In a recently published ruling, the Austrian Ministry of
Finance dealt with the question whether Austria had a right to levy
exit tax on capital gains as a result of the relocation of a
taxpayer from Austria to Canada (EAS 3412).
Generally, exit taxation within the meaning of sec. 27(6)(1) of
the Austrian Income Tax Act (Einkommensteuergesetz) is
triggered when, inter alia, a taxpayer, holding shares and
bonds as a non-business asset (Privatvermögen), moves
his or her residency from Austria to another country. The
relocation normally restricts Austria's right of taxation and
is therefore considered equivalent to a taxable sale of the
respective assets.
The double taxation treaty concluded between Austria and Canada
("DTT"), however, contains some
special rules in this respect: Art. 13(5) of the DTT generally
allocates the right to tax profits from the sale of assets
(including shares and bonds) to the state of residence of the
seller (i.e., Canada in the case at
