Portfolio Dividends - A Follow-up

This article was originally published in the schoenherr roadmap`10 - if you would like to receive a complimentary copy of this publication, please visit: http://www.schoenherr.eu/roadmap.

The Austrian government recently amended the respective Austrian international participation exemption to avoid the unequal treatment of foreign participations as compared to domestic participations. The previous provision contradicted the European principle of freedom of capital (see Baumann in Roadmap 2009).

The government's decision followed the Austrian Administrative Supreme Court, which ruled in 2008 that foreign dividends received from under 10% participations (so-called "portfolio dividends") are tax exempt¹, and two appeals currently pending before the European Court of Justice (ECJ)² in that regard.