Capital gains tax for foreigners

Foreigners are liable to a limited tax on domestic interest income as referred to in the Austrian EU Withholding Tax Act (EU-QuStG), provided the interest is subject to capital gains tax deduction (capital gains tax on interest pursuant to Article 98 para. 1 no. 5 lit b of the 1988 Income Tax Law – EStG 1988). The following individuals are subject to limited tax liability:

• natural persons from third countries* (with Austrian interest income as referred to in the EU-QuStG);
• natural persons from third countries* and the EU who hold an interest in foreign entities that are transparent from a tax point of view (particularly partnerships);
• ambassadors and diplomats from third countries* as well as employees of international organisations (from third countries* and the EU).

Interest payments related to securities of Austrian issuers and Austrian bank deposits have been subject to this extended tax liability since 1 January 2015. The current tax rate is 27.5%.

* Third countries mean non-EU countries in this context.