Austria’s National Council approves Andorra tax treaty

A first comprehensive treaty, still pending

The Finance Committee’s report identifies this as the countries’ first double-taxation agreement and confirms that Federal Council consent is also required. The parliamentary record shows referral to that chamber on 15 October, with committee consideration scheduled for 20 October and its plenary for 22 October. Those scheduled stages are not completed approvals.^[3][5]

Dividends, interest and royalties

Article 10 would generally cap source tax at 15% of gross dividends. Qualifying beneficial-owner companies, excluding partnerships, directly holding at least 10% of the payer’s capital throughout 365 days including payment day would obtain source exemption. Specified direct reorganisation-related ownership changes are disregarded for that period.^[2]

Articles 11–12 would reserve qualifying interest to the beneficial owner’s residence state and cap source royalty tax at 5% of gross royalties. These passive-income rules have permanent-establishment connection exceptions; excessive related-party interest or royalties are not fully protected. Residence and beneficial ownership remain essential conditions, not automatic group entitlements.^[2][4]

Business profits and safeguards

Business profits would generally require a permanent establishment for source taxation under Article 7. Article 9 provides corresponding adjustments for qualifying transfer-pricing corrections. Groups must therefore consider operations, not simply withholding ceilings.^[2][4]

Article 27 could deny a benefit obtained through an arrangement with a principal treaty-benefit purpose, subject to the relevant provisions’ object-and-purpose exception.^[2][4]

When relief could begin

Article 28 requires diplomatic notifications completing domestic procedures; entry into force follows thirty days after the later notification. Withholding relief starts with payments from the following 1 January; other taxes concern taxable years beginning from that date. No fixed commencement is established. Groups should await completion before changing withholding instructions.^[1][2][4][5]