Avoidance of double taxation by countries without a DTA

If a trader undertakes activities in a country with which Austria has no double taxation agreement (DTA), this can lead to genuine double taxation, since each of the two countries has the right to taxation (Austria as country of residence of the trader, the foreign country as a result of the activities undertaken there).

To relieve the trader of the burden of such double taxation, Austrian tax law provides for the possibility of unilateral relief from Austrian taxation. From the point of view of the Austrian state, this means unilaterally waiving the right to taxation, whereas with a DTA, the other country would be obliged to forgo taxation if the situation were precisely reversed.

Order on Avoidance of Double Taxation

The Order of the Federal Minister of Finance on the Avoidance of Double Taxation provides that in the case of a permanent establishment in a non-DTA country, where income has actually been taxed then tax relief will be given when the tax assessment in Austria is made.

If the mean tax load in the foreign country is more than 15 percent, such income will be exempt from tax in Austria, although subject to the progression proviso. If the mean tax load in the foreign country is lower, then the foreign tax actually paid will be offset against Austrian income tax. Both are claimed directly in the tax return and taken into account in the income tax assessment.

The same applies to foreign income from self-employed work through a permanent establishment, from construction or installation work for contractual or training purposes, and from an entertainment performance.

Decision to remedy double taxation

If neither a double taxation agreement (DTA) nor the above Order can prevent double taxation, then it is possible to submit to the Federal Minister of Finance an application for the double taxation to be remedied by means of a decision.

The application pursuant to section 48 paragraph 5 BAO must be sent by post to the Federal Ministry of Finance, attn. department IV/8:

Bundesministerium für Finanzen
z.H. Abteilung IV/8
Johannesgasse 5
1010 Wien

Special case of Russia and Belarus

By note verbale dated 8 August 2023, Russia declared the partial suspension of the DTA Russia (BGBl III No. 10/2003 as amended by BGBl III No. 89/2019). With effect from 7 December 2023, article 5 up to and including article 22, article 24, article 26.1 and article 26.2 of this DTA and the associated protocol provisions are to be regarded as suspended until further notice (BGBl III No. 200/2023). By note verbale dated 27 March 2024, Belarus declared the partial suspension of the DTA Belarus (BGBl III No. 69/2002 as amended by BGBl III No. 129/2015). With effect from 28 June 2024 to 31 December 2026, articles 10, 11 and 13 of this DTA are therefore to be regarded as suspended (BGBl III No. 100/2024).

The regulation BGBl II No. 474/2002, which enables the unilateral elimination of double taxation for persons with unlimited tax liability in Austria if a DTA is not applicable, is not applicable in relation to Russia and Belarus because this presupposes that no DTA exists. As both DTAs are still applicable on the merits, this condition is not met.

In the case of taxpayers who are subject to the tax jurisdiction of Austria and Russia or Belarus, a unilateral relief measure may be granted upon application by way of offsetting the taxes levied in Russia or Belarus, taking into account the maximum amount to be offset, if the requirements of section 48 paragraph 5 BAO are met. The ordering of such a relief measure requires the necessity of offsetting domestic and foreign taxation in the sense of genuine international double taxation that has already occurred and is at the discretion of the competent authority.

Legal bases

Translated by the European Commission, altered by the Federal Ministry of Finance

Last update: 1 January 2025

Responsible for the content: Federal Ministry of Finance