🇦🇹 Austria — 🇩🇪 Germany

Tax Treaty / Double Tax Avoidance Agreement detail

The Austria–Germany Double Taxation Agreement was signed on 24 August 2000, replacing the long-standing 1954 convention, and entered into force on 18 August 2002. Given the two countries' shared language, currency (euro), deep trade integration, and extensive shared border spanning the Salzburg, Tyrol, and Vorarlberg-Bavaria corridors, this treaty is among the most practically significant in the German-speaking world. Dividend withholding tax is reduced to 5% for qualifying corporate shareholders holding at least 10% of capital, and 15% in all other cases. Both interest and royalties are fully exempt from withholding tax at source under the treaty, a position further reinforced by the EU Interest and Royalties Directive and the Parent-Subsidiary Directive, which together eliminate most intra-group withholding on qualifying payments between EU-resident entities. A dedicated Grenzgänger (cross-border commuter) regime governs the taxation of individuals who live in one state and work in the other across the shared border zone, providing clarity for the large daily commuter population between Austrian Länder and Bavaria. Social security coordination is handled outside the treaty via EU Regulation 883/2004 and the bilateral German-Austrian social security agreement of 1978, both of which supersede older bilateral totalization arrangements. Austria's Verbund group-consolidation regime and Germany's Organschaft fiscal unity provisions interact with the treaty's permanent establishment and profit attribution articles, requiring careful analysis for intra-group structures. Both Austria and Germany have signed and ratified the OECD Multilateral Instrument (MLI), and its provisions are in force for this treaty, including the principal purpose test (PPT) as the anti-avoidance standard and mandatory binding arbitration under Part VI of the MLI. Protocol amendments were agreed in 2015 and again in 2024, the most recent incorporating various MLI-aligned clarifications covering hybrid mismatches and updated dispute resolution language. Pension and government-service provisions follow OECD Model lines, with source-state taxation for government pensions and residence-state taxation for private pensions.