Details of the income and capital and protocol between Austria and Hong Kong, signed on 25 May 2010, have become available. The treaty was concluded in the English language. The treaty generally follows the OECD Model Convention.
The maximum rates of withholding tax are:
|-||10% on dividends in general, 0% in case of qualifying companies holding directly at least 10% of the capital of the company paying the dividends;|
|-||0% on interest; and|
|-||3% on royalties.|
Deviations from the OECD Model include that:
|-||a building site, a construction, assembly or installation project or supervisory activities in connection therewith constitute a permanent establishment, but only where such site, project or activities continue for a period of more than 6 months;|
|-||the furnishing of services, including consultancy services, by an enterprise, but only if activities of that nature continue (for the same or a connected project) within a contracting party for a period or periods aggregating more than 183 days within any 12-month period;|
|-||Art. 13 provides that the source state may tax capital gains from the alienation of shares of a company deriving more than 50% of its asset value directly or indirectly from immovable property situated in the other contracting party; and|
|-||the protocol refers to the OECD and UN Commentaries for the interpretation of the treaty.|
Austria generally provides for the exemption-with-progression method to avoid double taxation if the respective income is subject to tax in Hong Kong. For passive income, however, Austria provides for the ordinary credit method. Hong Kong generally provides for the ordinary credit method to avoid double taxation. The treaty provides for the exchange of information according to the new OECD Standard.
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