A prosperous and sophisticated business center and a traditional trading bridge to Eastern Europe and the Balkans, Austria actively welcomes foreign investors. Austria’s tax policy is not to combat offshore countries but to make tax treaties with them- Belize, Hong-Kong and other. Sophisticated tax minimizing structures are designed for all types of businesses – general trading, holding, investment or royalty companies. With effective tax planning and restructuring, the effective tax rate can be as low as 3-5%.
AUSTRIAN LIMITED LIABILITY COMPANY (GMBH)
There are endless possibilities existing for using an Austrian entity in connection with tax planning.Company registered in Austria can achieve tax-free dividends and capital gains from foreign participations, even if the foreign entity is in an offshore jurisdiction.
Austria does not recognize any C.F.C. legislation, nor any thin-cap rules or debt equity ratios. Therefore, you can leverage an Austrian company by acquiring funds towards investments. Any interest resulting from that loan is fully tax deductible. There is no withholding tax due on payments to a foreign lender, even if that interest is paid to an offshore company or non-treaty jurisdiction.
Company in Austria also serves perfectly as a royalty company - for the purpose of receiving royalties for patents or other intellectual property from subsidiaries and third parties. With more than 60 double tax treaties, many countries have reduced or 0% withholding tax on incoming and outgoing royalties.
Since Austria is an EU Member State, the EU Savings and Royalty Directive can be applied which foresees that, provided the parent company holds at least 10 % of the shares of a subsidiary within the European Union for at least a period of one year, there is no withholding tax levied upon royalty payments to an Austrian company.