Austrian management can make a foreign company resident

A company is generally subject to unlimited Austrian corporation tax if either its registered seat or its place of management is in Austria. Both are not required. Management refers to where the decisive will for directing the business is formed, rather than the location printed on a director-service contract.

The resident base is worldwide income, subject to treaties and domestic relief. A nonresident can still have taxable Austrian-source income. Before an owner relocates, document who has real authority over commercial decisions, contracts, people and funds. Personal residence, corporate residence and permanent establishment are separate questions.

References [1]

Corporate tax and the cost of distributing profits

The ordinary corporate rate is 23%. A €100,000 taxable company profit therefore leaves €77,000 after corporation tax before other adjustments. If all of that is then distributed to an individual under the ordinary 27.5% dividend treatment, the second charge is €21,175 and total tax is €44,175. A 23% headline does not describe the owner’s fully distributed result.

Minimum corporation tax can apply to covered capital companies even in a loss year. Its calculation depends on the statutory minimum capital and entity type. Director remuneration has its own classification; a shareholding exceeding 25% can move it outside ordinary wage-income treatment.

References [2][3]

CFC rules changed in 2026

Current §10a uses actual foreign tax below 15% under the Austrian statutory computation. It also examines whether passive income exceeds one third of the foreign entity’s total income and whether the Austrian corporate taxpayer, alone or with connected enterprises, controls more than 50% of voting rights, capital or profits.

The substantial-economic-activity test looks at people, equipment, assets and premises, with proof required from the controller. Passive categories include financing, intellectual-property and specified related-party invoicing income, not just dividends. A separate switch-over mechanism can replace participation exemption with credit treatment; passing one threshold does not resolve every foreign participation.

References [4]

Outbound payments and withholding relief

Dividend withholding commonly starts from 27.5%, before recipient-specific domestic, treaty or qualifying EU relief. For interest, the instrument and recipient matter: the BMF distinguishes savings interest, securities, corporations and recipients in information-exchange jurisdictions. Do not assign the resident investor’s rate to every foreign lender.

Covered royalty payments commonly face 20% gross withholding under the nonresident rules, with separate net-basis and relief provisions. Confirm beneficial recipient, treaty entitlement, documentation and whether relief is available at source or by refund. A contract promising a net payment can increase the payer’s cost if it must bear the tax.

PaymentDomestic starting treatmentWhat to check
Dividends27.5% ordinary starting pointDomestic, treaty or EU relief may reduce the final burden
InterestInstrument- and recipient-dependentDeposit and securities interest have distinct source and exemption rules
Covered royalties20% gross starting pointNet-basis and treaty/EU relief require their own conditions
References [5][6]

VAT includes a new 2026 food category

The standard VAT rate is 20%. Specified supplies use 10% or 13%. Since 1 July 2026, selected basic food supplies and imports use 4.9%, but only where they fall within the relevant Combined Nomenclature classifications. Restaurant and catering services do not automatically receive this new food rate.

The transaction date and classification matter for deposits, returns and mixed products. A prepared product that combines eligible and non-eligible ingredients is not necessarily within the 4.9% list. Cross-border services, goods, reverse charge and input-tax recovery require their own place-of-supply analysis.

CategoryRateScope
Ordinary supplies20%Unless a specified reduced rate or exemption applies
Specified reduced supplies10% / 13%Classify the exact supply
Selected basic food supplies/imports from 1 July 20264.9%Annex 3 classification; not a blanket restaurant rate
References [7][8]

Employer cost extends beyond social insurance

In addition to the social-insurance components in the personal guide, ordinary new-system employee severance contributions are 1.53% and do not use the general contribution ceiling. The family-burden employer contribution is 3.7%, and the regional surcharge varies by federal state. Municipal payroll tax generally adds 3%, subject to its base and exemptions.

Vienna also has an employer levy of €2 per employment relationship per started week, with exemptions. Its housing contribution is 0.75% on each side rather than the ordinary 0.50%. A proper cost model must therefore include the work location, salary pattern, contribution ceilings, employee category and applicable reductions.

Additional employer itemRate / amountLimitation
Employee severance fund1.53%Separate uncapped basis; category rules apply
Employer family-burden contribution3.7%Gross-pay base, statutory exceptions
Regional surcharge0.31%–0.40% published rangeExact federal state and current tariff needed
Municipal payroll tax3%Relevant Austrian establishment and statutory base
Vienna employer levy€2 per started weekPer qualifying employment relationship; exemptions
References [9][10][11][12][13][14]

Transfer functions and assets deliberately

The Income Tax Act’s business-asset valuation and exit provisions require market-value analysis where Austrian taxing rights over assets are restricted. Corporate tax draws on the applicable profit-computation rules. An owner’s relocation and a company’s migration or intellectual-property transfer are not the same transaction.

Prepare a functions-and-assets map before moving contracts, staff, management or valuable rights. Determine the tax base, valuation and any available payment treatment for the actual transaction. Keep any personal portfolio non-assessment separate from company-level departure liabilities and their reporting.

References [15][2][1][16]

An operating calendar from the first employee

Employees subject to Austrian social insurance must be registered before work begins. Payroll then needs to handle ordinary pay, special payments, paid absences and correct contribution categories. Wage tax, employer contributions and municipal tax generally have monthly payment deadlines; the municipal annual declaration is normally due by 31 March of the following year.

Assign responsibility for bookkeeping, VAT, payroll, corporation-tax returns, payment instalments and authority notices before operations start. A foreign owner should know who can access FinanzOnline and who maintains the evidence for treaty relief or a CFC substance defence.

References [10][11][12][17]
Sources & research notes17 references

Sources supporting this guide. Research draft awaiting editorial review.

  1. USP: company seat, management and worldwide tax liability
  2. USP: corporate tax and minimum tax
  3. USP: shareholder-director remuneration and distributions
  4. KStG §10a: 2026 CFC threshold, control and substance
  5. BMF: nonresident withholding and refund categories
  6. BMF: dividends, deposit and security interest
  7. USP: current VAT rates
  8. USP: 4.9% basic-food VAT from July 2026
  9. Austrian Social Insurance: contribution rates and values, 2026
  10. USP: employer payroll responsibilities
  11. USP: tax payment rates and due dates
  12. USP: municipal payroll tax
  13. City of Vienna: employer levy and exemptions
  14. City of Vienna: 2026 housing contribution
  15. Income Tax Act: consolidated September 2026
  16. BGBl I 43/2026: exit-proof duties and transition
  17. USP: corporate returns