The Rubik Agreement concluded between Austria and Switzerland was repealed and the scope of the Rubik Agreement concluded between Austria and Liechtenstein was restricted with effect as of 1 January 2017.
Both the Treaty between the Republic of Austria and the Swiss Confederation on Cooperation in the Areas of Taxation and Capital Markets ("Swiss Rubik Agreement" ) and the Treaty between the Republic of Austria and the Principality of Liechtenstein on Cooperation in the Area of Taxation ("Liechtenstein Rubik Agreement" ) provided that a Swiss/Liechtenstein paying agent had to withhold tax on, inter alia, interest income, dividends and capital gains from assets booked with an account or deposit of such Swiss/Liechtenstein paying agent, if the relevant holder of the assets (i.e. in general individuals on their own behalf or as beneficial owners of assets held by a domiciliary company [Sitzgesellschaft ]) was tax resident in Austria. The same applied to income from assets managed by a Liechtenstein paying agent, if the relevant holder of the assets (i.e. in general individuals as beneficial owners of a transparent structure) was tax resident in Austria. The withholding at source had the effect of final taxation, meaning that the Austrian tax authorities received all taxes due, while the Austrian resident taxpayers could retain anonymity.
The amending protocols to the agreements between the European Community and the Swiss Confederation, respectively, the Principality of Liechtenstein, regarding Council Directive 2003/48/EC on taxation of savings income in the form of interest payments, will be applicable regarding Austria as of 1 January 2017. They provide for automatic exchange of information between the contractual parties in line with the OECD's Common Reporting Standard (CRS). Obviously, this meant it was necessary to consider the future of the two Rubik agreements.
The Swiss Rubik Agreement was repealed with effect as of 1 January 2017. Thus, since that date there is no withholding at source in Switzerland, but rather automatic information exchange and the obligation of Austrian taxpayers to report their Swiss income.
Also as of 1 January 2017, the Liechtenstein Rubik Agreement was restricted to tax transparent structures set up before that date; the pertinent bank accounts will be exempted from automatic information exchange under CRS. All other provisions of the Liechtenstein Rubik Agreement remain in force, in particular part 4 relating to the taxation of (i) gratuitous transfers of assets by individuals or legal entities resident in Austria to non-transparent structures managed by Liechtenstein paying agents, irrespective of the location of the assets, and (ii) distributions by non-transparent structures managed by Liechtenstein paying agents to individuals resident in Austria.
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.