The refunding of withholding tax, wage tax and capital gains tax on cross-border transactions is a perennial tax saga for private individuals and companies in many industries and across a range of business cases.
1. Who is affected by the restructuring of the refunding procedure?
The new rules applicable from 01/01/2019 essentially apply to foreign private individuals and foreign companies who/which are able to claim back withholding tax, wage tax or capital gains tax that has been withheld in Austria. The new procedure is to be applied irrespective of the legal basis (e.g. double taxation agreement or Austrian tax law) on which the refund is to be made.
The persons below are most notably affected with regard to the following common refunding scenarios:
- Foreign private individuals with regard to capital gains tax on income from Austrian capital assets (e.g. on dividends, capital gains from shares or funds, derivatives and interest)
- Funds with regard to dividends, interest or other income
- Foreign temporary employment agencies with regard to any withholding tax on the fee for assigning employees to Austria on a temporary basis
- Foreign employees, to the extent that wage tax has wrongly been withheld for work actually carried out in Austria
- Foreign Group companies, to the extent that capital gains tax or withholding tax has been withheld in Austria because, for example, not all the evidence for an exemption from capital gains tax on dividends or withholding tax on licences was available at the time of payment.
2. What does the change of procedure from 01/01/2019 involve?
From 01/01/2019, a two-stage procedure must be followed for the refunding of withholding tax or capital gains tax.
Advance electronic notification
Advance electronic notification is required. This advance notification must be provided no earlier than after the end of the year in which the tax was withheld. For this purpose, there are now separate forms for all relevant business transactions (e.g. sale of shares, dividends, temporary employment).
The form sent for the purpose of providing advance electronic notification must be printed out together with confirmation of transmission, furnished by the foreign tax administration with confirmation of residence, and sent by post to the responsible tax office.
TPA tip for using foreign forms
In principle, the residence certificate must be issued by the foreign tax authority on Austrian forms. However, the BMF issued a decree on the use of foreign forms on 29/01/2019, according to which the residence certificate for the USA, Mexico, Thailand and Turkey can, under certain conditions, be issued on the respective foreign form.
Do you still have questions about the refunding of withholding tax, wage tax and capital gains tax? Contact our tax experts!