In November 2016, a new double tax treaty (DBA) was negotiated between Austria and Israel. This DBA relates to taxes on income and property tax and will replace the old agreement dating back to 1970. The old DBA of 1970 has made cross-border investments difficult, dividends and interest rates were disproportionately taxed in the country of origin. The new DBA will comply with OECD standards.
The new double tax treaty has already been passed by the National Council and the Federal Council, the publication in the Federal Law is still pending.
Significant changes or improvements
If dividends are paid: The withholding tax is 0 % if the mother company holds more than 10% of the shares of the subsidiary.
Example: An Israeli parent company holds more than 10% in an Austrian subsidiary. The profit distribution of the Austrian subsidiary to the Israeli parent company will not be levied with an Austrian withholding tax according to the new DBA (old DBA: 25%).
If the Israeli parent company holds less than 10% in the Austrian subsidiary, the withholding tax is 10%.
Taxation of interest
The withholding tax of 15% (in the old DBA) is reduced to 5%.
Taxation of employees
In the case of the taxation of employees, the application of the 183-day has lapsed to an observation period of twelve months instead of the calendar year in the old DBA.
Commencement of the new DBA
The publication in the Federal Law in Austria is still pending.
Please contact us if you have any more questions.
Vienna, September 2017
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