Kontron : Manual reimbursement of taxes on earnings on capital

Claim for refund of Austrian withholding taxes on dividend income

A guidance to the completion of the refund form

April 2024

Claim for refund of Austrian withholding taxes

Introduction

Withholding taxes on Austrian dividend income

Distributions paid by an Austrian corporation are generally subject to 27.5 % Austrian withholding tax, if the distribution does not qualify as a repayment of capital but as a distribution of income (i.e. as a dividend). The withholding tax on dividend income has to be levied and paid to the tax office by the Austrian corporation. Shareholders, who are not tax resident in Austria, are entitled to reclaim part or all of the withholding taxes on the basis of

• a double tax treaty (DTT) concluded between Austrian and the shareholder's country of residence,
• the EU Parent-Subsidiary Directive or
• another specific provision in Austrian tax law (Fokus Bank claim, EU pension fund claim).

Should a foreign corporation, which is comparable to an Austrian corporation, be tax resident in a country, which has not concluded a DTT with Austria, Austrian dividend income is subject to 23 % corporate income tax. Therefore, such shareholders can reclaim 4.5 percentage points of the 27.5 % withholding tax in 2024.

How does the refund work?

In 2018 the legal regulations related to the refund of Austrian withholding taxes on income from capital assets were changed (see § 240a of the Austrian Federal Fiscal Code). The changes provide that the claim for refund must be preceded by a pre-notification (which has to be submitted electronically via the website of the Austrian Ministry of Finance). This new procedure applies to claims for refund filed after 31 December 2018 irrespective of the calendar year for which the claim is filed. The Ministry of Finance has published general information on the new procedure on its website in English (https://www.bmf.gv.at/en/topics/taxation/double-taxation-agreements/relief-from-austrian-withholding-taxes-under-dtc.html).

The new filing procedure provides for the following steps:

Step 1 For the refund of Austrian withholding taxes on dividend income paid by an Austrian public limited company ("Aktiengesellschaft"; "AG") the web-based form "Dividends from public limited liability companies (AG)" (abbreviated as "DIAG") has to be completed and submitted electronically to the tax office.

Step 2 The transmitted pre-notification has to be printed out and duly signed by the applicant. In addition, the applicant must obtain the certificate of residence from the local tax office on the printed pre-notification.

Step 3 After obtaining the certificate of residence, the pre-notification has to be sent by post together with the required supplements to the Austrian tax office "Finanzamt für Großbetriebe".

When can the claim for refund be filed?

A claim for refund cannot be filed before the end of the calendar year, in which the dividend was paid to the shareholder, and has to be filed by the end of the fifths calendar year following the calendar year, in which the dividend was paid. Therefore, a claim for refund of withholding taxes on a dividend paid in 2024 can be filed after 31 December 2024 at the earliest (i.e. the pre-notification cannot be transmitted before 1 January 2025) and has to be filed by 31 December 2029 at the latest (i.e. the printed and signed pre-notification form including the confirmation of residence has to be sent to the tax office on 31 December 2029 at the very latest).

The purpose of the guidance

This guidance solely provides instructions on the completion and transmission of the pre-notification form for the refund of Austrian withholding taxes on dividend income from public limited liability companies and does not contain any information on the legal requirements related to refunds of Austrian withholding taxes (such as, for example, on the entitlement to claim the refund of Austrian withholding taxes or on general procedural tax law). It has to be considered that for specific shareholders, such as investment funds or pension funds, specific rules apply and specific documentation has to be provided.

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Claim for refund of Austrian withholding taxes

How to find the pre-notification form for dividend income

Step 1

Go to www.bmf.gv.at and click on "Formulare".

Step 2

Enter "DIAG" in the search mask.

Step 3

Click on "ZS-RD-DIAG" and then on "weitere Formulare and Informationen".

Step 4

Select the German version (click on "DIAG (Web-Formular)") or the English version (click on "DIAG- Englisch (Web-Formular)") of the web-based form.

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Claim for refund of Austrian withholding taxes

How to complete the form

2024

Select the legal basis for the refund. You can choose the following:

1. Refund due to a double- taxation treaty (DTT)

In case of a treaty-based claim, the difference between the 27.5% Austrian WHT and the tax rate on dividends in the relevant DTT will be refunded (if the relevant DTT stipulates that Austria may tax dividends at e.g. 15 %, 12.5 percentage points are refundable).

1. Refund due to § 21 para 1 no 1a KStG (Fokus Bank Claim)

In case of corporations resident in the EU/EEA, the total Austrian WHT will be refunded, if the Austrian WHT cannot be credited on the basis of a DTT in the country of residence.

1. Refund due to § 6 KStG (EU pension funds)

Dividends paid to EU pension funds, which are comparable to Austrian pension funds, are tax exempt in Austria. Thus, in case of foreign pension funds the total Austrian WHT will be refunded.

1. Refund due to § 94 no 2 EStG (EU Parent-Subsidiary Directive)

Under certain conditions § 94 no 2 EStG provides for a tax exemption for foreign corporations resident in the EU holding at least 10% in the Austrian corporation (parent- subsidiary exemption).

(e) Refund due to § 98 EStG

In case of corporations resident in country without a DTT with Austria,

4.5 percentage points will be refunded.

When applying for a refund of Austrian WHT for the first time, the applicant receives a Withholding Tax Number (this will be sent by post), which must be quoted in all future refund procedures.

Therefore, when completing this web-based form for the first time, leave this box empty. For future claims enter the Withholding Tax Number provided by the tax office.

To be completed only, if you have appointed a representative (i.e. an Austrian certified tax advisor), who files the claim for refund.

To finish page 1, click on "Forward"

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Claim for refund of Austrian withholding taxes

How to complete the form

Enter the total amount of Austrian WHT, which shall be refunded under this claim.

To finish page 2, click on "Forward"

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Claim for refund of Austrian withholding taxes

How to complete the form

The questions on the beneficial ownership raised in section 6A of the web-based form correspond to the questions in the section A of the former form ZS-RE1A, which was in use for claims filed before 2019.

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Claim for refund of Austrian withholding taxes

How to complete the form

The questions on the beneficial ownership raised in section 6B of the web-based form correspond to the questions in the section B of the former form ZS-RE1A, which was in use for claims filed before 2019.

To finish page 3, click on "Forward"

Indicate the number of the securities account in which the shares are held.

Should the shares have been acquired successively, state the last acquisition date.

In addition to the Date of inflow either the "Date of dividend distribution resolution" or the "Ex- date" has to be provided as well.

The sum of the repayment amounts from the various shareholdings has to correspond to the repayment amount stated under section 4 of this web-based form.

To enter additional shareholdings click on "New". The claim can be made for any number of shareholdings.

To finish page 4, click on "Forward"

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Claim for refund of Austrian withholding taxes

How to complete the form

To complete the pre-notification click on "Send" at the end of this page. The pre-notification will then be transmitted to the tax office.

Please note that when transmitting the pre-notification, the claim is not deemed to have been officially filed (the official filing requires the sending of the hard-copy form by post to the tax office - see below).

Before transmitting check the information for completeness and accuracy.

When clicking on "Send", the following page will be displayed:

By clicking on "Save entries" the data entered in the web-based form can be saved in a separate file (fsxml-file). This file can be used to fill in a form automatically (see next page).

An automatically generated transaction number is assigned to the pre-notification, which is also shown on the form to be printed and duly signed. This is not the Withholding Tax Number (see section 1 of the web-based form), which will be sent by the tax office to the applicant separately by post.

Download, save and print out the transmitted form. The next steps are as follows:

• 1. Obtain the certificate of residence under section 8 of the printed form from your local tax authority.*
  2. Sign the form.
  3. Send the signed form including all supplements mentioned under section 6A of the web-based form to the tax office "Finanzamt für Großbetriebe" (see address on the form).
• According to an information recently published by the Austrian Ministry of Finance applicants resident in Mexico, Thailand, Turkey or the US can provide separate certificates of residence (i.e. it is not necessary to certify the residence on the Austrian form).

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Claim for refund of Austrian withholding taxes

How to save and amend pre-notifications

Save and amend pre-notifications

In the course of filling in the web-based form, the data can be saved in a separate fsxml-file at any time. To save the data click on "More" (at the end of each page) and on "Save and continue".

When clicking on "More" and on "Load data", a previously saved fsxml-file can be uploaded. The web-based form will then be filled in automatically with the data saved in the fsxml-file.

Is it possible to amend a pre-notification already transmitted to the Austrian tax office?

A pre-notification already submitted to the Austrian tax office cannot be amended, however, it is possible to submit a new pre-notification. For this purpose

• upload the fsxml-file saved immediately after transmitting the web-based form to the tax office,
• make the necessary amendments and
• transmit the pre-notification again to the tax office.

The form to be sent to the tax office in hard copy will show a new transaction number. The new transaction number enables the tax office to assign the hard copy form received by post to the correct pre-notification.

Is it possible to withdraw a pre-notification transmitted to the tax office?

No, this is not possible. Pre-notifications transmitted to the tax office will be saved until the end of the statutory limitation period (i.e. the pre-notification will be saved until the end of the fifth year following the calendar year, for which the pre-notification was transmitted).

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Any questions? We are happy to assist.

Johannes Edlbacher

Partner Financial Services

Tel: [phone]

E-Mail: [e-mail]

Linda Hattas

Senior Manager Financial Services

Tel: [phone]

E-Mail: [e-mail]

pwc.com

Disclaimer: The information provided in this guideline is based on the legal situation valid April 2024. Subsequent changes in tax law or interpretation of tax law can affect the correctness of this tax information. Although the guideline has been prepared carefully, the authors assume no liability for the effectiveness, completeness and validity. The guideline cannot replace individual advice from a certified tax advisor.

© 2024 PwC PricewaterhouseCoopers Wirtschaftsprüfung und Steuerberatung GmbH. All rights reserved. PwC refers to the Austrian member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see http://www.pwc.com/structure for further details.