Unlimited or limited tax liability – when does an individual have his/her “permanent home” for tax purposes in Austria?

LBG Austria - Summary: Interests of taxable persons may vary considerably. While one especially desires the establishment of residence for tax purposes in Austria in order to be unlimited taxable in Austria, the other one tries hard to avoid exactly that, namely being taxed on his/her worldwide income in Austria. Regarding the tax allocation of income, double taxation agreements have to be taken into account. However, only the criteria in the Austrian Federal Fiscal Code (BAO) determine whether unlimited tax liability due to a “permanent home” in Austria is given. Recently the Federal Finance Court Innsbruck stated - with reference to judicial decisions of the Austrian Administrative Court - that using the “permanent home” for 2-3 month/year already qualifies for having one’s residence for tax purposes in Austria but that spending annually 14-21 days in an apartment which is furthermore usually classified not habitable is not sufficient to create unlimited tax exposure under Austrian tax law.

LBG Austria - Recommendation: The assessment oft the question whether unlimited or limited tax liability is given has great relevance regarding tax consequences on each domestic and foreign source of income, total tax burden as well as possible exit taxes or moving-in taxes. We recommend therefore a careful assessment of all assignment criteria on a case-by-case-basis in compliance with one’s overall tax interests – and a renewed assessment if circumstances change.

Contact & Advise: Our experts at LBG will be pleased to advise you in your individual situation. Please contact our consultants either directly at LBG at our 30 locations in Austria (www.lbg.at) or email us welcome@lbg.at – we will connect you with the right expert at LBG who is very familiar with your concerns.