[Code of Federal Regulations]
[Title 26, Volume 18, Parts 500 to 599]
[Revised as of April 1, 2000]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR516.1]
[Page 100-102]
TITLE 26--INTERNAL REVENUE
CHAPTER 1--INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
(Continued)
PART 516--AUSTRIA--Table of Contents
Subpart--Withholding of Tax
Sec. 516.1 Introductory.
(a) Pertinent provisions. The income tax convention between the
United States and the Republic of Austria, signed on October 25, 1956,
referred to in this part as the convention, provides in part as follows,
effective on and after January 1, 1957:
Article I
(1) The taxes referred to in this Convention are:
(a) In the case of the United States of America: The federal income
taxes, including surtaxes.
(b) In the case of the Republic of Austria: The Einkommensteuer
(income tax), the Koerperschaftsteuer (corporation tax) and the Beitrag
vom Einkommen zur Foerderung des Wohnbaues und fuer Zwecke des
Familienlastenausgleiches (housing reconstruction and family allowance
contribution).
(2) The present Convention shall also apply to any other income or
profits tax of a substantially similar character which may be imposed by
one of the contracting States after the date of signature of the present
Convention.
Article II
(1) As used in this Convention:
(a) The term ``United States'' means the United States of America,
and when used in a geographical sense means the States, the Territories
of Alaska and Hawaii, and the District of Columbia;
(b) The term ``Austria'' means the Republic of Austria;
(c) The term ``enterprise of one of the contracting States'' means,
as the case may be, a United States enterprise or an Austrian
enterprise;
(d) The term ``United States enterprise'' means an industrial or
commercial enterprise or undertaking carried on in the United States by
a natural person (including an individual in his individual capacity or
as a member of a partnership) resident in the United States or by a
United States corporation or other entity; the term ``United States
corporation or other entity'' means a corporation or other entity
created or organized under the law of the United States or of any State
or Territory of the United States;
(e) The term ``Austrian enterprise'' means an industrial or
commercial enterprise or undertaking carried on in Austria by a natural
person (including an individual in his individual capacity or as a
member of a partnership) resident in Austria or by an Austrian
corporation; the term ``Austrian corporation'' means a corporation or
other entity created or organized under the law of Austria;
(f) The term ``permanent establishment'' means a branch, office,
factory, workshop, a warehouse, a merchandising establishment, a mine,
oil well or other place of exploitation of the ground or soil, a
construction or assembly project or the like, the duration of which
exceeds or will likely exceed twelve months, or other fixed place of
business; but does neither include the casual and temporary use of mere
storage facilities, nor an agent or employee unless the agent or
employee has full power for the negotiation and concluding of contracts
on behalf of an enterprise and also habitually exercises this power in
that other State or has a stock of merchandise belonging to the
enterprise of the other State from which he regularly fills orders on
behalf of the enterprise. An enterprise of one of the contracting States
shall not be deemed to have a permanent establishment in the other State
merely because it carries on business dealings in such other State
through a commission agent, broker, custodian or other independent
agent, acting in the ordinary course of his business as such. The fact
that an enterprise of one of the contracting States maintains in the
other State a fixed place of business exclusively for the purchase of
goods and merchandise shall not of itself constitute such fixed place of
business a permanent establishment of the enterprise. The maintenance
within the territory of one of the contracting States by an enterprise
of the other contracting State of a warehouse for convenience of
delivery and not for purposes of display shall not of itself constitute
a permanent establishment within that territory. The fact that a
corporation of one contracting State has a subsidiary corporation which
is a corporation of the other State or which is engaged in trade or
business in the other State shall not of itself constitute that
subsidiary corporation a permanent establishment of its parent
corporation;
(g) The term ``competent authorities'' means, in the case of the
United States, the Commissioner of Internal Revenue as authorized by the
Secretary of the Treasury; and in the case of Austria, the Federal
Ministry of Finance.
(2) For the purpose of the present Convention:
(a) Dividends paid by a corporation of one of the contracting States
shall be treated as income from sources within such State.
(b) Interest paid by one of the contracting States, including any
local government
[[Page 101]]
thereof, or by an enterprise of one of the contracting States not having
a permanent establishment in the other contracting State shall be
treated as income from sources within the former State.
(c) Income from real property (including gains derived from the sale
or exchange of such property, but not including interest from mortgages
or bonds secured by real property) and royalties in respect of the
operation of mines, oil wells, or other natural resources shall be
treated as income derived from the contracting State in which such real
property, mines, oil wells or other natural resources are situated.
(d) Compensation for labor or personal services (including the
practice of liberal professions) shall be treated as income from sources
within the contracting State where are rendered the services for which
such compensation is paid.
(e) Royalties for using, or for the right to use, in one of the
contracting States, patents, copyrights, designs, trademarks and like
property shall be treated as income from sources within such State.
(3) In the application of the provisions of this Convention by one
of the contracting States any term not otherwise defined shall, unless
the context otherwise requires, have the meaning which the term has
under its own tax laws. For the purposes of this Convention the term
``residence'' in Austria shall include the customary place of abode
therein.
* * * * *
Article VI
The rate of tax imposed by one of the contracting States upon
dividends received from sources within such State by a resident or
corporation or other entity of the other contracting State not having a
permanent establishment in the former State shall not exceed 50 percent
of the statutory rate of tax imposed on such dividends by such former
State but such rate of tax shall not exceed 5 percent if the shareholder
is a corporation controlling, directly or indirectly, at least 95
percent of the entire voting power in the corporation paying the
dividend, and if not more than 25 percent of the gross income of such
paying corporation is derived from interest and dividends, other than
interest and dividends received from its own subsidiary corporations.
Such reduction of the rate to five percent shall not apply if the
relationship of the two corporations has been arranged or is maintained
primarily with the intention of securing such reduced rate.
Article VII
Interest received from sources within one of the contracting States,
on bonds, notes, debentures, securities or on any other form of
indebtedness (exclusive of interest on debts secured by mortgages) by a
resident or corporation or other entity of the other contracting State
shall, in an amount not exceeding fair and reasonable consideration on
indebtedness, be exempt from tax by the former State if such resident,
corporation or other entity has no permanent establishment in such
former State.
Article VIII
(1) Royalties and other amounts received as consideration for the
right to use literary, musical or other copyrights, artistic and
scientific works, patents, designs, plans, secret processes and
formulae, trademarks, and other like property and rights (including
rentals and like payments for the use of industrial, commercial or
scientific equipment but not including motion picture film rentals) by a
resident or a corporation or other entity of one of the contracting
States from sources within the other contracting State shall, in an
amount not exceeding fair and reasonable consideration for such right to
use, be exempt from taxation by such other State if the recipient has no
permanent establishment situated in such other State.
(2) The rate of tax imposed by one of the contracting States upon
motion picture film rentals received from sources within such
contracting State by a resident or corporation or other entity of the
other contracting State not having a permanent establishment in the
former State shall not exceed 50 percent of the statutory rate of tax
imposed on such rentals but in any case shall not exceed 10 percent of
the amount of such rentals.
Article IX
(1) Income from real property (including gains derived from the sale
or exchange of such property and interest on mortgages secured by such
property) and royalties in respect of the operation of mines, oil wells
or other natural resources shall be taxable in the contracting State in
which such property, mines, oil wells or other natural resources are
situated.
(2) Where a resident or corporation or other entity of one of the
contracting States derives any income coming within the scope of
paragraph (1) from property within the other contracting State, the
recipient may, for any taxable year, elect to be subject to the tax of
such other contracting State on a net basis as if such resident,
corporation or other entity were engaged in trade or business within
such other State through a permanent establishment therein.
* * * * *
[[Page 102]]
Article XI
* * * * *
(2) Private pensions and private life annuities which are from
sources within one of the contracting States and are paid to individuals
residing in the other contracting State shall be exempt from taxation by
the former State.
(3) The term ``pensions'', as used in this Article, means periodic
payments made in consideration for services rendered or by way of
compensation for injuries received.
(4) The term ``life annuities'', as used in this Article, means a
stated sum payable periodically at stated times during life, or during a
specified number of years, under an obligation to make the payments in
return for adequate and full consideration in money or money's worth.
* * * * *
Article XIV
(1) Dividends and interest paid by an Austrian corporation (other
than a United States corporation) shall be exempt from United States tax
where the recipient is a nonresident alien or a foreign corporation.
* * * * *
Article XVI
(1) The competent authorities of the contracting States shall
exchange such information (being information available under the
respective taxation laws of the contracting States) as is necessary for
carrying out the provisions of the present Convention or for the
prevention of fraud or the like in relation to the taxes which are the
subject of the present Convention. Any information so exchanged shall be
treated as secret and shall not be disclosed to any persons other than
those concerned with the assessment and collection of the taxes which
are the subject of the present Convention. No information shall be
exchanged which would disclose any trade, business, industrial or
professional secret or any trade process.
(2) In no case shall the provisions of this Article be construed so
as to impose upon either of the contracting States the obligation to
carry out administrative measures at variance with the regulations and
practice of either contracting State or which would be contrary to its
sovereignty, security or public policy or to supply particulars which
are not procurable under its own legislation or that of the State making
application.
Article XVII
* * * * *
(2) Should any difficulty or doubt arise as to the interpretation or
application of the present Convention or its relationship to Conventions
of the contracting States with third States the competent authorities of
the contracting States may settle the question by mutual agreement.
Article XVIII
(1) The provisions of this Convention shall not be construed to deny
or affect in any manner the right of diplomatic and consular officers to
other or additional exemptions now enjoyed or which may hereafter be
granted to such officers.
(2) The provisions of the present Convention shall not be construed
to restrict in any manner any exemption, deduction, credit or other
allowance now or hereafter granted by the laws of one of the contracting
States in the determination of the tax imposed by such State.
* * * * *
Article XIX
(1) The competent authorities of the two contracting States may
prescribe regulations necessary to carry into effect the present
Convention within the respective States.
(2) The competent authorities of the two contracting States may
communicate with each other directly for the purpose of giving effect to
the provisions of this Convention.
Article XX
(1) The present Convention shall be ratified and the instruments of
ratification shall be exchanged at Vienna as soon as possible. The
Convention shall have effect on and after the first day of January of
the calendar year in which such exchange takes place.
(2) The present Convention shall remain in force indefinitely, but
may be terminated by either of the contracting States, provided that at
least six months' prior notice of termination has been given through
diplomatic channels. In such event, the present Convention shall cease
to be effective for the taxable years beginning on or after the first
day of January next following the expiration of the six-month period.
(b) Meaning of terms. As used in Secs. 516.1 to 516.12, any term
defined in the convention shall have the meaning so asigned to it; any
term not so defined shall, unless the context otherwise requires, have
the meaning which such term has under the internal revenue laws of the
United States.
[[Page 103]]