Businesses in Austria are typically carried out via a limited liability company (Gesellschaft mit beschränkter Haftung, or GmbH) or – to a lesser extent, typically in the case of a listed company – via a joint stock company (Aktiengesellschaft, or AG).

Under a GmbH, the shareholders are authorised to give instructions to a managing director. There is typically a low degree of fungibility of shares and a wider range of possibilities for the design of the articles of association.

Under an AG, a supervisory board and a management board are mandatory, with both operating independently from the shareholders in terms of business decisions. There is typically a higher degree of fungibility of shares.

GmbHs or AGs are separate taxpayers for Austrian corporate income tax (Körperschaftsteuer) purposes.

With the Corporate Amendment Act 2023, a new legal form ‒ the so-called flexible company (“FlexCo”) ‒ was introduced in 2024. A simplified internal decision-making process of the shareholders and the possible creation of so-called company value shares intends to facilitate the corporate participation of employees. The legislator describes the FlexCo as a hybrid of a GmbH and an AG, as the FlexCo provides the option of holding its own shares as well as certain flexible capital measures.

Generally, shareholders of corporations are not liable for the liabilities of the companies, apart from in very exceptional cases (eg, in the case of effective management of the corporation by a shareholder).

In Austria, the most commonly used tax-transparent entities are the general partnership (Offene Gesellschaft, or OG) and the limited partnership (Kommanditgesellschaft, or KG).

An OG is a type of partnership entity consisting of at least two individuals or legal entities. Each of the partners in an OG bears personal, unlimited, direct and joint liability to the partnership’s creditors for its obligations. In contrast to incorporated entities, OGs may be set up without any initial capital. An OG comes into legal existence as soon as it is entered into the Commercial Register. The OG possesses a legal identity from a civil law perspective (whereas it is transparent from a tax law perspective) and constitutes an independent entity with rights and obligations vis-à-vis external parties.

In contrast to an OG, in a KG not all of the partners bear full and unlimited liability for the partnership’s obligations. Rather, it is only required that there be (at least) one general partner (Komplementär) who – just as in an OG – bears unlimited liability to the partnership’s creditors (the “general partner”). The remaining partners can have limited liability vis-à-vis the creditors; they are referred to as “limited partners” (Kommanditisten). The liability of each limited partner ends as soon as their limited partnership share (liability share) has been fully paid in. Only the liability share is registered and public.

A special form of KG is the Gesellschaft mit beschränkter Haftung und Compagnie Kommanditgesellschaft (“GmbH & Co KG”). This form is characterised by the fact that its sole personally liable general partner is a GmbH. In a typical set-up, the shareholders of the GmbH are ‒ at the same time ‒ also limited partners of the KG. In a typical GmbH & Co KG, sole management and representation authority over the KG is vested in the GmbH acting as the general partner. The GmbH, in turn, is represented by its managing director(s). This means that the duty of the GmbH’s managing director(s) is/are to manage the affairs of the GmbH & Co KG and fulfil all the related obligations.

According to Austrian corporate income tax law, a corporation with its registered seat or place of management in Austria is subject to unlimited tax liability. The registered 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 corporation’s senior management makes its executive decisions.

Double taxation treaties (DTTs) regulate that the place of effective management is decisive in the case of a dual residence of a corporation (the “tie-breaker rule”). Important elements for determining this place include the residency of board members and the location of board meetings.

Taxation of Corporations

The income of a corporation is qualified as business income that is subject to corporate income tax at a rate of 23% (since 2024). If the remaining income is subsequently distributed to the shareholders (as distribution of profits/dividends), then those already taxed profits are taxed again at the level of the receiving shareholders (principle of separation, or Trennungsprinzip).

Taxation of Partnerships

Partnerships such as OGs or KGs are transparent for income tax purposes (no taxation at the level of the partnership) so that profits and losses are directly taxed at the partners’ level and the applicable tax rate depends on whether the partner is a corporation (23% corporate income tax) or an individual (progressive tax rate up to 55%). The assets, liabilities and income of the partnership are generally allocated to the partners in proportion to their partnership interests.

Individuals

The taxation of the income of individuals (who own a business or are a partner in a transparent partnership carrying out business) ‒ generated by themselves or through the partnership ‒ generally depends upon their personal tax rate. The progressive tax rates for 2025 range from:

• up to EUR13,308 – 0% tax rate;
• EUR13,309 to EUR21,617 – 20% tax rate;
• EUR21,618 to EUR35,836 – 30% tax rate;
• EUR35,837 to EUR69,166 – 40% tax rate;
• EUR69,167 to EUR103,072 – 48% tax rate;
• EUR103,073 to EUR 1 million – 50% tax rate; and
• more than EUR1 million – 55% tax rate (until 2025).

However, special tax rates apply for income from capital investments and income from the alienation of private real estate, as follows.

• Income from capital investments (eg, dividends or capital gains from the sale of shares in a corporation) are taxed at 27.5%. The application of this special tax rate has the disadvantage that income-related expenses or operating expenses that are directly connected with the income from capital investments may not be deducted.
• Income from the alienation of private real estate is taxed at a 30% real estate sales tax rate (with certain tax exemptions and reductions available).

Corporations determine their income through the comparison of business assets and annual financial statements. Business profits and expenses are not calculated for the period in which they are actually received or paid but, rather, are attributed to the specific period in which goods are delivered or services rendered (“accrual method”).

Corporations are legally obliged to keep books according to the accounting standards set in in commercial law and these standards are generally also binding for tax purposes (Grundsatz der Maßgeblichkeit). However, there are some deviations between commercial law rules and tax law rules, especially in terms of the main principles of asset valuation and the depreciation of assets.

In Austria, an R&D tax credit (so-called Forschungsprämie) is available for companies that have project-related R&D expenses. The maximum tax credit is EUR1 million per year. Its evaluation is carried out by the Austrian Research Promotion Agency (Forschungsförderungsgesellschaft, or FFG), based on the project proposal.

This tax credit is acknowledged as a high incentive to undertake R&D activities by Austrian companies, given that this grant is treated as an immediate cash credit on a company’s tax account.

Austria allows an investment allowance (Investitionsfreibetrag) for depreciable fixed assets acquired after 31 December 2022. Pursuant to this rule, 10% of the acquisition or production costs of such assets can be deducted as a tax allowance. If the asset qualifies as being related to greening or environmental measures, the investment allowance is 15%. A maximum of EUR1 million in acquisition or production costs per year can be used as the basis for this allowance.

The utilisation of losses as special expenses is possible for corporations. First, the positive and negative income of one year is netted. Second, corporations may choose to carry forward the losses indefinitely. However, only 75% of the total amount of income of the taxable year is tax deductible and the remaining losses can be carried forward to the following years.

A special restriction for corporations using carried-forward losses exists in the event of buying unprofitable “shell companies”. The utilisation of losses will be denied where significant changes are made within a short period of time to:

• the shareholder structure of a corporation (eg, more than 75% of the shares in the corporation are sold);
• the organisational structure of a corporation (eg, new managing board); and
• the economic structure of a corporation (eg, new business model).

As a measure against the COVID-19 crisis, a temporary carry-back of losses was implemented. Operating losses for the year 2020 could be used for the tax assessment of the year 2019 and remaining losses for the year 2020 could be deducted from the income of the year 2019 (up to a maximum of EUR5 million) and 2018 (up to a maximum of EUR2 million). The 75%-limitation rule did not apply.

At arm’s length interest expenses are, in principle, deductible for Austrian corporate income tax purposes. A number of interest deduction limitation rules must be observed to determine if interest expenses are deductible in the case at hand. The following are the most important rules.

• Interest arising from the leveraged financing of acquisition of participations is tax deductible, as long as the participation is part of a corporation’s business assets. Interest is not deductible if the participation is acquired by a corporation in the same consolidated tax group.
• Interest deduction is not allowed where the corporation receiving the interest payment is a member of the same group of companies or significantly influenced by the same shareholder ‒ for example, where the corporation is paying the interest and at the level of the receiving corporation, the interest income is not subject to taxation at all or only subject to a tax rate of less than 10%.
• With effect from 1 January 2021, Austria implements the EU Anti-Tax Avoidance Directive and introduced a new interest limitation rule (so-called Zinsschranke). This new rule caps the deduction of borrowing costs (net interest expenses) at 30% of the taxable result (the tax-relevant EBITDA). The new interest limitation rule covers all borrowing costs, irrespective of whether these are incurred in relation to unrelated third parties or within a group.

Austrian tax law recognises consolidated tax grouping for corporate income tax purposes by enabling groups of corporations to offset the losses and profits within a group of subsidiaries at the parent company level.

Group taxation requires a group parent. Regarding group members, a share in the statutory capital and the voting rights of that group member of more than 50% is necessary. The participation may be either held directly or indirectly through another group member or a partnership. All Austrian corporations, as well as comparable foreign corporations that are resident in the EU or in a state that has concluded an agreement for exchange of information and mutual assistance in the collection of taxes with Austria, may qualify as a group member. An application for group taxation must be submitted to the group parent’s competent tax authority and the tax group needs to exist for a period of at least three full years.

As a consequence of group taxation, the total profits or losses of the group members are attributed to the group parent corporation. As regards local group members, the degree of participation of the latter is not relevant ‒ ie, the total profits or losses of a group subsidiary are subject to attribution even if the participation is less than 100%. However, profit attribution rules for foreign group members are different to those for Austrian group members. If a foreign subsidiary generates a loss, this loss has to be allocated to the group parent corporation on a pro rata basis, depending on the percentage of the participation in the foreign subsidiary.

Capital gains (and losses) realised on assets of an Austrian corporation are considered normal business income that is taxable at the statutory tax rate (23% corporate income tax), unless it concerns a capital gain on a shareholding that meets the requirements for the participation exemption to be applied.

Under the international participation exemption, capital gains and dividend income from qualified shareholdings are fully exempt from the Austrian corporate income tax base.

Under the domestic participation exemption, profit distributions of domestic corporations are exempt from taxation and this exemption applies without any minimum holding requirements and holding periods. However, capital gains realised on the alienation of shares in domestic corporations are subject to regular taxation.

Enterprises, whether transparent or opaque, may become subject to VAT when providing services or selling goods in Austria.

Real estate transfer tax (RETT) applies to an exhaustive list of domestic real estate transactions. The main rule covers purchase contracts or similar transfer agreements. RETT also applies where the right to dispose of 95% or more of the shares or the accumulation of 95% or more of the shares of a corporation or partnership holding immovable property in Austria is transferred to one shareholder or to a tax group.

Incorporated businesses are generally subject to VAT. However, they are usually able to claim input VAT as well. The general VAT rate is 20%, but a reduction to 10% is available for some products and services.

Closely held local businesses are mostly structured as limited liability companies in Austria.

The income from self-employment (ie, business profit) is subject to an overall progressive income tax rate of up to 55%.

The income (profit) of a corporation is subject to a 23% corporate income tax rate (first level) and profit distributions are subject to 27.5% capital gains tax rate at shareholder level (second level). If the shareholder also acts as a managing director of the corporation, the directors’ fees are subject to the progressive tax rate and only an at arm’s length remuneration is deductible at the level of the company. Excessive fees (eg, directors’ or management fees) or benefits to shareholders or affiliates are treated as non-deductible hidden profit distributions.

In Austria, there are currently no measures in place to prevent corporations from accumulating earnings for investment purposes.

There are no special taxation rules for closely held corporations in Austria. The general rules apply.

Where shares are part of the private assets of an individual, capital income from dividends and the alienation (eg, sale) of shares are taxed at a flat tax rate of 27.5%. Capital gains on the sale of shares are also taxed at this flat tax rate if the individual’s stake is below 1%.

These rules also apply for shareholdings in privately held corporations.

The withholding tax (WHT) is principally levied on dividends at the applicable tax rate for individuals (27.5%) or corporations (23%).

EU corporations that are subject to a limited tax liability benefit from the EU Parent-Subsidiary Directive ‒ under which, they may obtain a 100% tax exemption for dividends.

• There is no obligation to withhold and pay WHT in Austria (so-called relief at source) if:
1. a profit distribution is made by an Austrian corporation;
2. the EU recipient corporation holds at least one tenth of the share capital of the Austrian subsidiary; and
3. a minimum holding period of one year is observed.
• There is nevertheless an obligation to withhold and pay WHT in Austria if there are reasons to suspect abuse. Abuse is assumed, in particular, if the EU recipient corporation has no function and its sole purpose is to avoid Austrian WHT. In order to rule out such a suspicion of abuse, the EU recipient corporation must submit a written declaration to the Austrian corporation that it carries out an activity that goes beyond the scope of asset management, employs its own staff and has its own business premises (so-called proof of substance). These declarations can be submitted on a form provided by the Austrian Federal Ministry of Finance. On this form, a certificate of residence of the EU recipient corporation must also be obtained from the competent EU tax office promptly after the profit distribution.
• If proof of substance cannot be provided by the EU recipient corporation (which will often be the case with a holding company or an acquisition vehicle), relief at source is generally not possible and the Austrian corporation would have to withhold WHT on the distribution and pay it to the Austrian tax office. The EU recipient corporation would then still have the option to apply to the Austrian tax office for a refund of the WHT from the following year. In such a refund procedure, the Austrian tax office would check whether there actually is abuse or whether the conditions for an exemption from WHT are met and therefore the WHT should be refunded to the EU recipient corporation. As soon as a refund is granted, relief at source can subsequently be granted for three years under certain conditions.

The dividend WHT can also be reduced at source under the applicable DTTs in accordance with the formal requirements laid down in the DTT Relief Regulation (Doppelbesteuerungsabkommen-Entlastungsverordnung, or DBAEV). A recipient seeking to reduce the dividend WHT will have to provide a certificate of residence issued on Austrian forms “ZS-QU1” (for individuals) or “ZS-QU2” (for legal entities). Additionally, legal entities must also satisfy the relevant substance requirements as previously mentioned.

The DTT Relief Regulation limits the dividend WHT exemption at source in certain cases – for example, foreign foundations, trusts and investment funds do not qualify for dividend WHT exemption at source. Austrian corporate income tax law further includes a special provision that allows a foreign entity to apply for a refund of the total Austrian WHT – including the share of WHT that Austria is entitled to tax under the relevant DTTs – if the foreign entity is unable to credit the Austrian WHT in its country of residence (eg, because the dividend income is exempt).

At EU level, further provisions and limitations regarding WHT are expected under the new rules of the Unshell Directive and the Directive on Faster and Safer Relief of Excess Withholding Taxes (the “FASTER Directive”).

The most common tax treaty countries are Germany, Luxembourg, Switzerland and the UK.

Austrian tax law has several anti-treaty shopping clauses to prevent the abuse of DTTs. Austrian tax authorities check whether an entity claiming tax relief with reference to a tax treaty generates its income through its own activities and whether there are considerable reasons to act via the tax-privileged entity in question. Furthermore, several Austrian DTTs include subject-to-tax, switch-over and remittance clauses to prevent certain income from not being taxed in either of the two treaty countries.

The main issue in tax audits regarding transfer pricing is ensuring compliance with the arm’s length principle. Other issues are the examination of the transfer pricing methodologies chosen, the assessment of the attribution of beneficial ownership in the companies’ assets as declared, and ensuring the fulfilment of formal requirements when issuing the obligatory reports.

The Austrian tax authorities strictly apply the at arm’s length principle (as included in Austrian tax law) in most double taxation treaties and elaborated on in the OECD’s Transfer Pricing Guidelines, as amended under the OECD/G20 Base Erosion and Profit Shifting Project (BEPS). Therefore, transactions between affiliated companies should be at arm’s length, while proper documentation should be available to substantiate the at arm’s length nature of the transactions.

All transactions within a group of companies must meet the requirements of the arm’s length principle.

Austria makes explicit reference to the OECD standards in the guidelines issued by the Ministry of Finance.

Austria generally follows the OECD’s Transfer Pricing Guidelines.

Austria has concluded DTTs with more than 90 countries. Most of these DTTs follow the OECD Model Convention, which contains provisions on mutual agreement procedures (MAPs). International transfer pricing disputes are usually resolved through a MAP process.

In cases where a taxpayer exercises economic activities in a state with which Austria has not yet concluded a DTT, the Austrian Ministry of Finance may mandate that taxpayers subject to double taxation be partly or fully exempt certain items of taxation.

Generally, in cases where a transfer pricing claim is settled, the Austrian tax authorities act in accordance with the settlement. However, compensating adjustments must be based on a previously agreed pricing method that is applied in predefined scenarios of uncertainty and must lead to an arm’s length result.

Local branches (permanent establishments in fiscal terms) are generally taxed on the basis of the same rules and principles as subsidiaries of non-local corporations. In practice, there are usually problems ‒ or at least discussions ‒ regarding the allocation of income/expenses and assets.

Austrian income tax law differentiates between unlimited and limited tax liability. Non-residents are subject to limited tax liability, with the consequence that only that income that was generated in Austria (including domestic capital gains) is subject to Austrian income taxation. Generally, capital gains are subject to capital gains tax (27.5% for individuals and 23% for corporations).

However, where the shareholder is resident in a country with which Austria has concluded a DTT, Austria may ‒ depending on the specific treaty ‒ be prohibited from levying capital gains taxation.

In order to avoid the buying of shell companies to make use of the losses saved up in a corporation, the utilisation of such losses is denied in cases where the identity of the corporation changes owing to a change in the organisational, economical and shareholder structure. Thus, a change of control might result in the forfeiture of tax losses carried forward.

Furthermore, RETT applies where the right to dispose of 95% or more of the shares or the accumulation of 95% or more of the shares of a corporation or partnership holding immovable property in Austria is transferred to one shareholder or to a tax group.

No specific formulas are used to determine the income of foreign-owned local affiliates selling goods or providing services. However, it must be ensured that the determination follows the arm’s length principle.

There are no specific rules regarding deductions for payments by local affiliates for management and administrative expenses incurred by a non-local affiliate. However, in general, the arm’s length principle and the transfer pricing rules must be taken into consideration.

Any borrowing between related parties must comply with the arm’s length principle.

To distinguish between a shareholder loan recognisable for tax purposes (with interest deduction) and hidden equity, the Austrian Supreme Administrative Court states that agreements between related parties are only recognised if they fulfil the following three criteria (so-called relative case law). The agreement:

• must be sufficiently expressed externally (in writing);
• must have an unambiguous content; and
• must be concluded in accordance with the arm’s length principle, meaning on terms that unrelated parties would have agreed upon.

These three criteria must be cumulatively present at the time of the conclusion of the agreement. The lack of one of these three conditions results in the tax invalidity of the agreement (with the consequence that interest is not deductible).

A corporation with its registered seat or place of management in Austria is subject to unlimited tax liability. This means that the corporation’s worldwide income (all domestic and foreign profits) is subject to corporate income tax in Austria.

Foreign income (eg, profits of a permanent establishment) is part of the taxable income in Austria. Given that foreign income will generally also be taxed in the other state, double taxation is avoided through DTTs. If a DTT applies, the regulations laid down therein have priority.

Where foreign income is tax exempt in Austria, the corresponding expenses that are economically directly connected to such income are not deductible in Austria.

Under Austrian law, capital gains (eg, profit distributions in the form of dividends) are generally subject to corporate income tax. However, dividends from domestic subsidiaries are tax exempt because of the participation exemption. Foreign dividends ,as well as capital gains from foreign subsidiaries, are generally tax exempt under certain conditions.

Under the Austrian participation exemption, dividend income distributed to an Austrian corporation is tax exempt under the following conditions:

• a minimum participation in the foreign subsidiary (which needs to be comparable to an Austrian corporation) of at least 10%; and
• a holding period of one year without interruption.

The exemption is not limited to dividends from EU corporations, as profit distributions from subsidiaries in third states are also exempt if the requirements are met. Austria thereby exceeds the scope of the EU Parent-Subsidiary Directive.

Furthermore, in cases where an Austrian corporation holds less than 10% of a foreign subsidiary and the subsidiary (which needs to be comparable to an Austrian corporation) is resident in the EU or in a jurisdiction with which Austria has agreed on a comprehensive exchange of information, profit distributions (“portfolio dividends”) are also exempt from corporate income tax.

Intangibles may be transferred or leased (royalties) at arm’s length conditions, resulting in taxable income (transfer price or royalties) at standard rates.

As part of the implementation of the EU Anti-Tax Avoidance Directive, Austria introduced a controlled foreign companies (CFC) regime on 1 January 2019, which leads to the attribution (taxation in Austria) of low-taxed “passive income” from foreign subsidiaries under the following conditions.

The CFC rules apply if:

• an Austrian parent corporation (subject to unlimited tax liability) directly or indirectly holds more than 50% of the voting rights or capital of a controlled foreign subsidiary or is entitled to more than 50% of the controlled entity’s profit; 
• the controlled foreign subsidiary does not conduct “substantial economic activity” supported by staff, equipment, assets, and premises; and
• more than a third of the controlled entity’s profits stem from low-taxed passive income.

“Passive income” is defined as:

• interest or any other income generated by financial assets; 
• royalties or any other income generated from IP;
• dividends and income from the disposal of shares, insofar as they would be taxable;
• income from financial leasing;
• income from insurance, banking and other financial activities; or
• income from invoicing companies that earn sales and service income derived from goods and services purchased from ‒ and sold to ‒ associated enterprises and which add no or little economic value.

The income is considered low-taxed if it is taxed at an effective tax rate that does not exceed 12.5%.

In addition, Austria also has a so-called switch-over rule for dividends distributed from low-taxed subsidiaries to Austria. Pursuant to this rule, received dividends will not be subject to the participation exemption but ‒ under certain conditions ‒ will be subject to regular corporate income tax and the tax levied in the source state will be credited (ie, a switch from exemption method to credit method). The switch-over rule does not apply if the passive income has already been covered by the above-mentioned CFC rules.

The CFC rules described in 6.5 Taxation of Income of Non-Local Subsidiaries Under Controlled Foreign Corporation-Type Rules only apply where the controlled foreign subsidiary does not conduct “substantial economic activity” supported by staff, equipment, assets, and premises. Thus, it would be possible to avoid the attribution of such foreign passive income (and taxation in Austria) by providing evidence of such “substantial economic activity” supported by staff, equipment, assets, and premises (ie, the so-called substance test).

The gains made by local corporations on the sale of shares in non-local affiliates are tax exempt where the two conditions mentioned in 6.3 Taxation on Dividends From Foreign Subsidiaries are met ‒ namely, a minimum participation in the foreign subsidiary (which needs to be comparable to an Austrian corporation) of at least 10% and a holding period of one year without interruption.

Section 22 of the Austrian Federal Fiscal Code provides for a general anti-avoidance rule that applies in the case of abusive tax structures.

Tax planning may reach a point beyond which it cannot be tolerated ‒ ie, where transactions are entered into, or entities are established, solely for the purpose of obtaining special tax advantages. A legal structure is inappropriate or unusual and therefore an abusive tax structure if it only makes sense when taking into account the related tax-saving effect, given that the main purpose or one of the main purposes is to obtain a tax advantage that defeats the object or purpose of the applicable tax law.

Individuals are also covered by the general anti-avoidance rule (Section 22 of the Austrian Federal Fiscal Code). A new version of the provision was introduced in 2018 and clearly follows the EU Anti-Tax Avoidance Directive (ATAD) in the decisive passages. The legislative materials for Section 22 also reveal the implementation of the ATAD as the legislator’s clear main objective.

In addition, Section 21 of the Austrian Federal Fiscal Code can be considered as another general anti-avoidance rule that provides for the “substance over form” approach. Per this approach, the economic substance of facts and circumstances ‒ rather than their formal appearance ‒ is to be taken into consideration when assessing tax questions.

Austria has no periodic routine audit cycle. Tax audits are typically carried out at the discretion of the tax authorities.

The status of implementation in Austria regarding the BEPS recommended changes can be summarised as follows:

• Action 1 (address the challenges of the digital economy) – not yet implemented, although discussions are ongoing;
• Action 2 (neutralise the effect of hybrid mismatch arrangements) – implemented through the Multilateral Convention to Apply Measures Related to Tax Treaties to Prevent Base Erosion and Profit Shifting (MLI/BEPS/OECD/G20) (the “Multilateral Instrument”, or MLI);
• Action 3 (strengthen CFC rules) – implemented through the adoption of the ATAD;
• Action 4 (limit base erosion via interest deductions and other financial payments) ‒ implemented through the adoption of the ATAD;
• Action 5 (counter harmful tax practices more effectively and strengthen transparency) – implemented through Council Directive (EU) 2018/822 of 25 May 2018 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation and through the adoption of several provisions of the Austrian Federal Fiscal Code;
• Action 6 (prevent treaty abuse) – implemented through the MLI;
• Action 7 (prevent the artificial avoidance of permanent establishment status) – implemented through the MLI;
• Action 8 (assuring that transfer pricing outcomes are in line with value creation: intangibles) – new OECD standards implemented through the transfer pricing guidelines (Verrechnungspreisrichtlinien (VPR) 2021);
• Action 9 (ensure that transfer pricing outcomes are in line with value creation: risks and capital) – new OECD standards implemented through the VPR 2021;
• Action 10 (ensure that transfer pricing outcomes are in line with value creation: other high-risk transactions) – new OECD standards implemented through the VPR 2021;
• Action 11 (establish methodologies to collect and analyse data on BEPS and the actions to address it) – the data collected in compliance with the Austrian Transfer Pricing Documentation Act (Verrechnungspreisdokumentationsgesetz, or VPDG) could be used for corresponding analysis;
• Action 12 (require taxpayers to report aggressive tax planning arrangements) – implemented through the adoption of DAC6 via the Austrian EU Reporting Requirement Act (EU-Meldepflichtgesetz, or EU-MPfG);
• Action 13 (re-examine transfer pricing documentation) – new OECD standards implemented through the VPDG;
• Action 14 (make dispute resolution mechanisms more effective) – implemented through the MLI; and
• Action 15 (develop a multilateral instrument) – implemented through the MLI.

The Austrian government has fully supported the BEPS project at all times.

On 3 October 2023, the Austrian Ministry of Finance has published its draft for a Pillar Two implementation law, the Austrian Minimum Taxation Act (Mindestbesteuerungsgesetz, or MinBestG), which came into force at the end of December 2023. Austria implemented Pillar Two by means of a separate law rather than amending the Austrian Corporate Income Tax Act. It includes an Income Inclusion Rule (IIR, applicable for fiscal years starting on or after 31 December 2023) and an Undertaxed Profits Rule (UTPR, applicable for fiscal years staring on or after 31 December 2024), as well as a Qualified Domestic Minimum Top-Up Tax (QDMTT). Moreover, all safe harbours as suggested by the OECD in its various Pillar Two publications (eg, temporary safe harbours, a permanent safe habour for non-material constituent entities, a QDMTT safe harbour, and an temporary UTPR safe harbour) are implemented.

Austrian entities are, in general, required to file a GloBE Information Return (GIR) within 15 months after the end of the reporting fiscal year (18 months for the transitional year). However, the Austrian Minimum Taxation Act also provides the option to transfer the obligation to file the GIR to another Austrian entity.

Failures to comply with the administration of the new rules can be sanctioned with a fine of up to EUR100,000 (EUR50,000 in case of gross negligence).

Since the publication of LuxLeaks, the Panama Papers and similar reports, public interest in international taxation has grown substantially. As a result, the Austrian business and political press frequently reported on such developments and on scientific contributions concerning how to make taxation more efficient. However, neither the BEPS project nor the implementation of its recommendations receives significant media attention.

The Austrian economy relies to a large extenton foreign markets. Consequently, the Austrian government pursues a competitive tax policy objective. In recent years, the corporate income tax rates have been reduced from 25% to 24% (2023) and 23% (2024 and subsequent years). However, Austria has also introduced several anti-abuse and CFC rules to limit BEPS, as well as introducing statutory provisions to strengthen tax transparency. Austria seeks to achieve international standards for fair and realistic tax competition.

Austria does not have a competitive tax system, state aid, or other similar constraints that might be particularly affected by anti-BEPS measures.

The BEPS and ATAD proposals addressing hybrid instruments have been implemented in Austria and as such are included in Austrian tax law and/or Austrian DTTs.

Austria has no territorial tax regime. An Austrian resident corporation is liable to corporate income tax on its worldwide profits (unlimited tax liability), whereas a non-resident corporation is only taxed on its Austrian-source income (limited tax liability).

As part of the implementation of the ATAD, Austria introduced a CFC regime on 1 January 2019, which leads to the attribution (taxation in Austria) of low-taxed passive income from foreign subsidiaries under the conditions described in 6.5 Taxation of Income of Non-Local Subsidiaries Under Controlled Foreign Corporation-Type Rules.

Further to recently adopted anti-avoidance rules (eg, CFC rules and the switch-over rule) driven by BEPS and EU legislation, Section 22 of the Austrian Federal Fiscal Code further provides for a relatively new general anti-avoidance rule that applies in the case of abusive tax structures.

Thus, Austrian tax law already provides adequate regulations to address the abuse of benefits and tax avoidance in general.

As a result of new amended transfer pricing documentation rules with the implemented country-by-country reporting (CbCR), as well as the master file and the local file, IP must be documented more extensively.

Transfer pricing reporting standards (including CbCR) have been updated and amended recently by the Austrian Transfer Pricing Documentation Act and published guidelines from the Austrian tax administration.

As part of the implementation of EU Directive 2021/2101, there are also new reporting obligations for financial years beginning after 21 June 2024, for the purposes of “public CbCR” (CbCR-Veröffentlichungsgesetz).

No general national statutory changes have been made in Austria yet. However, the government supports the OECD’s initiatives in this regard.

The EU Directive on Administrative Cooperation (“DAC7”) has already been implemented into Austrian law. DAC7 contains rules on information exchange among digital platforms. The European Council further adopted a directive amending EU rules on administrative co-operation (“DAC8”) in 2023. DAC8 introduces rules on the information exchange of crypto-assets and advance tax rulings for the wealthiest individuals. The new rules should be implemented into Austrian law this year, as the deadline for implementation is 31 December 2025.

On a domestic level, Austria took already unilateral action on digital taxation in 2019 by introducing the Digital Tax Act (Digitalsteuergesetz, or DiStG). This legislation imposes a 5% tax on online advertising services provided for consideration within Austria, but only for corporations surpassing defined turnover thresholds from such services.

Austria has not yet introduced any provisions dealing with the taxation of offshore IP.