International Tax
The operational functions of multinational companies (R&D, production, sales, services, etc.) are usually spread across multiple locations around the world. This presents considerable challenges for tax departments. This is because the tax regulations abroad often differ significantly from local tax legislation. Cross-border considerations must therefore go beyond the solutions that apply to individual sites.
Our WTS international tax law experts specialise in the management of cross-border projects. This is often required for mechanical and systems engineering, the IT industry, the service sector, as well as many other industries. All the while, the fiscal framework conditions in the project country and the ever-evolving international environment are key complexity drivers.
Our tax experts advise on the selection of organisational structures in the conflicting area between foreign subsidiaries and permanent establishments (PEs). In doing so, the recognition, registration and processing involved with PEs - also representative establishments under BEPS - is a frequent focus of our work.
WTS Austria also helps companies to fiscally optimise their foreign distribution models (authorised dealer, commission agent, representative, agent). Our range of services includes tax planning when structuring cross-border supply and service relationships within the group and selecting suitable foreign investment locations. We review existing corporate and investment structures (with respect to an exemption of dividend income and capital gains, loss utilisation in the group, avoidance of controlled foreign corporations tax, a reduction of withholding taxes, etc.) and identify alternatives for the group structure through the use of holding, license and financing companies.
In light of increasing digitisation, we are keeping an eye on current legal developments at OECD and EU level for the justification and taxation of so-called "virtual" or "digital premises". In addition, our international tax law team looks after inbound establishments of foreign companies in Austria and handles all compliance issues (including bookkeeping and payroll accounting).
At WTS Austria we provide companies with customised, practical and pragmatic solutions across all key legal areas during their projects and when founding a business establishment or subsidiary company. We provide support during audits, mutual agreement/arbitration proceedings, EAS inquiries and advance ruling queries (information notice as defined in Sec. 118 of the Austrian Fiscal Code (BAO)).
WTS Austria is also the ideal contact for tax interface advice in the fields of transfer pricing, VAT, customs, cross-border reorganisations and global expatriate services, for which we work closely together in integrated project teams. Through our integration in the WTS Global tax advisor network, which is represented in over 100 countries, we can implement projects quickly and efficiently and develop customised solutions.
We also represent international natural persons (from internationally active directors or board members to artists and athletes).
Double taxation treaties and MLI
Austria has signed almost 100 double taxation treaties (DTTs). Although Austria endeavours to follow the OECD model convention in the DTTs, each DTT has its own special features, regulations and deviations. Accordingly, we keep an eye on the DTTs that are concluded worldwide, the OECD recommendations, any changes to the DTT by the MLI (Multilateral Instrument) as well as the requirements of European law.
Permanent establishments
Anyone who works abroad can found a permanent establishment without being aware of it. With the worldwide BEPS initiatives, the taxation rules for cross-border companies are changing significantly. Similarly, the definition and subsumption of a permanent establishment is subject to ongoing change or is becoming ever more detailed. These days, a home office set-up or the employee's home can already constitute a permanent establishment. Constant issues include construction and assembly establishments, representative establishments and the assessment of commission agent structures.
WTS Austria shows the legal framework, assesses the danger of a permanent establishment risk and assists with the ongoing taxation of permanent establishments.
Withholding tax
Under the provisions of Sec. 99 of the Income Tax Act (EStG), with certain taxable enumerated income a withholding tax of 20% must be retained for payments to foreign recipients. A withholding obligation applies, amongst other things, with payments to foreign contractual partners such as writers, lecturers, artists, architects and athletes as well as with payments to supervisory boards and domestic technical and commercial advisory services. A withholding obligation also applies when assigning rights and employees.
Our WTS tax experts ensure fulfilment of withholding and documentation obligations when it comes to payments to foreign contractual partners (inbound). We also take care of a tax-optimised utilisation of foreign withholding taxes (outbound) in Austria. We also show how you can directly avoid withholding taxes or optimise your inbound and outbound activities.
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