Double Taxation Treaty between Austria and the UAE

1.  If I have my centre of vital interests in UAE and have an apartment in Austria, will I be subject to tax in Austria? Is the condition of the apartment relevant?

As long as someone has the possibility to use an apartment in Austria at any time, this person will have unlimited tax liability in Austria. If a person is officially registered in Austria, the tax office will assume that unlimited tax liability applies in Austria. If the condition of the apartment is so bad that no use is possible, the unlimited tax liability can be avoided. However, this would have to be proven to the tax office. A residence does not automatically mean taxation in Austria. According to the DTA Austria - UAE, the decisive factor for the allocation of taxation rights is the country of residence according to the DTA, as well as the allocation regulations.

2.   A core element of the double taxation agreement Austria - UAE is the centre of vital interests. How is this defined and were there any changes due to the amended double taxation agreement between Austria and the UAE?

The concept of the centre of vital interest continues to exist. There was no change to the double taxation agreement in this regard. The centre of vital interests is where a person has the closest economic and personal relations. The economic aspect is aimed at the place where most of the income is generated. The personal ties are about where family and friends live. The personal aspect plays a greater role in practice.

3.  A person who has his centre of vital interests in the UAE and works in the UAE for a local company has a  residence in Austria. Does this result in taxation in Austria?

In principle, residence leads to unlimited tax liability in Austria (taxation of worldwide income). The double taxation agreement restricts this. For the salary of the local company from the UAE, the UAE has the right of taxation while there is no taxation in Austria.

4.  Somebody is an Austrian National resident since 20 years in the UAE with no ties to Austria except      employment in an Austrian company. What are the tax consequences?

The centre of vital interests is in the UAE. For income from an Austrian company, it is crucial where the work is performed. For the days when the person is present in Austria, Austria has the right of taxation. For the days when the person works in UAE, the UAE has the right of taxation.

5.    A person who currently lives in UAE, and works at a local company in UAE, will move to Austria in the 2nd half of the year and open a business there. Is the income from the 1st half year taxable in Austria?

Since this person is assumed to have no previous connection to Austria, unlimited tax liability in Austria begins with the establishment of a residence in Austria. Since the income was earned in the UAE prior to this, it is not subject to income tax in Austria.

6.    What does it mean if I have rental (real estate) income from the UAE?

According to the DTA between Austria-UAE, the UAE has the right to tax the rental income from the UAE. If the person is an Austrian tax resident and has his centre of vital interest in Austria, then Austria also taxes the rental income from the UAE. Austria then credits the taxes of the UAE against the Austrian taxes. This is new after the ratification because of the change to the credit method.

7.    A person has his center of vital interests in UAE and rents apartments in Austria. Does the amendment of the DTA UAE - Austria change anything in the tax situation?

The rental is subject to limited tax liability in Austria, so only this income is taxed in Austria. Since the centre of vital interests is in the UAE, there are no further tax consequences in Austria. Therefore, there are no changes due to the amendments to the DTA.

8.    A person is an UAE resident for more than five years, work in the UAE and obtain salary from a company based in the UAE. This person holds real estate in Austria, which should be sold. What are the tax consequences regarding the real estate?

According to the double taxation agreement, Austria has the right of taxation, so that the transaction is subject to the so-called “real estate income tax”. This is a flat tax and usually amounts to 30% of the profit. Possible tax exemptions - as well as the application of a reduced taxation - would have to be examined.

9.  If a person moves his centre of vital interests from Austria to Dubai, does an exit tax only apply to the individual or also to a company?

If a person moves his centre of vital interests from Austria to UAE, then there will be disclosure of hidden reserves on capital shares held.
Companies may also be subject to exit taxation. For example, if assets or a business are transferred from Austria to the UAE. 
In the case of exit taxation, it is always decisive whether the right of taxation is restricted from the Austrian point of view.

10. An employee with centre of vital interests in Austria works for an Austrian company in a branch office in UAE. What are the tax consequences of the amendment to the double taxation agreement?

In this case, Austria taxes the whole salary. If taxes are paid on the salary in the UAE, then thesetaxes can be credited against the Austrian taxes.