (CIT): The standard rate is 25%. With effective tax planning and restructuring, the effective tax rate can be as low as 3-5%.
- INCOMING DIVIDENDS: 0% in general for EU and tax treaty countries.
- CAPITAL GAINS TAX (CGT) by rule are taxed at the standard corporate tax rate although reductions and exemptions are widely applied, bringing the effective rate to 0%.
- WITHHOLDING TAX:
ROYALTIES: 0% or reduced under a tax treaty or EU Directive on Royalties. Otherwise, tax rate is 20%.
DIVIDENDS: 0% or reduced for dividends paid to an EU or treaty jurisdiction entity. Otherwise, tax rate is 25%.
INTERESTS: In general, withholding tax on interest is not levied.
- BILATERAL TAX TREATIES Austria’s tax policy is not to combat offshore countries but to make tax treaties with them. Tax treaties have been signed with Belize, Hong-Kong,United Arab Emirates (Dubai), to name a few.
- VALUE ADDED TAX (VAT). EU VAT regime. Standard rate for inland sales is 20%.
AUSTRIAN LIMITED LIABILITY COMPANY (GMBH)
There are endless possibilities existing for using an Austrian entity in connection with tax planning.Company registered in Austria can achieve tax-free dividends and capital gains from foreign participations, even if the foreign entity is in an offshore jurisdiction.
Austria does not recognize any C.F.C. legislation, nor any thin-cap rules or debt equity ratios. Therefore, you can leverage an Austrian company by acquiring funds towards investments. Any interest resulting from that loan is fully tax deductible. There is no withholding tax due on payments to a foreign lender, even if that interest is paid to an offshore company or non-treaty jurisdiction.
Company in Austria also serves perfectly as a royalty company – for the purpose of receiving royalties for patents or other intellectual property from subsidiaries and third parties. With more than 60 double tax treaties, many countries have reduced or 0% withholding tax on incoming and outgoing royalties.
Since Austria is an EU Member State, the EU Savings and Royalty Directive can be applied which foresees that, provided the parent company holds at least 10 % of the shares of a subsidiary within the European Union for at least a period of one year, there is no withholding tax levied upon royalty payments to an Austrian company.
- Modern and efficient multilingual banking & financial services sector;
- Excellent air and sea connections and telecommunications services;
- Professional, reputable and efficient Government and Tax Authorities;
- A mature professional services sector;
- Very low expense level (fees) for financial and professional service provision compared to other Jurisdictions. The difference is more evident in the case of professional service recurring costs (administration, accounting & tax compliance) are estimated to be at 35- 40% of Western European rates.