The amending protocol to the 1985 income and capital tax treaty between Austria and South Korea is entering into force on 1 March 2023. The protocol, signed 14 June 2021, is the second to amend the treaty and includes the following changes:
- The preamble is updated in line with BEPS standards;
- Article 5 (Permanent Establishment) is updated in line with BEPS standards with regard to the exclusion of certain fixed places of business from resulting in a permanent establishment if the overall activity of the fixed place of business is of a preparatory or auxiliary character, as well as new rules regarding dependent agent permanent establishments;
- Article 9 (Associated Enterprises) is updated with new provisions regarding corresponding transfer pricing adjustments;
- Article 26 (Exchange of Information) is replaced in line with OECD standards on information exchange;
- A new Article 26A (Assistance in the Collection of Taxes) is added to the treaty;
- A new Article 28 (Entitlement to Benefits) is added, providing that a benefit under the treaty shall not be granted in respect of an item of income or capital if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of the treaty; and
- Existing Articles 28 (Entry into Force) and 29 (Termination) are renumbered as Article 29 (Entry into Force) and Article 30 (Termination).
The protocol applies from 1 January 2024.