The Austrian Ministry of Finance published an EAS ruling
dealing with tax issues of intra-group cross-border personnel
Under double tax treaties that follow the OECD Model Convention,
the remuneration for posted employees may be taxed both in the
state of residence and in the state in which the employment is
exercised. However, art. 15(2) of the OECD Model Convention
determines that the remuneration shall be taxable only in the state
of residence, if, inter alia, (i) the recipient is present in the
other state for a period or periods not exceeding in the aggregate
183 days in any twelve month period commencing or ending in the
fiscal year concerned; and (ii) the remuneration is paid by, or on
behalf of, an employer who does not reside in the other state.
In 2013, the Austrian Supreme Administrative Court
(Verwaltungsgerichtshof ) decided that an economic view, rather
than a purely civil law perspective, has to be applied when
determining the employer in terms of art. 15(2) of the OECD Model
Convention (22 May 2013, 2009/13/0031). In a guidance note issued
in 2014, the Austrian Ministry of Finance followed this approach
and clarified that the judgement of the Austrian Supreme
Administrative Court is only applicable to cases in which the
employer is rendering passive services, i.e. services that do not
constitute an integral part of the posting company's commercial
activity such as advisory or training services (12 June 2014,
In that context, the Austrian Ministry of Finance recently dealt
with a case where a German company incorporated an Austrian
subsidiary and subsequently decided to post employees from Germany
to Austria (EAS 3375). It was held that in such cases, the question
of whether active or passive services are provided needs to be
assessed on a case-by-case basis. According to the Austrian
Ministry of Finance, active services are provided in cases in which
(i) the personnel leasing caters for the interest of the posting
company; and/or (ii) the posted employees remain subject to the
instructions of the posting company. In contrast thereto, passive
services are provided in cases where the leased personnel are used
to pursue the receiving company's commercial activity.
Furthermore, a passive service is deemed to exist if the receiving
company requested the cross-border posting of employees due to a
short-term shortage of manpower. The reason for this is that the
personnel leasing will be carried out in the interest of the
receiving company and the posted employees will provide their
labour to the receiving company.
In the EAS ruling, the Austrian Ministry of Finance also dealt
with art. 15(3) of the double tax treaty concluded between Austria
and Germany, which in contrast to the OECD Model Convention,
provides that the applicability of the 183 day rule shall not
depend on the residence of the employer in the state in which the
work is exercised in cases of commercial personnel leasing.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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