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2010 Eur. Tax Stud. 1 (2010)

handle is hein.journals/eurotaxs2 and id is 1 raw text is: European Tax Studies Income Tax Treatment of Corporate Finance in Austria Eva Eberhartinger and Matthias Petutschnig1 1. Introduction The current legal basis of income tax on individuals, including partners from partnerships, in Austria is the Einkommensteuergesetz (EStG) (individual income tax act) enacted in 1988. Income tax of corporations is based on the Korperschaftsteuergesetz (KStG) (corporate income tax act) enacted also in 1988. The EStG is primarily applicable to individuals but as the KStG often refers to the regulations of the EStG the individual income tax act is also highly relevant for corporate taxpayers. Corporations that either have their seat or their place of management in Austria are subject to unlimited corporate income taxation and are taxed on their worldwide income. The statutory tax rate for corporations is 25%.2 Austria applies a shareholder- relief-system on dividends distributed to individual shareholders with a 25% capital yield tax withheld by the distributing corporation. Dividends distributed to corporate shareholders are exempt from tax at the parent's level.4 However in certain situations5 (shareholding of less than 25% or indirect shareholding for a domestic parent; shareholding of less than 10% for a foreign parent) the distributing corporation is obliged to withhold 25% capital yield tax that will then be credited to the shareholder's overall corporate income tax liability or will be refunded.6 1 Prof. Dr Eva Eberhartinger, LLM is full professor and head of the Tax Management Group of the Department of Finance, Accounting and Statistics of WU - Vienna University of Economics and Business and Vice-Rector for Finance of WU. Matthias Petutschnig is research and teaching associate at Tax Management Group of the Department of Finance, Accounting and Statistics of WU - Vienna University of Economics and Business. 2 § 22(1) KStG. 3 § 93 et seq EStG. 4 § 10 KStG. 5 § 94 EStG and § 94a EStG. 6 § 94 and 94a EStG. @ Copyright Seast - All rights reserved 1 1/2010