The State Tax Service has published a consolidated version of its tax treaty with Austria reflecting changes under the MLI based on each country’s submitted reservations and notifications.

RF Report

Azerbaijan’s State Tax Service (STS) has released the consolidated versions of its tax treaty with Austria reflecting the changes introduced by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI).

The consolidated texts have been prepared based on the reservations and notifications submitted to the Depositary by the respective countries.

Azerbaijan-Austria Tax Treaty (2000)

Taxes covered

The Convention applies to all income and capital taxes imposed by Austria or Azerbaijan, including taxes on total income, capital, property gains, wages, and capital appreciation. It covers Austria’s income, corporation, land, agricultural/forestry, and vacant plot taxes, and Azerbaijan’s profit, personal income, property, and land taxes. It also extends to any new taxes that are substantially similar, with both countries required to notify each other of major tax law changes.

Withholding rates

  • Dividends: Dividends paid by a company in one Contracting State to a resident of the other may be taxed in both states. If the recipient is the beneficial owner, the source-state tax is limited to 5% when the company holds at least 25% of the capital with an investment over USD 250,000, 10% for a similar holding over USD 100,000, and 15% in all other cases.
  • Interest: Interest paid to a resident of the other Contracting State may also be taxed in both states, but the source-state tax is capped at 10% of the gross interest if the recipient is the beneficial owner.
  • Royalties: Royalties may be taxed in the state of origin, with the tax limited to 5% if the royalty relates to a patent, design, or similar knowledge not older than three years, and 10% in all other cases, provided the recipient is the beneficial owner.

The MLI applies to withholding taxes on amounts paid or credited to non-residents for events occurring on or after 1 January 2025, and to all other taxes levied by Azerbaijan from taxable periods beginning 1 July 2025, and by Austria from taxable periods starting on 1 January 2026.