Foreign trusts and foundations
Austria has no domestic trust law. It taxes foreign trusts and foundations by asking one question: who really controls the assets.
In short
- Austria is a civil-law country and has not signed the Hague Trust Convention — the trust is a foreign concept with no domestic legal home.
- For tax, a trust is either non-transparent (opaque) or transparent, decided by who controls the management of its assets.
- Endowing assets to a non-transparent trust triggers a foundation transfer tax of generally 25% of their fair market value — but only where the person endowing them, or the trust itself, is connected to Austria at that moment, so an endowment completed before the move falls outside it.
- Distributions from an opaque trust to an Austrian-resident beneficiary are investment income taxed at 27.5% — since 1 January 2026 whether they are one-off or recurring.
- A transparent trust is disregarded — its income is taxed as the beneficiary's own as it arises, distributed or not.
- Foreign foundations comparable to the Austrian Privatstiftung are generally taxed under the foundation regime; every structure should be reviewed before the move.
A trust in a civil-law country
Families arriving from common-law jurisdictions often bring a trust with them — a revocable living trust from the United States, an English family settlement, a Channel Islands discretionary trust. Austrian law has no native category for any of them. Austria is a civil-law jurisdiction, it has not signed the Hague Trust Convention, and its courts have seen only a handful of trust cases. The trust does not dissolve on arrival, but it stops being the familiar, well-lit institution it was at home and becomes something Austrian law must classify from the outside.
The friction is practical as well as conceptual. Austrian registers record legal owners: entering Austrian real estate in the land register, or shares in an Austrian company in the commercial register, on behalf of a trust is problematic. In practice trustees hold through underlying companies, or the family keeps Austrian-situs assets out of the trust altogether. None of this makes trusts unusable for people connected to Austria — but it means the structure deserves deliberate analysis rather than the assumption that it will simply carry on working. The same is true, for the same reasons, of foreign foundations, dealt with below, and of the domestic alternative, the Austrian private foundation, which was designed precisely to give civil-law Austria what the trust gives the common law.
Transparent or opaque: the control test
Austrian income tax draws one big line through the trust world. A trust is treated as non-transparent — a separate taxable thing — where neither the settlor nor the beneficiaries hold comprehensive instruction and supervision rights over the management of the trust assets. It is treated as transparent — disregarded entirely — where they do. The label on the deed matters less than the reality of control.
In practice the classification falls out quickly at the two ends of the spectrum. A genuinely discretionary trust, where the settlor has handed management to the trustees and the trustees decide both investments and distributions at their own discretion, is typically non-transparent. A bare trust, where the trustee acts on the beneficiary's instructions and must hand over the assets on request, is transparent — and so, in substance, are many revocable grantor-style arrangements in which the settlor has kept the keys. Between the poles sit the difficult cases: letters of wishes that are always followed, protectors with wide veto rights, reserved investment powers. Those need individual analysis, because everything that follows — entry tax, the taxation of distributions, who declares the income — turns on which side of the line the trust falls.
What each classification costs
Three moments matter: assets going in, income arising, and distributions coming out. The table compares the two trust classifications with the Austrian private foundation, which is the benchmark any family weighing structures will be measured against.
| Tax event | Non-transparent (opaque) trust | Transparent trust | Austrian private foundation |
|---|---|---|---|
| Endowment of assets | Foundation transfer tax, generally 25% of fair market value. | No entry tax — the beneficiary is treated as still owning the assets. | Foundation entry tax 3.5% (as of 2026); real estate instead bears real estate transfer tax at 0.5–3.5% plus a 3.5% entry-tax equivalent. |
| Ongoing income | The trust is a separate person; a foreign trust's foreign income is generally outside Austrian tax — unless management from Austria pulls it in. | Attributed to the Austrian-resident beneficiary as it arises and taxed as their own, whether or not anything is paid out. | Corporate income tax 23%, dividends generally exempt; 27.5% interim tax on interest, realised capital gains, crypto and private property gains, creditable on distribution. |
| Distributions to an Austrian-resident beneficiary | Investment income taxed at 27.5%, one-off or recurring; no Austrian withholding, so the beneficiary declares it. | Not taxed separately — the income was already the beneficiary's. | Flat 27.5% withholding; distributions of substance can be tax-neutral. |
| Treaty position | Precarious — a trust is rarely a treaty-resident person in its own right. | The beneficiary's own treaty position applies. | Treaty-resident; can claim reduced withholding rates itself. |
Two points in that table deserve emphasis. First, the old cliff between a single payment and a pattern of payments is gone: until the end of 2025 a one-off distribution from a trust that was not comparable to an Austrian private foundation fell outside the income tax altogether, and only recurring payments were caught. Since 1 January 2026 every distribution from a foundation-like foreign structure is taxed however it is timed, at the same flat 27.5% that applies to directly held investment income. Second, the opaque trust's Austrian-tax shelter for foreign income depends on the trust staying genuinely foreign: if its effective management moves to Austria — a trustee or controlling settlor running things from Vienna — the structure can be pulled into Austrian taxation under the rules described in foreign income and companies.
Liechtenstein and other foreign foundations
Foreign foundations — Liechtenstein family foundations above all — are analysed along a parallel track. Where a foreign foundation is comparable to the Austrian Privatstiftung in its legal build and its actual operation, it is generally treated under the Austrian foundation regime rather than the trust rules: endowments within the foundation-transfer-tax system, and distributions to Austrian-resident beneficiaries at the flat 27.5%. Since 1 January 2026 that rate reaches distributions from foundation-like foreign structures generally, so comparability no longer decides the rate on the way out — it still decides the entry tax, where a non-comparable structure pays 25% instead of 3.5%. Comparability is a question of substance — a genuinely independent board and real separation from the founder point one way; a foundation run as the founder's instrument points the other, towards transparent treatment with attribution of the income to the family.
The word doing the work in that paragraph is generally. The classification of any individual Liechtenstein foundation depends on its statutes, by-laws and lived practice, and the difference between outcomes is large — which is why a family arriving with such a structure should have it reviewed rather than relabelled. An illustration of how such a review plays out sits among the case studies, in the scenario of a family relocating with a Liechtenstein foundation.
Registration and reporting
Whatever its tax classification, a trust connected to Austria is visible to the authorities. A trust managed from Austria — in particular where a trustee is resident here — must report its beneficial owners to the Austrian beneficial-ownership register, and the net is wide: settlor, trustees, any protector, the beneficiaries and anyone else exercising control all count. Foundations report their founders, board members and beneficiaries in the same way. Financial accounts held by trusts and foundations are within the Common Reporting Standard, so account data flows automatically to the residence states of controlling persons; for structures with American connections, FATCA reporting and the US tax treatment of foreign trusts add a second, unforgiving layer, sketched under US citizens moving to Austria. Planning on the assumption of visibility is not pessimism; it is the operating environment.
Review the structure before you move
Almost every unpleasant outcome on this page is avoidable with time. A distribution taken while the beneficiary is still non-resident is outside Austrian tax altogether; taken two years into Austrian residence, the same payment bears 27.5% Austrian tax — and since 1 January 2026 a one-off payment no longer escapes. A trust that would classify badly can be restructured, decanted or wound up before Austrian tax residence begins; afterwards, every move happens inside the Austrian net. Whether the endgame is keeping the trust, simplifying into direct ownership or migrating into an Austrian foundation, the analysis belongs at the start of the relocation timeline.
Bring the trust deed, the by-laws and the distribution history to the table before the move — the sequencing options are set out under pre-immigration tax planning, and the wider context under wealth & succession in Austria.
Questions on this page
Is a one-off distribution from a foreign trust tax-free in Austria?
Not any more. Until the end of 2025 a single payment from a trust that was not comparable to an Austrian private foundation escaped tax, because only recurring payments were caught. Since 1 January 2026 distributions from any foundation-like foreign structure, trusts included, are investment income taxed at 27.5%, whether they are paid once or repeatedly. There is no Austrian withholding agent, so the beneficiary declares them in the Austrian return.
How does Austria decide whether a trust is transparent or non-transparent?
By control: a trust is non-transparent where neither settlor nor beneficiaries hold comprehensive instruction and supervision rights over the management of the assets. Discretionary trusts are typically non-transparent; bare trusts, where the trustee acts on the beneficiary's instructions, are transparent.
How are Liechtenstein family foundations treated in Austria?
A foreign foundation that is comparable to the Austrian Privatstiftung is generally taxed under the Austrian foundation regime rather than as a trust. Whether a particular Liechtenstein foundation is comparable depends on its statutes and how it is actually run, so it needs case-by-case review.
Does a foreign trust have to be registered anywhere in Austria?
A trust managed from Austria — in particular where a trustee is resident here — must report its beneficial owners, including settlor, trustees, any protector and the beneficiaries, to the Austrian beneficial-ownership register.
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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