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India-Austria Double Taxation Avoidance Agreement (DTAA)

The Indian government entered into a significant Double Taxation Avoidance Agreement (DTAA) with the government of the Republic of Austria, which officially came into effect on September 5, 2001. This agreement was established with a primary objective: to mitigate the burden of double taxation and combat fiscal evasion related to income taxes. Notably, the DTAA has been further enhanced by an amending protocol that took effect on May 1, 2020, aligning the agreement with global norms and standards.

Applicability

The DTAA governs the following taxes within the contracting states:

a. In India:

  • Income tax.
  • Super-tax, including any surcharge.

b. In Austria:

  • Profits tax.
  • Salaries tax.
  • Property tax.

Key Takeaways

Here are key aspects to consider in the India-Austria DTAA:

  1. Taxes in Austria are assessed for the calendar year following the year in which the notice of termination is provided, while in India, taxes apply to income arising from or after the 1st of January following the year in which the notice of termination is issued.
  2. Pensions or annuities received by a resident of one territory from sources in the other territory are subject to taxation only in the latter territory.
  3. Remuneration for services performed (except pensions and annuities) received from Indian public funds by an Austrian resident is not taxed in Austria, unless the services were provided to an Indian national in India, and vice versa.
  4. Capital gains resulting from the sale, exchange, or transfer of capital assets, whether movable or immovable, are taxed exclusively in the jurisdiction where the capital asset is located at the time of the transaction.
  5. When a resident of one territory establishes that the actions of the taxation authorities in the other territory would lead to double taxation, in violation of the convention, they have the right to present their case to the competent authority in their place of residence.
  6. Dividends distributed by a company based in one contracting state to a resident of another contracting state may be subject to taxation in the latter contracting state.
  7. Royalties and fees for technical services originating in one state and payable to a resident of another state may be taxed in the receiving state.
  8. Gains derived by a resident of one state through the transfer of immovable property located in the other state may be taxed in the state where the property is situated.

Inference

The India-Austria DTAA brings significant advantages, foremost among them being the prevention of multiple taxations on the same income. Additionally, this agreement offers a reduced withholding tax, tax credits, and exemptions from certain taxes. Taxpayers benefit from a reduced Tax Deducted at Source (TDS) on income from sources such as interest, royalties, or dividend payments in India, minimizing the risk of tax evasion in either or both of the two contracting states.

This agreement not only promotes economic cooperation but also ensures fairness and transparency in tax matters, benefiting individuals and businesses operating in both India and Austria.

Chandrawat & Partners specializes in international tax agreements and is well-equipped to provide expert legal advice on the India-Austria Double Taxation Avoidance Agreement and related issues. If you require in-depth legal guidance or assistance on this matter, please do not hesitate to contact us. We are committed to offering professional legal services and helping you navigate the complexities of international tax laws.

For more information or to seek our expertise on this agreement or other legal matters, please reach out to us. We are here to serve your legal needs with the utmost professionalism and diligence.

To know more about DTAA relations between India and Austria, please download our Guide.

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