Dividend Withholding Tax in Austria

JANUARY 2024 | KNOWLEDGE HUB

Withholding Tax Rates in Austria

Domestically, Austrian law stipulates a 24% WHT for corporations (23% from 2024, previously 25% until 2022) and 27.5% for other recipients. This baseline, though, can be significantly reduced through the extensive network of over 80 double tax treaties signed by Austria.

Double tax treaties, exemptions, and possible relief methods 

These treaties become crucial avenues for avoiding double taxation on income derived from states with which Austria has a DTT. They pave the way for a reduced WHT on dividends, offering taxpayers a more favorable withholding rate.

To achieve the reduced WHT rate outlined in the applicable DTT, Austrian tax law provides two alternative methods: the refund method and the exemption at source method.

Refund

Austrian subsidiaries typically withhold the standard WHT rate on profit distributions to foreign parent companies. The parent company then applies for a refund, seeking the difference between the standard WHT rate and the lower DTT rate. Approval leads to subsequent dividend distributions within three years without WHT deduction, given certain conditions.

Exemption at Source Method

Relief at source is contingent on a written declaration by the direct parent company, confirming active engagement beyond asset management. Active business indicators include having employees, office space, and involvement in substantive activities like holding or group financing.

Statute of limitations

In Austria, the statute of limitations extends over 5 years from the end of the year in which the tax was withheld.

 

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