Austrian departure taxation is regularly attributed to the wrong provision. The charge sits in the income tax act, and it reaches corporations from there, because § 7 Abs 2 of the Körperschaftsteuergesetz provides that how income is to be determined is governed by the Einkommensteuergesetz 1988 and by the corporate act itself. A reorganization does not sit outside it either: so far as a contribution into a domestic or foreign corporation restricts the Republic of Austria’s taxing right in whole or in part, § 16 Abs 1 of the Umgründungssteuergesetz takes the values of § 6 Z 6 lit. a of the income tax act and applies § 6 Z 6 lit. c to lit. e mutatis mutandis. The share exchange has a regime of its own: where a shareholding within the meaning of § 12 Abs 2 Z 3 is contributed to a company resident in a Union or Economic Area state against consideration, § 16 Abs 1a departs from Abs 1 and, where the contributor is an individual, applies § 17 Abs 1 and Abs 1a mutatis mutandis. Section 17 Abs 1 applies the valuation rules of the second sentence of § 16 Abs 1 and of § 16 Abs 2 and Abs 3, and § 17 Abs 1a leaves the liability arising on a share exchange unassessed on application by the contributor, with assessment following if the consideration is sold, otherwise ceases to be held, or is lost in a tax neutral way. A sale of the contributed shares by the receiving company itself, or their otherwise ceasing to be held in its business assets, counts as a sale of the consideration where the contributor emigrates, or transfers the consideration gratuitously, in that connection; and in that case the unassessed liability route of § 27 Abs 6 Z 1 lit. a of the income tax act does not apply. The consequence of the confusion is a body of advice that describes the right outcome for the wrong reason, and that falls apart the moment a specific event has to be tested against a specific rule.
The two provisions that matter are § 6 Z 6 of the Einkommensteuergesetz, which governs the valuation of business assets, and § 27 Abs 6, which governs private capital assets. They are not parallel regimes. Each borrows machinery from the other, and understanding which way each reference runs is the difference between a five year instalment plan and a liability that is never assessed at all.
Two provisions, and the reference that connects them
Section 6 Z 6 lit. a applies where assets of a domestic business or permanent establishment are transferred abroad into another business, or where domestic businesses or permanent establishments are relocated abroad, provided the businesses are connected by common ownership, co entrepreneurship, a participation of more than 25 per cent running either way between the taxpayer and the foreign corporation, or the same persons exercising or influencing the management or control of both. The assets are then taken at arm’s length values, the values that would have applied on a supply to a business wholly independent of the taxpayer, and the same holds for other services. Lit. b extends those values to any other circumstance leading to a restriction of the Republic of Austria’s taxing right in relation to other states.
Section 27 Abs 6 does something structurally similar for private capital assets. Its Z 1 treats as a disposal any circumstance leading to a restriction of Austria’s taxing right in respect of an asset within the capital income rules, a derivative, or a cryptocurrency, and § 27b Abs 3 applies that same Z 1 to realized crypto gains. Emigration by an individual is the ordinary case.
The connection runs from the second provision to the first. Outside the cases named in lit. a, which hold the specific relief described below, § 27 Abs 6 Z 1 lit. d directs that § 6 Z 6 lit. c and lit. d apply mutatis mutandis. That is why the five year instalment rule of the business provision governs private portfolios as well, and why an adviser who has read only § 27 will find no instalment mechanism there. It runs the other way too: § 6 Z 6 lit. h borrows § 27 Abs 6 Z 1 lit. e for business assets whose charge was never assessed, or never arose under § 16 Abs 1a of the Umgründungssteuergesetz.
The relief for private assets moving inside the Union and the Economic Area
For private capital assets there is a route that has no equivalent for business assets. Under § 27 Abs 6 Z 1 lit. a, on emigration of an individual to a European Union or European Economic Area state, the tax liability arising is, on application, only ruled upon in the assessment notice and is not assessed until the actual disposal of the asset or derivative. The same applies to a gratuitous transfer of such an asset to another individual resident in a Union or Economic Area state.
This is not a deferral of payment. It is a deferral of assessment, which is a different and more favourable thing. No instalments run, and no claim interest runs, because lit. c of that same Z 1 disapplies the claim interest of § 205 of the Bundesabgabenordnung, and the assessment is made only when a realizing event occurs, which the same letter treats as a retroactive event within § 295a of that code. Where the taxpayer re enters Austrian taxing rights while the liability remains unassessed, lit. e of that Z 1 keeps the original acquisition costs, capped at the common values, and the later disposal is then not treated as a retroactive event.
Two things count as an actual disposal for these purposes even though nothing is sold. A later emigration, or a later transfer of the asset, to a state not covered by the relief is one. Breach of the annual evidence obligation is the other, and it is dealt with below.
Five years, two years, and the calendar they run on
Where the instalment route applies, the periods differ by asset class. Lit. d spreads the instalments on fixed assets evenly over a period of five years, and lit. e spreads current assets evenly over two. Both start the same way: the first instalment falls due one month after notification of the tax assessment, and the further instalments on 30 June of the following years. In the two year case that means one payment a month after the notice and a second on 30 June of the following year.
The instalment route is available on application in two situations. The first is the transfer of assets within a business of the same taxpayer, or the relocation of businesses or permanent establishments within the meaning of lit. a, into a Union or Economic Area state. The second is a restriction of Austria’s taxing right within the meaning of lit. b vis à vis a Union or Economic Area state. Outside that perimeter the provision gives no instalment plan, and the charge is payable in the ordinary way.
Lit. d also disapplies § 205 of the Bundesabgabenordnung. That provision charges interest on differences of income tax and corporate tax for a period that ends at the notification of the assessment, so it bites on the assessed difference and not on the instalments themselves, the first of which falls due a month after that same notification. Lit. e contains no equivalent disapplication.
What makes the outstanding instalments fall due
Under lit. d, four events make the open instalments payable, and they do so to the extent that the event occurs rather than in full on every occasion. The first is that the assets, businesses or permanent establishments are sold, otherwise cease to be held, or are transferred or relocated to a state outside the Union and Economic Area. The second is that the place of management of a corporation is moved to a state outside that area.
The third is that the taxpayer files for insolvency or is wound up. The fourth is procedural: the taxpayer fails to pay an instalment, or pays too little, and does not cure that within twelve months of the due date. A missed instalment in Austria is therefore a recoverable administrative failure rather than an immediate collapse of the arrangement. A contribution under § 16 Abs 1 of the Umgründungssteuergesetz carries a trigger of its own, the consideration received being sold by the contributor or otherwise ceasing to be held. It is added to those four where the restriction of the taxing right is total, and, because the partial case has an exclusive trigger of its own, it replaces them where the restriction is partial.
Attached to all four is a reporting duty that is easy to overlook. The occurrence of any of those circumstances must be notified to the competent tax authority within three months of its occurrence. The provision states that duty impersonally and puts no Austrian intermediary in the chain, and it is triggered by events that may take place entirely within a foreign group.
The evidence obligation above 100,000 euros
The unassessed liability route for private assets carries a condition of its own, in § 27 Abs 6 Z 1 lit. f. Where the income determined under the first sentence of § 27a Abs 3 Z 2 lit. b, the difference between the asset’s common value when the restricting circumstances arise and its acquisition cost, comes to more than 100,000 euros in total in an assessment year, the taxpayer or his successor must prove to the competent tax office, until the liability is assessed, in writing or through FinanzOnline and stating his current address, that no event triggering assessment of the liability has yet occurred.
The proof is annual. It starts from the year in which the liability was not assessed and must be given by the end of the following year in each case. Where the proof is defective, the tax office must invite the taxpayer to remedy it within a reasonable period.
That obligation, and the deemed disposal attached to breaching it, took effect on 1 July 2026 and reach only non assessment applications ruled upon in notices issued after 30 June 2026. Files that predate it are on a separate and shorter timetable. Where a liability arising after 31 December 2005 was ruled upon in a notice issued before 1 July 2026, has still not been assessed in full, and the amount originally left unassessed exceeds 100,000 euros, § 124b Z 493 of the income tax act requires the taxpayer or his successor to prove by 31 December 2026, in writing or through FinanzOnline and stating his current address, that no event triggering assessment of the outstanding liability has yet occurred. That is a single filing on a fixed date, not the start of the annual cycle.
Breach of the annual obligation is one of the two events treated as an actual disposal. A holder who moves within the Union and the Economic Area, keeps his shares and simply stops filing the annual confirmation has converted an unassessed liability into an assessed one. Of all the failure modes in European exit taxation this is among the quietest, because nothing happens in the year of the breach except the loss of a status nobody was monitoring.
Coming back, and what Austria gives credit for
The provisions are drafted symmetrically, and the entry side is where the value of a well documented departure shows up. Under § 27 Abs 6 Z 1 lit. e, where Austria’s taxing right comes into existence in relation to another state, the common value counts as acquisition cost. That is the ordinary step up on immigration, and it applies to a person arriving with a portfolio built elsewhere.
The exception is the returning taxpayer. Where the liability was not assessed and Austrian taxing rights are re established, the original acquisition costs continue to apply, capped at the common values. A holder who left under the unassessed liability route and comes back does not obtain a step up on the way in. He resumes the position he had on the way out, which is the logical counterpart of never having been assessed.
The statute then adds a proof based relief. Where the taxpayer demonstrates that increases in value arose within the Union and Economic Area, those increases are deducted from the disposal proceeds. This is the provision that makes the departure valuation worth doing properly even where no tax is assessed at the time. The evidence that establishes what the asset was worth on the day of the move is the evidence that later limits the Austrian charge, and it cannot be reconstructed years afterwards from a different jurisdiction.
The rate, and why it decides the size of the problem
Income from capital assets is subject to a special rate of 27.5 per cent, with a lower rate of 25 per cent for bank deposits and unsecuritized other monetary claims against credit institutions, excluding compensation payments and lending fees. Income taxed at those rates is taken into account neither in the total amount of income nor in the income figure itself, unless the taxpayer opts for ordinary taxation. Neither rate is universal: § 27a Abs 2 lifts a list of cases out of both, among them loans with no banking transaction behind them and participation as a silent partner.
Applied to a departure charge on a privately held shareholding, 27.5 per cent on a latent gain accumulated over a decade is a substantial single figure, and it is the number against which the instalment plan and the unassessed liability route have to be measured. Five annual instalments spread that charge across five years. The unassessed liability route removes it until a sale actually occurs.
That is the hierarchy an Austrian departure file should establish first. Private assets moving inside the Union and the Economic Area sit at the top, with no assessment on application, except where § 17 Abs 1a of the Umgründungssteuergesetz disapplies that route on a deemed sale of the consideration. Business assets moving inside that area sit in the middle, with instalments on application. Anything moving outside the Union and the Economic Area sits at the bottom, with the tax due in the ordinary way.
Where the Austrian design leaves the planner
The Austrian rules reward a clean separation between business and private assets, because the two receive genuinely different treatment on the same journey. They reward a Union or Economic Area destination, because both reliefs are conditional on it. And they reward continuity of administration after the move, because both routes are defeated by procedural failure rather than by any commercial decision.
The point that most often goes unnoticed is the asymmetry of the acceleration triggers. Under the instalment route, the events that accelerate are commercial: a sale, a relocation, an insolvency. Under the unassessed liability route, the events that accelerate include a filing failure with no commercial content at all. The more favourable regime is the one with the more fragile condition attached to it.
In one mandate the whole Austrian analysis reduced to a single allocation of responsibility: who, in which country, would file the annual confirmation for the following eight years. The tax outcome had been settled in an afternoon. The administrative arrangement took considerably longer, and it was the part that determined whether the settled outcome would survive.
This article is informational and does not constitute tax or legal advice. The treatment of any structure depends on its facts and on the law of each jurisdiction involved. Each engagement is subject to scope and applicable regulation.