The Austrian Minister of Finance has recently published a draft regulation dealing with tax benefits which may be granted to certain high-profile scientists, researchers, artists and athletes relocating to Austria.
Pursuant to sec. 103 of the Austrian Income Tax Act (Einkommensteuergesetz), the Austrian Minister of Finance may eliminate an additional tax burden resulting from an individual's relocation to Austria; namely for people whose relocation to Austria serves the promotion of science, research, arts or sports and is thus in the public interest (additionally, in case of scientists and researchers, 30% of their income may be exempted from tax for five years). The Austrian Minister of Finance may prescribe such regulations as may be necessary or appropriate to carry out these provisions. In this respect, the draft of a regulation (Zuzugsbegünstigungsverordnung) has now been made available, which deals with certain procedural and substantive issues in connection with the above mentioned provision.
Firstly, the draft deals with the mandatory content of an application for preferential tax treatment (which generally has to be submitted before the individual's relocation to Austria, but at the latest six months thereafter). Secondly, the draft defines in which cases the relocation to Austria of a scientist, researcher, artist or athlete serves the public interest. Thirdly, it outlines in detail how an additional tax burden resulting from an individual's relocation to Austria (which, as is known, is a high tax country) is to be eliminated: Non-Austrian sourced income is to be subjected to a flat tax rate. This is determined by dividing the individual's non-Austrian taxes paid in the three years prior to the relocation through its non-Austrian income earned in this period of time, with a minimum rate of 15% applying. After ten years, the flat rate rises by two percentage points per year; the preferential regime ends once the tax rate reaches at least 48%. Interestingly, if a taxpayer avails himself/herself of the flat rate on nonAustrian sourced income, double tax treaties may not be relied upon (clearly a treaty override). Finally, the draft stipulates the cases in which the preferential tax treatment is prematurely forfeited (e.g., if the individual ends his/her relevant activities).