Foreign income and companies
Once you are Austrian tax resident, your worldwide income is on the table — and a company you run from Austria may come with you.
In short
- Austrian tax residents pay Austrian income tax on their worldwide income — foreign dividends, interest, gains, rent and business profits included.
- A foreign company managed from Austria can itself become Austrian tax resident, with worldwide profits subject to 23% corporate income tax.
- CFC rules attribute the passive income of low-taxed controlled foreign companies (effective rate below 15%) to an Austrian controlling corporation.
- Dividends you receive from a foreign company are taxed at a flat 27.5%; treaties typically cap the foreign withholding at 15%, which Austria credits.
- Whether a foreign entity is taxed as a company or looked through follows a comparability test against Austrian company types — not the entity's label.
- Every foreign structure deserves a review before the move, while the full range of options is still open.
Worldwide income after the move
Austria draws one clean line. Residents — anyone with a domicile or habitual abode in the country, as explained on the tax-residence page — are subject to unlimited income tax liability on income from anywhere in the world. Non-residents pay Austrian tax only on defined Austrian-source income. Citizenship plays no role.
For an internationally invested family this means that, from the day residence begins, foreign portfolios, foreign rental properties and foreign business interests all fall within the Austrian net. Investment income is generally taxed at the flat rates described on the investment income and capital gains page — 27.5% on most dividends, bond interest and gains — while rent and active business income join the progressive scale set out in the income tax rates. Where an Austrian bank holds the assets, it withholds the tax at source; foreign custody accounts must be self-assessed in the annual return.
Double taxation is dealt with through Austria's network of roughly 90 treaties, which allocate taxing rights and require Austria either to exempt foreign income or to credit the foreign tax. The double taxation treaties page explains the mechanics; where no treaty exists, a unilateral relief ordinance usually fills the gap.
The place-of-management risk
A foreign company run day to day from a desk in Vienna can become an Austrian tax resident company — with its worldwide profits taxed at 23%.
Under Austrian law a corporation is tax resident if its legal seat or its place of management is in Austria. The place of management is where the key commercial and strategic decisions are in fact taken — not where the registered office sits, and not what the letterhead says. An owner-manager who relocates to Vienna and continues to direct a foreign company from there brings the company's management with them, whatever the corporate documents provide.
The consequences are substantial: Austrian corporate income tax at 23% on worldwide profits, Austrian filing and accounting obligations, and a potential residence conflict with the company's home jurisdiction that has to be resolved under the applicable treaty. Even where full residence is avoided, sustained management activity from Austria — a home office, habitual contract negotiation, a dependent agent — can create an Austrian permanent establishment, pulling part of the company's profit into Austria and often triggering payroll obligations.
The risk is manageable, but only by design: genuinely empowered local directors abroad, board meetings held and minuted outside Austria, and a disciplined split between ownership and management. Where that discipline is unrealistic, it is often cleaner to relocate or reorganise the company deliberately — the options are compared on the relocating your company page.
Company or partnership? The comparability test
Austrian tax law does not take a foreign entity at face value. Whether it is treated as opaque (a separately taxable corporation) or transparent (a partnership whose income is attributed to its owners) depends on a case-by-case comparison of its legal features with Austrian company types: limited liability, transferability of interests, centralised management, capital structure and similar criteria.
The distinction matters greatly. An opaque entity shields its profits from Austrian tax until it distributes them or becomes Austrian resident itself; a transparent entity's income lands on your Austrian return as it arises, whether or not you receive a cent. Hybrid forms — a US LLC is the classic example — sit near the borderline, and their Austrian classification can differ from their treatment at home, producing mismatches that only a case-by-case review resolves.
CFC rules: when foreign profits are taxed anyway
Even a genuinely foreign-managed, opaque company can see its profits taxed in Austria under the controlled-foreign-company rules. These attribute the undistributed passive income of a low-taxed foreign company to an Austrian controlling corporation. Four conditions must all be met:
| Condition | Threshold |
|---|---|
| Low taxation | Effective foreign tax rate below 15%, measured against income recomputed under Austrian rules |
| Passive income | More than one third of total income is passive (interest, royalties, dividends, financial leasing and similar) |
| Control | More than 50% of voting rights, capital or profit entitlement, held alone or with associated enterprises |
| No substance | No substantive economic activity supported by staff, equipment, assets and premises (proof of substance defeats the rule) |
The rules operate at the level of a controlling Austrian corporate body — an Austrian holding company, but an Austrian private foundation just as much — so they become relevant the moment a relocating family puts any such vehicle above a low-taxed foreign company. Companies you hold directly as an individual are outside the CFC regime, but they face the place-of-management and attribution questions above instead. Either way, a low-taxed offshore structure rarely survives an Austrian move unexamined.
Dividends, participation exemptions and withholding
How profits travel from a company to you — and between companies — is taxed in layers. For you personally, dividends from a foreign company are taxed at the flat 27.5% rate; foreign withholding tax, typically capped at 15% under the relevant treaty, is credited against it. Within corporate structures, Austria's participation exemptions can eliminate tax on inter-company dividends entirely, which is why an Austrian holding company is often part of a post-move architecture. Two further features of the corporate regime shape such structures: tax losses carry forward without time limit but can offset at most 75% of a year's income, and affiliated Austrian companies may pool their results in a tax group, with the losses of foreign subsidiaries in the EU or in states that give Austria comprehensive administrative assistance usable pro rata, only temporarily, and only up to 75% of the domestic group's income.
| Dividend flow | Austrian treatment | Typical relief |
|---|---|---|
| Foreign company → you (Austrian resident) | Flat 27.5% income tax | Foreign withholding credited, treaties usually cap it at 15% |
| Austrian subsidiary → Austrian company | Exempt (national participation exemption) | No minimum holding or period |
| Foreign subsidiary → Austrian company, ≥10% held ≥1 year | Dividends and capital gains exempt (international qualified participation) | Subject to anti-abuse provisions |
| Foreign subsidiary → Austrian company, smaller stake | Dividends exempt (portfolio exemption) if the subsidiary is comparable and information exchange applies | Capital gains not covered; from a 5% stake the exemption switches to a credit if the subsidiary is low-taxed and mainly passive |
| Austrian company → foreign shareholder | 27.5% withholding (23% for corporate shareholders) | Treaties typically reduce to 15%; EU parent companies ≥10% for 1 year can be exempt with substance |
What to review before the move
Almost every question on this page has a better answer before residence begins than after. Before the move, list every company, partnership and holding vehicle in the family's orbit and ask: where will its management actually sit once we live in Vienna? Would it be classified as opaque or transparent by Austria? Is its effective tax rate below 15%, with more than a third of its income passive? Should retained profits be distributed now, while Austria has no claim on them, rather than later at 27.5%?
The entry step-up — Austria revalues financial instruments, including company shares, to fair market value on arrival — solves the historical-gains problem for shareholdings, but it does nothing about future dividends, management location or CFC exposure. Those are questions of structure and behaviour, and they are far easier to fix from abroad. The pre-immigration planning page walks through the full sequence, the setting up a company page covers the Austrian GmbH as a building block, and the tax hub maps the wider system.
Questions on this page
Does Austria automatically tax the profits of my foreign company once I move?
Not automatically. A foreign company is normally taxed in Austria only on distributions to you — unless it becomes Austrian tax resident through its place of management, maintains an Austrian permanent establishment, or falls under the CFC rules within a corporate structure.
What makes a foreign company tax resident in Austria?
A corporation is Austrian tax resident if its legal seat or its place of management is in Austria. If the key management decisions are in fact taken from Austria after your move, the company can become subject to Austrian corporate income tax at 23% on its worldwide profits.
When do Austria's CFC rules apply?
Four conditions must all be met: the foreign company is effectively taxed below 15%, more than one third of its income is passive, the Austrian controlling corporation holds more than 50%, and the foreign company lacks a substantive economic activity with staff, equipment, assets and premises.
How are dividends from my foreign company taxed after I become Austrian resident?
At a flat 27.5%. Foreign withholding tax is usually capped at around 15% under the applicable double taxation treaty and credited against the Austrian tax.
Is a foreign partnership taxed like a company in Austria?
No. Entities comparable to an Austrian partnership are transparent: their income is attributed to the partners as it arises and taxed at the partners' level, whether or not anything is distributed.
Considering a move to Austria?
Tell us where you stand — the country you are leaving, the shape of your family and your assets, and when you plan to move. We advise on the legal and tax consequences of relocating to Austria and coordinate with advisers in the country of departure.
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