Austria

Read legal, tax and practice information for Austria, and search for branches and members in the jurisdiction. If you have any comments on the report please contact editor@step.org

*Updated June 2019*

Editorial Board

Dr Friedrich Schwank TEP, Law Offices Dr F Schwank, Vienna, Austria

Important new developments

Same-sex marriages and registered partnership for everyone are available.
Austria plans to implement the EU Anti-Tax Avoidance Directive.
The government proposes to reduce the personal income tax and a reduction of the flat corporate rate from 25 per cent to 21 per cent.
Tax system to become greener.
Digital services will be taxed at a rate of 5 per cent.

Legal system

Civil law, incorporating EU law.

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Inheritance and succession

Succession

Forced heirship, limited to children or issue of pre-deceased children, spouse and registered partner. Forced heirship portions are half of the intestate portions. In other cases, testamentary freedom applies.

Divorce invalidates any provision in favour of the ex-spouse contained in a last will or testament, unless the testator has expressly stated otherwise.

Family law and defined inheritance rules

Yes.

Intestate succession: children inherit in equal shares, grandchildren take the place of predeceased children; beside a surviving spouse, children receive two-thirds in equal shares and the spouse, including registered partners, receive one-third. In the absence of children, the spouse takes two-thirds while one-third goes to the parents of the deceased. If one of the parents is predeceased the spouse takes their share as well. If one or both parents are predeceased, the spouse inherits the entire estate. In the absence of a spouse, relatives inherit on the next level of parentage.

De facto spouses have no inheritance entitlements, unless considered in a will, or in the entire absence of any relatives. In the absence of any heir at all, the de facto spouse will inherit. However, in all cases the de facto spouse is entitled to use the common home for a limited period of one year after the death of the deceased.

Probate process

A court commissioner is appointed to determine the heirs and their entitlements. Upon the heirs stating their acceptance of their respective entitlements, the commissioner makes a list of assets and liabilities. The probate court transfers assets and liabilities to the heirs and issues an inheritance certificate for the use in other EU Member States. Personal property of deceased foreigners resident outside Member States, having acceded to the EU Succession Regulation, is to be subject to summary release proceedings, irrespective of any pending estate procedures, in respect to real property of the deceased.

Mental capacity

Impaired mental capacity: does not per se exclude capacity of making a will.
Reduced mental capacity: the court of protection can order a higher level of formalities for making a will.
Lack of entire mental capacity: the making of a will is not possible.

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Estate planning

Use of trusts in estate planning

Austrian law does not provide for trust legislation. Foreign trusts can be used in estate planning, provided that these trusts are opaque and discretionary.

Austria is not a member of the Hague Trust Convention on the Law Applicable to Trusts and on their Recognition.

Use of foundations in estate planning

Austrian private for-profit foundations and Austrian companies are frequently used in estate planning by high-net-worth individuals (HNWIs) by both Austrian and foreign HNWIs.

An Austrian private foundation with the main purpose of the maintenance of individuals can be established for 100 years and, by way of unanimous resolution of the beneficiaries, extended one time for another 100 years. An Austrian private foundation created for wider purposes can be established in perpetuity. One of its purposes may be benefits for individuals.

Types of entities

Austrian private foundation (Privatrechtsstiftung).

Closely-held limited liability company: GmbH --(Gesellschaft mit beschränkter Haftung).

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Taxation

Income tax system

Austrian tax residents are subject to Austrian taxation on their world income (less concessional deductions), though treaty protection may apply. In the absence of a tax treaty, relief is also available on application.

International public servants, active or retired, are exempted from income tax.

Personal income tax rates (to be reduced in 2021 and subsequent years)

Up to EUR11,000	0%
EUR11,001 to 18,000	25% to be reduced to 20%
EUR18,001 to 31,000	35% to be reduced to 30%
EUR31,001 to 60,000	42% to be reduced to 40 %
EUR60,001 to 90,000	48%
EUR90,001 to 1,000,000	50%
Over 1,000,000	55%

Corporate income tax rates

25 per cent flat based on accrual of balance sheet. To be reduced to 21 per cent.

Capital gains tax

Real estate: 30 per cent. Exceptions and allowances available.
Financial assets: 27.5 per cent
Interest from banks: 25 per cent

Non-residents taxable on

Income, including capital gains, from Austrian real estate.
Permanent establishment.
Royalties interest and dividends.
Certain services, performances of artists etc., delivered in Austria.
Details of double taxation treaties (DTTs) have to be taken into account. Austria has DTTs with more than 90 countries.

Withholding tax rate (non-treaty)

25 per cent (bank interest).
27.5 per cent (dividends to individuals and capital gains).
20 per cent (non-resident income).

Withholding tax rates (treaty) are dependent on the applicable tax treaty, with a range of 0-15 per cent.

Taxation at death

No inheritance or estate taxes for deaths having occurred after 31 July 2008.

Sliding scale from 2 per cent to 3.5 per cent transfer tax on Austrian real estate (some exemptions for spouses) plus 1.1 per cent land registrar charges. Fees for probate court and commissioner are scaled.

Other taxes

No gift or wealth tax. Gifts exceeding certain thresholds are subject to reporting within three months, but are not taxable if reported in a timely manner.

Tax treaties

Austria has 91 tax treaties. Bilingual resource of all treaties can be found at www.schwank.com/dba/left.htm

Tax information exchange agreements (TIEAs)

Austria has seven TIEAs: Andorra, Gibraltar, Guernsey, Jersey, Mauritius, Monaco and St Vincent and the Grenadines. Kodex – Doppelbesteuerungsabkommen 2018, (18. Auflage, Stand 1.3 .2018), Linde Verlag).
The Convention on Mutual Administrative Assistance in Tax Matters.
The Common Reporting Standard.
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting.

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Residence and domicile

The domicile concept is not applicable in Austrian law. Tax residence is established by any place in Austria available permanently to the taxpayer irrespective of use, unless treaty (DTT) protection applies. There is an exception for HNWIs with secondary homes in Austria, provided that homes are not being personally used by them for more than 70 days per year.

Special rules on becoming resident

Special tax concessions (reduction of tax bracket, limitation of tax base) are available for academic teachers, foreign scientists, researchers, athletes, actors, artists and other important individuals upon relocation to Austria and becoming tax residents.

Special rules on ceasing residence

Exit tax is assessed on relocation abroad but not payable as long as the tax residence remains in another EU Member State.

Domicile concept for gifts and inheritance

NOT APPLICABLE

Taxation of holdings by non-residents on death and of gifts

Gifts: not applicable, but subject to reporting.
Death: not applicable.

Reporting/auditing requirements

Asset protection laws

Yes. Companies must file end year accounts with the Company Register. Share corporations and Austrian private foundations are also subject to annual audit. Audit reports of private foundations are confidential and are neither filed nor published.

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Other relevant information

Asset protection laws

Yes. For the benefit of close family of the owner of real estate a prohibition of selling or mortgaging can be registered against the title of a property in the land registry.

Foreign currency restrictions

No.

Foreign ownership restrictions

Yes. In some of the nine Austrian provinces, the acquisition of real property by foreigners is subject to administrative control. Some provinces also restrict acquisition of holiday homes and agricultural land.

AML/due diligence and other requirements and regulatory procedures for advisors

In accordance with the EU Fourth and Fifth Anti-Money Laundering Directives:

To establish a trustee relationship.
For purchasing real property.
For incorporation of a company.
To open a bank account.
To acquire valuable personal property (art, jewels, precious metals, etc).

Other points of interest

Bank secrecy has been abolished. A central registry of all bank accounts has been established. No specific controlled foreign corporations (CFC) legislation, but some base erosion and profit shifting (BEPS) rules have been implemented.

Ultimate beneficial owners holding more than 25 per cent of a company have to be reported to the Owners Register established by the Statistical Bureau of Austria. The same rules apply to founders, beneficiaries and officers of private foundations and associations.

Key resources for further information

Publications

Louis Garb and John Wood, ed, International Succession (4^th Edition), (Oxford University Press, 2015), 5th edition to be published at the end of 2020.
Henry Christensen III, International Estate Planning (loose-leaf publication), Lexis Nexis.
Timothy Lyons, ed, European Cross-Border Estate Planning (Sweet & Maxwell)
www.schwank.com

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