The Austrian tax reform 2022 (Abgabenänderungsgesetz 2022 –AbgÄG 2022) brings various changes to the taxation of investment income.
WHT deduction by foreign paying offices for certain derivatives
In Austria, income from non-securitised derivatives is generally subject to the progressive income tax rate of up to 55%. Austrian paying offices (especially credit institutions), however, can voluntarily deduct withholding tax (WHT) at the special rate of 27.5%, which then serves as a final tax for the taxpayer. This opt-in has not been possible for foreign paying offices so far. Based on a recent court decision, the AbgÄG 2022 will change this from 1 January 2023 onwards.
Foreign paying offices shall be allowed to deduct a tax comparable to the Austrian WHT on the income of non-securitised derivatives. The paying office must, however, be resident in a country where extensive administrative assistance in tax matters with Austria applies, and the correct withholding and remittance of the WHT must be ensured by an Austrian tax representative.
Tax loss reporting upon request
Before the AbgÄG 2022, depositories were required to automatically provide the deposit holder with a tax report regarding the loss compensation. From 1 January 2024 onwards, the requirement for the automatic report will be abolished and the deposit holder will have to request a tax report from the depositary, which will be more extensive than the current report. The minimum requirement of the report is detailed in the income tax law, which will be accompanied by further clarification through the Federal Ministry.
WHT refund for non-EU and non-EEA portfolio investors subject to corporate tax
At present, corporate taxpayers resident in the EU or EEA can apply for a total refund of Austrian WHT on dividends –including the share of WHT that Austria is entitled to under the relevant DTA –if the foreign entity is unable to credit the Austrian WHT in its country of residence. Considering recent jurisprudence, the AbgÄG 2022 extends this possibility to non-EU and non-EEA portfolio investors (shareholding of less than 10%), where extensive administrative assistance in tax matters applies between Austria and the investor’s country of residence.
Withdrawal of assets from a deposit during a company reorganisation
The withdrawal of capital assets from a deposit or transfer to another deposit during a company reorganisation is currently subject to tax and brings with it WHT deduction. As far as the rules of the Austrian Reorganisation Tax Law (UmgrStG) apply to a restructuring, such deposit withdrawals shall no longer bring tax consequences with them. Therefore, the taxpayer must instruct the transferring depository to provide certain information to the tax office, such as their name and tax identification number, the transferred assets, the acquisition cost of the assets of the deposit holder and the recipient of the assets. Furthermore, the depository must be provided with information about the reorganisation. It shall be possible for the taxpayer to provide their own report for cases concerning non-Austrian depositories. This will apply from 1 January 2023 onwards.
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