Construction 2019 - Getting the Deal through, Austria

1. Foreign pursuit of the local market if a foreign designer or contractor wanted to set up an operation to pursue the local market, what are the key concerns they should consider before taking such a step?
From a legal perspective, companies entering the Austrian market are usually concerned about which legal entity is most suitable (ie, an Austrian branch of a foreign company or an Austrian subsidiary (jointstock company, private limited liability company or partnerships with or without limited liability). This decision is also driven by tax implications. In addition, potential market entrants take consideration of the tax and labour law regime; due to the single market, currency concerns only play a minor role. From a tax perspective, foreign designers or contractors who do not have their seat, place of management, residence or habitual abode in Austria are subject to limited tax liability for Austrian source income. Austrian source business income is subject to tax in Austria if the foreign designer or contractor has a permanent establishment (PE) or an agency PE in Austria, or if Austrian real property is concerned. However, income derived from commercial consulting, technical consulting or provision of personnel in Austria is also taxable in Austria without a PE therein. Most double taxation treaties provide for special regulations as regards the qualification of building sites, construction or installation projects. For double taxation treaties that follow the OECD model tax convention, building sites, construction or installation projects constitute a PE only if they last for more than 12 months.

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