Incoming Dividends
Incoming dividends remitted by the subsidiary to the holding company must either be exempted from or subject to low withholding tax rates in the subsidiary’s jurisdiction.
Dividend Income Received
Dividend income received by the holding company from the subsidiary must either be exempted from or subject to low corporate income tax rates in the holding company’s jurisdiction.
Capital Gains Tax on Sale of Shares
Profits realized by the holding company on the sale of shares in the subsidiary must either be exempt from or subject to a low rate of capital gains tax in the holding company’s jurisdiction.
Outgoing Dividends
Outgoing dividends paid by the holding company to the ultimate parent corporation must either be exempt from or subject to low withholding tax rates in the holding company’s jurisdiction.
By these criteria Austria, while not having the worst EU holding company regime, is by no means the most attractive country in which to set up a holding company.
Austrian Holding Companies
Overview
The Austrian Holding Company is an ordinary company which falls within the scope of general tax law and may benefit from the double taxation treaties concluded by Austria and the European tax directives.There are no limitations on the activities of the company.
Formation
The minimum share capital for incorporation of an Austrian company is €70,000 for an « AG » and €35,000 for a « GmbH ». While the share capital of an « AG » must be fully paid up, for a company incorporated as a « GmbH » a minimum of €17,500 or the equivalent of 25% of the share capital must be paid up on incorporation.
Income
The taxable income of an Austrian Company is based on the annual financial statements prepared in accordance with generally accepted accounting principles subject to adjustments and provisions.
Legal Form
An Austrian Holding Company can be constituted as an “Aktiengesellschaft” (joint stock company- AG) or a “Gesellschaft mit beschraenkter Haftung” (private limited company- GmbH).
Taxation
Resident and non-resident companies are taxed at a flat rate of 25%. The Minimum tax payable is €1,750 for a Gmbh and €3,500 for an AG.Capital duty of 1% is levied on the amount of capital contributed to a new corporation or when the capital of an existing corporation is increased.
Dividends Exemption
Dividends received by an Austrian Company from:
An Austrian subsidiary are exempt from tax, regardless of the amount of participation held.
A non-resident subsidiary will not be subject to tax if the parent company owns at least 10% of the share capital for a minimum period of 1 year.
In order to benefit from the participation exemption, the following rules must be met:
The subsidiary’s primary type of income must not derive from interest, leasing property other than land and buildings or capital gains.
The subsidiary must be subject to corporate income tax at a minimum rate of 15%.
The shareholders of the subsidiary are mainly individuals and Austria’s right to tax such income is limited.
Capital Gains Exemption
Gains derived from the disposal of shares of a non-resident company in which the parent holds at least 10% of the share capital for a period of at least 1 year are exempt from tax. The previous antiabuse rules applied to dividends must also be applied to capital gains.
Exemption from Withholding Tax on Payment of Dividends
Dividends paid are exempt from withholding tax if the following conditions are met:
- the recipient is an Austrian company that owns at least 25% of the distributing company;
- the recipient company is an EU resident (proved by a residence certificate) which owns at least 25% of the distributing company for a minimum period of 2 years and confirms by writing that its activities are not mere asset administration.
Interest and Royalties
As “income” above
Some advantages of the Austrian Holding Company
Besides the common advantages of a holding company, the Austrian Holding Company may also enjoy from the following:
Exemption from Withholding Tax on Payment of Interest and Royalties
Interest and royalties paid by an Austrian company subject to unlimited corporation tax to an EU resident are exempt from withholding tax. The same exemption is applied for interest and royalties paid to a parent company which owns at least 25% of the payer for a minimum period of 1 year.
Key Formation
Formation
| AG | GmbH | |
| Minimum Subscribed Capital | €70,000 (AG) | €35,000 (GmbH) |
| Minimum Paid-Up Capital | €70,000 (AG) | €17,500 (GmbH) |
| Number of Shareholders | 1 (Both AG and GmbH) | 1 (Both AG and GmbH) |
| Type of Shares | Registered (Both Ag and GmbH) | Registered (Both Ag and GmbH) |
| Substance | Nil | Nil |
Taxation
| AG | GmbH | |
| Capital Duty | 1% | 1% |
| Net Worth Tax | 0% | 0% |
| Corporate Income Tax | 25% | 25% |
| Double Tax Treaties | Over 70 | Over 70 |
| Dividends Exemption | 100% | 100% |
| Holding Requirements | 10% and 1 Year | 15% Corporate Tax |
| Capital Gains Exemption | Yes | Yes |
| Tax Credit | Yes | Yes |
| Relief of Losses | Carry Forward Indefinitely (*) | Carry Forward Indefinitely (*) |
| CFC Rules | No | No |
| Debt-to-Equity Ratio | Yes | Yes |
Withholding Taxes
| AG | GmbH | |
| Dividends | EU Parent Co 0% (**) | EU Parent Co 0% (**) |
| Treaty Countries | 0% | 2-10% |
| Others | 25% | 25% |
| Royalties | EU Parent Co 0%2 | EU Parent Co 0%2 |
| Treaty Countries | 0% | 2-15% |
| Others | 20% | 20% |
| Liquidation | Nil | Nil |
Austria Double Tax Treaties (DTT)
The Austrian Tax Treaty Network .Double Taxation Conventions regarding income and capital as of 4 February 2015. https://english.bmf.gv.at/taxation/Double-Taxation-Agreements.html A Holding solution can always be complex and requires careful planning and execution.We therefore encourage our clients to contact us directly, without obligation.We will gladly assist with advice on how to approach your particular case.
Contact Us
Should you require additional information, request a quotation or clarify any related matter, please contact one of our Consultants who will be happy to assist with your enquiries.
Disclaimer
COI ´s services are subject to its Terms and Conditions.The information provided by COI is intended as informative material and should not be relied solely upon in decision-making, especially if it concerns international tax planning and financial structuring as these areas are subject to frequent changes, although its efforts to keep all information on its website regularly updated.
COI strongly recommends that each potential user of its services seek tax and legal advice before deciding on implementing a solution employing international financial structures. COI will not be liable for any damages, costs and expenses resulting from or incurred as a result of any action taken or omitted based upon any such information provided by COI.