Turkey-Austria Double Tax Treaty

Turkey and Austria have signed a double taxation agreement in 2008. The convention was ratified by both countries in 2000 and enforced in 2010. The Turkey-Austria double tax treaty covers persons residing in one or both contracting countries, according to the first article of the document. With respect to the avoidance of double taxation, the agreement affects the following taxes:

• -          the income and corporate taxes in Austria,
• -          the income and corporate taxes in Turkey.

The double tax treaty will also apply to similar taxes levied in both countries. The Turkish and Austrian tax authorities have the obligation of notifying each other of amendments brought to the taxation laws which could affect the agreement.

Persons covered by the Turkey-Austria double taxation treaty

The double taxation treaty between Turkey and Austria covers both natural and legal persons. The term “person” refers to both private individuals and companies. Turkish and Austrian companies are defined as corporate bodies or entities paying the tax for carrying out business activities. Also, the term “registered address” is replaced with “legal head office” according to the Turkish Commercial Code. A company registered in one state with a fixed place of business in the other is considered a permanent establishment if it carries out commercial activities for more than six months.

For information about the sites considered permanent establishment under the double tax treaty with Austria you can ask our agents in company registration in Turkey.

Taxation under the Turkey-Austria double tax agreement

The Turkey-Austria double taxation convention covers the following elements of the income tax:

• -          the income arising from the transfer of immovable property, which can be taxed in one of the two countries,
• -          business profit which will be levied in the country a company earns that profit,
• -          income derived from international traffic, such as air transportation and shipping activities,
• -          dividends,
• -          interests,
• -          royalties.

Reduced tax rates under the Turkey-Austria tax treaty

The agreement also provides for the following reduced tax rates:

• -          a 5% rate on dividends paid by a Turkish company holding 25% of the voting shares in an Austrian company, and a 15% rate in all other cases,
• -          a 5% rate on dividends paid by an Austrian company holding 25% of the voting shares in a Turkish company, provided that the Austrian company is exempt from the dividend tax; and a 15% rate in all other cases,
• -          interests are taxed at different rates of 5, 10 and 15% depending on their provenience,
• -          royalties are taxed at a maximum rate of 10%.

For complete information about taxation under the agreement with Austria, please contact our Turkish agents.