The Austrian Annual Tax Act 2018 brought a major change to the application for refund of Austrian withholding taxes (WHT). Since 1.1.2019 applicants have been obliged to use an electronic pre-application, which is then followed by the actual application for refund. The Austrian Ministry of Finance (MoF) recently issued a decree which details the changes for foreign applicants. The changes are also relevant for foreign companies leasing personnel to Austria when applying for a relief of Austrian WHT.
Austria levies WHT on certain capital income (eg dividends), income of artists, sportsmen, lecturers, architects, technical and commercial consultants, leasing of personnel and certain other items. Also the refund of Austrian payroll taxes by foreign tax residents is subject to the methodology described in the following.
Introduction of an electronical pre-application for refund of Austrian WHT
According to the new regulation in sec 240a General Fiscal Law (BAO) foreign applicants have to file a pre-application using the provided online forms when applying for a refund of Austrian WHT. After this pre-application the actual application can be filed. The following steps have to be taken in order to obtain a WHT-refund in Austria:
- Use the respective online form and file it electronically (pre-application). For the form go to the website of the Austrian MoF and search for “ZS-RD” and you will receive a list of all available forms – all of them are available in English. In case different items of income have been obtained by the applicant, different applications and forms might have to be used.
- The pre-application and the respective delivery confirmation have to be printed out and signed by the applicant. Then the certificate/confirmation of residence has to be obtained from the foreign tax authorities on the printed and signed form.
- The signed and confirmed documents including any supporting documents have to be sent via post to the Austrian tax office Bruck, Eisenstadt, Oberwart.
Only WHT-refund requests filed this way will be accepted from 1.1.2019 onwards.
Until 31.12.2018 foreign applicants were able to file their application during the same year, the WHT was deducted. This was changed by the new legislation. Now the pre-application and consequently also the actual application can only be filed after the end of the year the WHT has been deducted, leading to respective liquidity costs for the foreign receiver of the income.
According to Austrian law, the application can be filed until the end of the fifth year following the deduction of WHT. However, a shorter term in a treaty might be relevant. This depends on whether the respective treaty was signed before the five-year term entered into force for the first time. With Federal Law Gazette of 1980 the former three-year term was extended to five years. This five-year term was firstly applicable to applications concerning the year 1975. For treaties signed before that date, the five-year term will be relevant, even if the treaty provides for a shorter term. Nevertheless, where a treaty was signed after that date and provides for a shorter statute of limitation, - eg 4 years in article 27 (2) of the Austrian-German treaty – the shorter term of the treaty will be relevant.
In case the applicant files his first refund request, he will receive an identification number (ABZ-number). This identification number has to be used on all future refund requests.
Leasing of personnel to Austria
Remunerations for leasing of personnel to Austria is subject to a 20% WHT if paid to foreigners. In order to obtain a WHT relief in such cases, special requirements have to be fulfilled. Among others there has to be an Austrian payroll for the leasing personnel. The payments can only be exempt from Austrian WHT, if the foreign receiver of the income has obtained and provided a notification of relief (Befreiungsbescheid) from the Austrian tax office Bruck, Eisenstadt, Oberwart. In the past it was possible to obtain this Befreiungsbescheid formless. Since 1.1.2019 the electronic forms provided by the Austrian MoF have to be used for this application. Furthermore, the foreign applicant now also has to file a pre-application for the application of the Befreiungsbescheid.
In case a WHT-relief at source was not possible – as no Befreiungsbescheid was provided –, the foreign receiver of income can apply for a refund. This application follows the same procedure as mentioned above for WHT in general.
In case you have any questions or need assistance with Austrian WHT or a WHT-refund do not hesitate to contact us.