BESt-CGT | Austrian Anadi Bank

Informationen on tax liability for foreign customers

Extension of limited tax liability („BESt-CGT“) for foreign customers as 1 January 2015

Due to the Abgabenänderungsgesetz 2014 (law modifying taxes), the limited tax liability on domestic interest earnings, provided that they are subject to capital gains tax, were essentially extended for foreign customers as of 1 January 2015.

Tax Rate

The tax rate corresponds to that of the “Inländer-KESt” (national capital gains tax) of 25% or 27.5%.
The “BESt-KESt” for interest on savings accounts and current accounts remains at 25%. The “BESt-KESt” also increased on interest from Austrian securities from 01.01.2016 to 27.5%.

Inception of the new regulations for foreign customers

The „BESt-KESt“ came into force on 1 January 2015 and applies to interest earned after 31 December 2014. Financial institutions must make the appropriate tax deduction from 1 January 2015.

The following foreign customers are affected by the limited tax liability:
  • Natural persons who are resident for tax purposes in a non-EU country.
  • Natural persons from non-EU countries and the EU, which are involved in foreign tax-transparent structures (in particular partnerships).
  • Ambassadors and diplomats from non-EU countries as well as employees of international organisations from the non-EU area and the EU.


Which payments fall within the scope of „BESt-KESt“:
  • Interest on bank balances of all kinds such as savings accounts, giro or clearing accounts and time deposits at Austrian banks, or domestic branches of foreign banks.
  • Interest from bonds of Austrian issuers, regardless of the effective country of issuance.
  • Interest on other debt securities such as certain certificates that are issued by Austrian issuers and are paid by an Austrian bank.
  • Investment funds that have these affected product groups in fund assets.
  • Funds: Flat rate determination and taxation, in the event of foreign funds where no corresponding registration is sent to the office responsible (in accordance with § 7 para. 6 of the EU Withholding Tax Act.)
  • In principle, only interest for the purpose of the EU Withholding Tax Act is affected. Products not subject to the EU Withholding Tax are also not subject to the limited tax liability.


Not subject to „BESt-KESt“:
  • Interest, which is obtained by natural persons who are tax resident in the EU and therefore fall within the scope of the EU Withholding Tax Act (incl. ambassadors and diplomats from the EU).
  • Interest, which is not obtained by natural persons.
    • bodies (including associations)
    • partnerships, where only bodies are involved.
    • Financial institutions.
    • Pension funds.
    • Care and support facilities and exempt benevolent funds of public bodies.
    • Investment funds and real estate investment funds.
    • Private foundations, establishments and trusts (exemption if intransparent or beneficial owners and investors declaration exists)
  • Similarly, mortgage bonds remain up to 4% of the return tax exempt for tax residents.
  • Private loans and private placements are excluded from the deduction obligation, since they are also not subject to capital gains tax (KESt).
  • Interest and other proceeds from capital claims of foreign customers that have been obtained by 31 December 2014 were subject to tax only in exceptional cases.


Reduction of capital gains tax („BESt-KESt“) due to double taxation agreement concluded by Austria

Interest earnings subject to limited tax liability in Austria, are also periodically subject to tax in the country of residence of the recipient.

Many double taxation agreements completed by Austria nevertheless stipulate that interest income in Austria may not be taxed or only at a rate below 25% or below 27.5%.

Thus, future clashes regarding the respective taxation claims may arise.

If the withholding tax rate according to applicable double taxation agreements/DBA exceeds the withholding tax, the tax payer can get a refund in Austria in the course of a procedure. The deducted withholding tax will be, in principal, creditable in the country of residence to the extent of the DBA.


Disclaimer: Please note that the above information concerning restricted capital gains tax liability provides an overview of the points that have to be observed from the perspective of Austrian tax law, and offers basic information. The content has been drawn up with all due care, but only contains general information, and therefore cannot be regarded as a substitute for individual advice. Austrian Anadi Bank AG accepts no liability and provides no guarantee that the information contained herein is complete and correct. Austrian Anadi Bank AG therefore refuses to pay compensation for damage of any kind whatsoever that may result from the use of this information.