AUSTRIA Law and Practice Contributed by: Clemens Philipp Schindler and Mohamed Hemdan, Schindler Attorneys
2.4 Taxation of Non-Resident Individuals Non-resident individuals are taxed only on their Austri - an income – ie, income from Austrian sources (limited tax liability). Whether income is considered Austrian is determined exclusively under Austrian tax law. The types of income that are subject to limited tax liability are exhaustively defined in Section 98 of the Income Tax Act. These include: • income from agriculture and forestry carried on in Austria; • income from independent personal services exer - cised or exploited in Austria; • business income where a permanent establish - ment is maintained in Austria, a dependent agent is appointed or Austrian immovable property is involved; • employment income exercised or exploited in Aus - tria, as well as remuneration paid out of Austrian public funds; • certain types of capital income; • income from letting and leasing of Austrian immov - able property or rights registered in Austrian public registers; and • capital gains from the disposal of Austrian real estate. As a general rule, Austrian-source income of non-res - idents is taxed at the ordinary progressive income tax rates (see 2.3 Taxation of Resident Individuals ). How - ever, for the purpose of rate calculation, an additional amount of EUR11,077 (as of 2026) is added to the taxable income of non-residents. The reason for this adjustment is that, from an Austrian tax perspective, the standard tax-free minimum (EUR13,539 in 2026) should not be recognised for non-residents by Austria, but rather by the individual’s state of residence. As a result, non-residents effectively retain a basic tax-free income of EUR2,462 in Austria. Depending on the type of income, taxation of non-res - idents may be carried out through payroll withholding tax (for employment income), capital gains withhold - ing tax (for certain capital income), the “non-resident withholding tax” for specific types of income, or by assessment.
In particular, income subject to the non-resident withholding tax (Section 99 of the Income Tax Act) includes: • income from independent personal services as an author, lecturer, entertainer, architect, sportsper - son, artist or participant in an entertainment perfor - mance, if the activities are performed or exploited in Austria; • profits from cross-border multi-tiered transparent partnerships where the recipients are not dis - closed; • royalties and fees for the use of know-how; • directors’ fees; • income from commercial or technical consultancy services; • income from cross-border hiring out of labour; • distributions or deemed distributions from real estate funds, if the real estate is located in Austria under the condition of public-placement; and • income from dormant partnerships. 2.5 Tax Residence of Legal Entities Under Austrian tax law, a legal entity (ie, a corporation) qualifies as tax-resident if either its registered seat or its place of management is located in Austria. The reg - istered seat of a corporation is deemed to be located at the place stipulated in the articles of association and registered in the commercial register. The place of management is deemed to be where the corpora - tion’s management makes its executive day-to-day management decisions. Earlier practice concentrated primarily on where the relevant decisions are taken (for example, as evidenced by board minutes), but the Austrian tax authorities now increasingly also consider where such decisions are communicated and imple - mented by the management. Resident corporations are subject to unlimited tax liability in Austria. Under the majority of Austria’s DTTs, the place of effec - tive management is decisive in the case of the dual residence of a corporation (the “tie-breaker rule”). In practice, no substantive distinction is generally made between the domestic term “place of management” and “place of effective management” under treaty law, whereas a corporation can only have one place of effective management under a DTT.
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