Among entities recently receiving refunds of Austrian withholding tax are:
- A governmental pension fund—a resident of Sweden
- Corporations that are residents of Spain and the United Kingdom
- A life insurance company—a resident of the UK
Other entities (see a sample list below) that have been subject to Austrian withholding tax on dividend distribution may want to consider filing claims for refunds. Such claims must be filed within five years after the year of dividend distribution. Thus, for example, claims for the tax year 2007 need to be filed by 31 December 2012.
Also, tax professionals with KPMG in Luxembourg believe that EU/EEA investment funds taking the form of a corporation (e.g., Luxembourg SICAVs) appear to be eligible for a refund of Austrian withholding tax.
Before 2009, Austrian tax law provided for a 25% withholding tax on portfolio dividends distributed to foreign corporations, whereas Austrian-resident corporate shareholders generally were able to credit or obtain a refund of the withholding tax. This treatment, thus, was viewed as discriminatory because it resulted in an effective higher taxation of foreign shareholders (compared to domestic ones) in EU Member States.
As a result of the European Commission’s action against this discriminatory tax treatment and also in light of judgments of the Court of Justice of the European Union in Denkavit and Amurta, Austria amended its tax law in 2009 to change this tax treatment of dividend distributions.
The Budget Supplementary Act 2009 (Budgetbegleitgesetz 2009) introduced a refund mechanism for foreign corporate shareholders (under section 21 paragraph 1(1A) of the Austrian corporate income tax law). This provision (effective 18 June 2009) provides that EU resident companies, as well as companies resident in qualifying EEA countries (i.e., those countries having implemented exchange of information and recovery of tax agreements), may file a claim for refund of withholding tax on dividends to the extent that the withholding tax cannot be credited pursuant to the laws of the shareholder’s country of residence.
Based on recent refund actions, certain non-resident taxpayers may be in a situation to claim refunds of the Austrian withholding tax on dividends, including:
- Pension funds resident within the EU/EEA that are comparable to an Austrian Pensionskasse (withholding tax claims would be based on section 6 of Austria’s corporate income tax law)
- Pension funds resident within the EU/EEA that are not comparable to an Austrian Pensionskasse but are separate legal entities subject to corporate income tax (i.e. non- transparent tax vehicles) (claims would be based on section 21 paragraph 1(1A))
- Pension funds resident in third countries that are comparable to but not a Pensionskasse, but are separate legal entities (claims would be based on EU law)
- Corporations that are residents within the EU/EEA (claims would be based on section 21 paragraph 1(1A))—this would appear to apply also to investment funds taking the form of a corporation (e.g., Luxembourg SICAVs).
- Corporations resident in third countries (claims would be based on EU law)
- Life insurance companies resident within the EU/EEA (claims would be based on section 21 paragraph 1(1A))
- Life insurance companies resident in third countries (claims would be based on EU law)
Read this September 2012 report [PDF 48 KB] prepared by the KPMG member firm in Luxembourg: Refund of Austrian withholding tax on dividends granted to foreign funds and corporations