Obligations on Austrian traders regarding activities in Austria by foreign traders

In general, there are no tax-related obligations on Austrian traders when a foreign trader works for them.

Caution

The information itemised here relates only to income tax, not to VAT.

In certain cases, however, Austrian traders must deduct a special withholding tax under Section 99 of the EStG from monies paid to the foreign trader and pay this to the tax office (→ BMF). In turn, there are exceptions to this withholding tax obligation, e.g. due to provisions under DTA law (see below).

Special withholding tax under Section 99 of the EStG (Income Tax Act)

Basically, the withholding tax must be applied if the foreign trader is operating in Austria as a

  • Writer
  • Lecturer
  • Artist
  • Architect
  • Sportsperson
  • Performance artist or as a
  • Co-worker in entertainment performances

or if they are providing commercial or technical consultancy in Austria. Other cases include those of licensing fees and fees for the posting of employees to be paid abroad by the Austrian trader for work performed within Austria. This special withholding tax is a tax with a fixed tax rate.

All sums retained by the Austrian trader for the special withholding tax in a calendar month must be remitted in a single payment to the tax office no later than the 15th of the following month, and marked ‘Withholding Tax in accordance with Section 99 of the EStG (Income Tax Act). In addition, the trader must also inform the tax office (→ BMF) (on Form E 19) of the payments made that are subject to the withholding tax (the calculation base), not itemised by individual foreign trader but categorised according to the tax rate.

Gross taxation

The tax rate is 20 percent, or 27.5 percent for income defined in Section 99 paragraph 1 (6) and (7) of the EStG. If the foreign income recipient is a corporation that is subject to corporation tax, 24 percent withholding tax may be withheld on income pursuant to Section 99 paragraph 1 (6) and (7) EStG. The calculation base is the full amount of the relevant income of the foreign trader (‘gross withholding tax’). This includes not only direct remuneration, honoraria, fees and similar but also any costs (e.g. airline tickets, hotel bills) that are paid direct by the Austrian trader or reimbursed to the foreign trader. Only retained VAT reduces the calculation base for the special withholding tax.

The option is available to the foreign trader to apply to the Austrian tax office for an income tax assessment on the basis of restricted tax liability, so that their occupational expenses and business expenses (e.g. airline tickets, hotel bills) can be taken into account.

Net taxation

In the case of payments to traders from a Member State of the EU or EEA (Liechtenstein, Norway, Iceland), as long as certain conditions are met, the withholding tax can be calculated on the basis of income after deduction of directly related occupational expenses and business expenses (e.g. airline tickets, hotel bills) (‘net withholding tax’).

Such costs must have been communicated to the Austrian trader in writing before payment of the income. For this purpose, the foreign trader must provide to the Austrian trader appropriate supporting documents, which must be retained by the Austrian trader.

The Austrian trader is, however, not obliged to apply net taxation but can – even if the foreign trader provides it with the invoices – deduct gross withholding tax, since the Austrian trader is liable for the correctness of the withholding tax.

The option is available to the foreign trader to apply to the Austrian tax office for an income tax assessment on the basis of restricted tax liability, so that their occupational expenses and business expenses (e.g. airline tickets, hotel bills) can be taken into account.

If the foreign trader claims as business expenses or occupational expenses payments made to other foreign traders (subcontractors), then net taxation is subject to additional conditions.

In the case of net taxation, the tax rate for income up to 20,000 Euro per calendar year is 20 percent, and 25 percent for portions of amounts of 20,001 Euro or more.

Legal bases

Forms

Tax liability (restricted) – Information on the withholding tax – E19German text

Disregarding the withholding tax on the basis of a double taxation agreement

The Austrian trader must withhold and pay the special withholding tax in all cases in which either the foreign trader comes from a country with which Austria has not concluded a double taxation agreement (DTA), or Austria has the right of taxation under the current DTA with the country of residence. As far as the activities subject to the special withholding tax (see above) are concerned, usually under a DTA Austria will lose its right to taxation in the case of writers, lecturers and those undertaking commercial or technical consultancy. If in such cases the Austrian trader disregards the withholding tax through reference to a DTA, then the foreign trader must submit a certificate of residence issued by the foreign tax office (Form ZS-QU 1 for natural persons or Form ZS-QU 2 for legal persons).

In the case of payments not exceeding 10,000 Euro a year, the certification of residency by the foreign tax administration on form ZS-QU 1 or ZS-QU 2 may be disregarded, but the Austrian trader must nevertheless comply with certain due diligence and documentation obligations.

Legal bases

Forms

Employee postings (foreign personnel supplier, Austrian employer, activity in Austria)

In cases where staff are supplied (for the purposes of a passive service), the recent adjudication of the Austrian Supreme Administrative Court (VwGH) (the finding of 22 May 2013, 2009/13/0031) means that essentially, the person for whom the work is being performed should be regarded as the employer for purposes of DTA law. Hence the leased employees' wages and salaries should be taxed in the country where the activity takes place. The duration of stay in that country is irrelevant here. Where the DTA provides for exemption as the means of avoiding double taxation, the emoluments should (subject to the progression proviso [Progressionsvorbehalt]) be exempt from tax in the country of residence of the employee under certain conditions. It is recommended in all cases to seek expert clarification in advance, from the competent tax office.

Further links

Artists and sportspersons

In the case of artists and sportspersons appearing in Austria, most double taxation agreements (DTA) permit taxation in Austria (the ‘artist clause’) so that even where a DTA is in force, the special withholding tax usually has to be applied. ‘Artist’ here does not simply mean those classically considered artists; the term should be interpreted very broadly so that it also covers those offering entertainment. This applies regardless of whether the foreign artist or sportsperson is self-employed or not.

If a net payment has been agreed with the artist or sportsperson, the Austrian trader (generally the organiser) must assume she/he will have to bear the cost of the withholding tax itself.

Disregarding withholding tax as of negligible value

In the case of foreign artists or sportspersons whose ‘Austrian income’ amounts to no more than 2,331 Euro in total (in the year 2024), the Austrian organiser may under certain conditions disregard the special withholding tax but has to meet certain obligations to exercise diligence and retain documents.

The sums apply after deduction of documented reimbursement of costs (e.g. airline tickets, hotel bills).

Further links

Artist/Sportsperson abatement, no retention of withholding tax under Section 99 EStG in specially documented cases (→ BMF)German text

Legal bases

Threshold value for disregarding withholding tax: section 42 paragraph 2 of the Einkommensteuergesetz (EStG)

Lecturers

Under most double taxation agreements (DTA), for lecturers the country where they are appearing has no right of taxation, so that the withholding tax can usually be disregarded for remuneration to foreign lecturers under the terms of a DTA (see above). Likewise, in the case of lecturers from a non-DTA country, the withholding tax may also be disregarded where it is of negligible value (see above), in just the same way as for artists and sportspersons.

Licensing fees

Under most double taxation agreements (DTA), licensing fees paid by an Austrian trader to a foreign trader are not taxable in Austria. Under the terms of some DTA (in particular those with developing countries), Austria has a limited right to tax at source. As set out in the section entitled ‘Disregarding the withholding tax on the basis of a double taxation agreement’, an Austrian trader may in such cases disregard the special withholding tax or reduce it to the level provided for in the DTA (in general by providing form ZS-QU 1 or ZS-QU 2).

In the case of payments to foreign artists and sportspersons it can be difficult to distinguish correctly between active performance (remuneration for their appearance) and compensation for rights (passive service), or to define the boundaries between these two areas correctly. For the most part it may be assumed that rights are not specifically compensated in addition to the appearance fee.

Forms

Translated by the European Commission
Last update: 1 January 2024

Responsible for the content: Federal Ministry of Finance

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