The amendment to the 1991 tax treaty between Austria and China came into force on 19 November 2024.

The protocol, signed on 14 September 2023, introduces several updates to modernise the agreement and align it with global tax standards.

The treaty’s title has been updated to reflect the OECD’s Base Erosion and Profit Shifting (BEPS) framework. Additionally, a new provision clarifies that income from fiscally transparent entities will be treated as income of residents, subject to specific conditions.

The scope of taxes covered by the treaty has been expanded. It now includes China’s individual and enterprise income taxes and Austria’s income, corporate, land, and property-related taxes.

Definitions have been updated to clarify terms such as “competent authority.” For non-individuals with residency in both countries, new rules determine residency based on factors like management location and mutual agreement between authorities.

The criteria for establishing a permanent establishment have changed, increasing the threshold for construction projects from six months to 12 months.

Withholding tax rates for dividends have been lowered to 5% for certain entities, such as government bodies or major shareholders. New exemptions have also been introduced for interest on government loans and specific credit sales.

Provisions for eliminating double taxation have been revised, removing certain assumed tax rates and exemptions previously applicable to dividends and interest.

Lastly, the protocol includes updated standards for exchanging tax-related information in line with OECD guidelines.

These changes will apply starting 1 January 2025 with the intention of enhancing clarity and compliance with international tax practices.