May 2010 - CDTA with Austria

In the absence of a CDTA, profits of Hong Kong trading companies doing business through a permanent establishment (“PE”) in Austria may be taxed in both places if the income is Hong Kong sourced. Under the HK-Austria CDTA, double taxation is avoided in that any Austria tax paid by the Hong Kong companies shall be allowed as a deduction from the tax payable in Hong Kong. In addition, Hong Kong airlines operating flights to Austria will only be taxed in Hong Kong (Hong Kong corporation tax rate of 16.5% is much lower than that of Austria of 25%). Profits from international shipping transport earned by Hong Kong residents that arise in Austria, which are currently subject to tax in Austria, will enjoy tax exemption under the CDTA.