• Service: Tax, International Executive Services, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 8/16/2013

Austria - Economic employer approach under the 183-day rule 

August 16:  The Austrian supreme administrative court issued a decision providing clarity concerning the taxation of remuneration paid by a hiring entity to international workers, and supporting the “economic employer approach” for purposes of determining which country could tax salary and wages paid to international workers.

Previously, the Austrian tax authorities recognized the “legal employer approach” so that, in general, short-term assignments qualified for application of the 183-day rule and thus the salary and wages were subject to Austrian tax.

The court, however, looked to which entity bears the costs for the employee and for the assignments, to find the critical element is whether the remuneration is actually “not borne” (rather than “not paid”) by the hiring entity (i.e., in this case, an employer resident in Austria, the source country).

The court found Austria had to grant an exemption from income tax for the portion of the employee’s remuneration because the 183-day rule was not satisfied.

The case identifying information is: VwGH 22.5.2013,2009/13/0031

Read a July 2013 report [PDF 189 KB] prepared by the KPMG member firm in Austria: Austria’s switch to the economic employer approach?

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