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.