Austria updates rules to avoid double taxation

Austrian finance ministry is updating procedures to implement the provisions of double taxation convention with respect to withholding tax regime with Pakistan. Sources in the Central Board of Revenue (CBR) told Business Recorder that the Austrian finance ministry had sent information about how Pakistanis could obtain treaty relief in Austria.
Pakistan and Austria had signed the convention for avoidance of double taxation on August 4, 2005 for promoting economic activities and strengthening bilateral relations, sources said.
About the information received, they said that a non-resident receiving income from Austrian sources might be subjected to an Austrian withholding tax levied at source. The most important types of income of non-residents are subject to Austrian withholding tax are income derived by eg sports persons, other persons participating in entertainment, authors, lecturers, artists, entertainers, and architects.
"Certain types of remuneration, such as royalties, payments for know-how and the like, directors'' fees, consultancy fees for commercial and technical advice, fees for hiring out labour, employment income, dividends and assimilated income, distributions of private foundations and income derived as a ''silent partner'' fall under the withholding tax regime."
The Austrian finance ministry said in order to avoid double taxation, Austria had concluded double tax conventions (DTCs) with more than 70 countries in the world, including Pakistan.
"In many instances, depending on the rules of each double tax treaty, Austria may be obliged to grant relief from its source taxation either fully or partial," the ministry said.
THE CBR IS INFORMED THAT TO OBTAIN TREATY RELIEF TWO DIFFERENT PROCEDURES ARE AVAILABLE: the relief-at-source procedure and the refund procedure.
The Austrian ministry explained the treaty relief at source that the paying agent may directly apply the double tax treaty when disbursing the payments. As a consequence, withholding tax may - depending on the relevant treaty - be reduced directly at source according to the provisions of the respective DTC.
It has been informed that recipients neither having a secondary residence in Austria nor receiving more than 10,000 euros per calendar year from Austrian sources do not need to submit a certificate of residence by the foreign tax authority.