New protocol to the tax treaty between UAE and Austria

When?

• 01 July 2021 - Signing of a new Protocol (the "Protocol") amending the Tax Treaty between UAE and Austria (the "DTA");
• Ratification Date - not yet announced;
• Entry into Force - first day of the third month after the exchange of the ratification instruments;
• Implementation Date - after 31 December of the calendar year in which the Protocol is ratified by both parties.

Who will be impacted:

• Individuals who are Tax Residents of Austria or UAE as per the DTA (Physical presence of the individual is not the only determining factor).
• Legal persons who have their corporate seat in the UAE and earn certain income in Austria or vice-versa.
• Any other legal or natural persons that are part of a tax structuring scheme which principal objective is to obtain tax relief as per the DTA.

Main Changes:

• With Holding tax on dividend income
• Method of claiming tax relief
• Exchange of Information
• Principle Purpose Test for Obtaining benefit of the DTA

Key Takeaways:

• Impact assessment on the payable tax by the corporate & natural person, taking the actual tax residency as a consideration
• Principle Purpose Analysis of the existing tax structuring scheme
• If the ratification of the Protocol happens before the end of 2021, the Protocol will be in force by 01 March 2022 and shall have effect as of 01 January 2022.