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5.1. Tax Base for Resident Entities

Resident companies are taxable in Austria on their worldwide income (unlimited tax liability) unless specifically exempt or otherwise relieved from taxation. Most income items are aggregated under the heading of commercial profits. Capital gains are taxable as ordinary income.

Income attributable to a foreign PE is theoretically subject to tax in Austria under the unlimited tax liability principle. However, most tax treaties concluded by Austria provide for the exemption method with respect to foreign PE income. Moreover, in non-treaty situations, Austria unilaterally exempt income attributable to a foreign PE to the extent it is subject in the foreign jurisdiction to a tax comparable to the Austrian corporate income tax and that tax is assessable at an effective average rate of more than 15% (as computed according to Austrian rules).

Other major exclusions from taxable income are dividends and capital gains benefiting from the domestic, portfolio, or international participation exemption regimes.