Brazilian Lawyer in Europe – part 2 – Non Double taxation in Austria

Following my European tour, I write from a Hotel lobby to talk about the use of Austria as a hub to avoid double taxation.

Austria is a great destination for foreign investors – especially those not from the Old Continent – that want to get into the European markets. On top of being a member of the European Union, with a strategically great location that connects the Union itself, Central Europe, Eastern Europe and the Commonwealth of Independent States, great infrastructure and one of the highest levels of life quality in the world, Austria is very open to foreign investment and has a wide web of around 80 treaties of double taxation relief, including one with Brazil.

The Convention on Avoidance of Double Taxation with Respect to Taxes on Income and on Capital between Brazil and Austria was signed by the two countries in 1975 and has guaranteed a co-operation between the two governments in order to benefit investments and capital flow from one country to the other without the burden of double taxation.

By provisions of the Convention, for example, Brazil is prevented from doing two things:

First, Brazil will not tax undistributed profits of a company under Austrian jurisdiction (Brazil taxes undistributed profits from companies located almost everywhere else), and

Second, shareholders located in Brazil are exempted from tax on dividends paid by the Austrian company of which they have shares (provided the Brazilian Investor has a minimum 25% equity in the Austrian company).

For those two reasons, I see that setting up a company in Austria might be a good way to do business in Brazil, or from Brazil, or using Brazil as a producer and selling the products abroad through a controlled Austrian company.

Besides, Vienna is beautiful beyond measure, and any opportunity to make business trips to the city should be sought after by any Brazilian legal director.