Tax Treaty Relief in Austria

How large is Austria's double-tax treaty network?

Austria maintains roughly 90 bilateral income and capital double-tax treaties (Doppelbesteuerungsabkommen, or DBAs) currently in force. As of January 2026, the Bundesministerium fur Finanzen (BMF) confirms 93 income-tax treaties in force, though key provisions with Russia and Belarus are suspended. [1] All Austrian treaties are based on the OECD Model Tax Convention on Income and on Capital, with bilateral variations. Texts are published in the Bundesgesetzblatt and indexed in the BMF treaty register. Austria also maintains a small number of inheritance-and-gift-tax treaties and seven Tax Information Exchange Agreements (TIEAs) with jurisdictions such as Andorra, Gibraltar, and Jersey that fall outside the main DBA network.

Seven additional amendments entered into force in recent years: the protocol updating the DBA with China applied from 1 January 2025, and a revised protocol with New Zealand took effect from October 2024. Austria covers all 27 EU member states, the United Kingdom, Switzerland, the United States, Canada, Australia, Japan, China, India, and more than 50 further countries. Where no DBA exists, section 48 of the Bundesabgabenordnung (BAO) may provide unilateral relief at the Austrian tax authority's discretion.

What relief methods do Austrian treaties use?

Austrian treaties predominantly use the exemption-with-progression method (Befreiungsmethode mit Progressionsvorbehalt). Under this approach, foreign-source income that a resident earns in the treaty partner state is exempt from Austrian tax but is taken into account when calculating the Austrian rate on the taxpayer's remaining domestic income. The progression clause prevents tax-free foreign income from distorting the rate applicable to Austrian income. [1]

The credit method (Anrechnungsmethode) applies under the treaties with the United States, the United Kingdom, Canada, and Japan, among a small group of others. Under these treaties, the foreign tax paid on income from the partner state is credited against the Austrian tax due on the same income, up to the Austrian tax attributable to that income. In practice, dividends and interest flowing to Austrian residents under most DBAs receive the credit method rather than full exemption, even in exemption-method treaties. A qualified tax professional can identify which method applies to each income category under the specific DBA relevant to a taxpayer's situation.

What are the domestic Austrian withholding rates and treaty reductions?

Austria levies Kapitalertragsteuer (KESt) on outbound passive income. Domestic rates before treaty relief are: dividends 27.5% under section 93 EStG (or 23% on corporate distributions to corporate shareholders); interest on securities and savings products 25--27.5% (cross-border interest payments to non-resident companies are generally 0% after the 2016 reform); royalties 20% under section 99 EStG. [2] Treaty-reduced rates vary by partner. The table below shows selected key relationships.

Source: PwC Worldwide Tax Summaries -- Austria, accessed June 2026. [2] Rates shown assume beneficial ownership and satisfaction of any relevant anti-abuse conditions. The EU Parent-Subsidiary Directive (section 94(2) EStG) and EU Interest-Royalty Directive provide 0% on qualifying intra-EU flows regardless of the bilateral treaty rates above.

How does a non-resident claim treaty relief in Austria?

The BMF provides two procedural routes for non-residents seeking relief from Austrian withholding tax. [3]

Relief at source: The Austrian paying agent (e.g., a bank, company, or fund administrator) applies the treaty rate directly when making the payment. To claim at-source relief, the non-resident recipient must complete either Form ZS-QU1 (for individuals) or Form ZS-QU2 (for legal entities) and provide it to the paying agent before payment. If the recipient earns more than EUR 10,000 from Austrian sources in a calendar year, the form must also be certified and stamped by the foreign tax authority of the recipient's country of residence -- that certification is the Ansaessigkeitsbescheinigung (certificate of residence). Recipients below the EUR 10,000 threshold who have no secondary domicile in Austria may self-certify without the foreign-authority stamp. [3]

Since 2025, both ZS-QU1 and ZS-QU2 may be fully completed and signed using a qualified electronic signature issued within the EU/EEA. The digital signature must remain verifiable -- printing a digitally signed PDF voids the validation. Where a foreign tax authority declines to use the Austrian forms, the recipient may attach a foreign certificate of residence to the completed ZS-QU form provided the foreign certificate is verifiable (e.g., by QR code or verification code), covers the relevant withholding date, and is in German or English (or accompanied by a certified translation). Special bilateral simplified arrangements exist for recipients in the United States (IRS Form 6166), Mexico, Thailand, Turkey, Spain, Portugal, Belgium, and Greece. [3]

Refund procedure: Where the Austrian payer has withheld at the domestic rate, the non-resident may reclaim the excess over the treaty rate via the BMF's web-based refund portal (available from the calendar year following the withholding event). The time limit for a refund claim is five years from the end of the assessment year under section 240 BAO. The package must include the completed and certified ZS-QU2, the Ansaessigkeitsbescheinigung, beneficial-ownership confirmation, and evidence of the Austrian withholding paid. The Austrian Administrative Supreme Court (VwGH) confirmed in its 2025 decision that certificates of residence for at-source KeSt relief must be in place before the payment date -- late submission shifts the non-resident to the refund route rather than permitting retroactive at-source adjustment. [4]

How does Austria's OECD Article 4 residence tie-breaker work?

Under Austrian domestic law, unlimited tax liability arises when an individual has a Wohnsitz (domicile -- a dwelling held under circumstances indicating it will be retained and used) or a gewohnlicher Aufenthalt (habitual abode -- presence that exceeds six months in a calendar year) in Austria. [5] A corporate or other entity is resident if its seat (Sitz) or place of effective management is in Austria.

Where an individual qualifies as a resident of both Austria and a treaty-partner state under their respective domestic laws, the treaty tie-breaker in OECD Model Article 4(2) applies in sequence: (1) permanent home -- residence is assigned to the state where the person has a permanent home available; (2) centre of vital interests -- if homes exist in both states, the state where personal and economic ties are closer; (3) habitual abode -- if the centre test is inconclusive; (4) nationality; (5) mutual agreement between the competent authorities if all earlier tests fail. Austrian courts, including the Bundesfinanzgericht (BFG), weight family ties and the location of the main employer heavily in the centre-of-vital-interests analysis. [5]

For companies that would be dual residents, Austria has not implemented MLI Article 4 (the dual-resident entity tie-breaker provision), so those cases continue under the existing bilateral treaty language or are resolved by the competent authority procedure. [6]

What is Austria's MLI status and what does it change?

Austria signed the OECD Multilateral Instrument (MLI) in June 2017 and deposited its ratification instrument in September 2017. The MLI entered into force for Austria on 1 July 2018. [6] Austria notified 38 covered tax agreements (CTAs) at signature. For each CTA, the MLI provision takes effect only where both Austria and the partner jurisdiction have notified the same article.

Key Austrian MLI positions: Austria adopted the Principal Purpose Test (PPT) under Article 7(1) as the minimum-standard anti-abuse rule, meaning treaty benefits can be denied where obtaining the benefit was one of the principal purposes of an arrangement unless granting the benefit would be consistent with the object of the relevant treaty provision. Austria opted into mandatory binding arbitration under Part VI for a group of key partners including Germany, France, Switzerland, Italy, and others, while opting out for certain CTAs. Austria did NOT adopt MLI Article 5 (allowing an election to shift from the exemption method to the credit method) or MLI Article 4 (dual-resident entity tie-breaker). [6]

EU Parent-Subsidiary Directive and Interest-Royalty Directive overlay

Within the EU, two directives supplement or supersede the bilateral DBA network. The EU Parent-Subsidiary Directive (Council Directive 2011/96/EU), transposed into Austrian law via section 94(2) EStG, eliminates withholding tax on dividends paid by an Austrian subsidiary to an EU-resident parent company that holds at least 10% of the Austrian entity's capital for at least one year. Anti-abuse provisions in section 94(2)(b) EStG -- aligned with the 2015 GAAR amendment to the Directive -- deny the exemption where the arrangement is not genuine and lacks economic substance. The CJEU's T Danmark and Y Denmark Aps cases (C-116/16, C-117/16) on beneficial ownership continue to shape Austrian practice on this point. [7]

The EU Interest-Royalty Directive (Council Directive 2003/49/EC), transposed via section 99a EStG, eliminates withholding tax on interest and royalty payments between associated EU companies where the recipient holds at least 25% of the Austrian payer's capital for at least one year. Both directives apply on a beneficial-ownership basis and are denied to pure conduit or letterbox structures. These EU-level reliefs operate independently of the bilateral DBA rates shown in the table above -- a qualifying EU company can claim Directive relief even if the treaty rate would be higher.

For country-level information on how Austria-resident individuals and businesses file taxes more broadly, see the Austria country overview. Specific questions about which method applies to your income sources and how to document beneficial ownership for a treaty or Directive claim are matters for a qualified tax professional.