On June 8 2018, Kosovo and Austria signed the Convention for
Elimination of Double Taxation with the purpose of developing
their economic relationship and enhancing their co-operation in
tax matters. On July 27 2018, Kosovo ratified the treaty; thus
it will be effective from next year.
The convention will be applied to income tax and corporate
tax in Austria and to personal income tax and corporate income
tax in Kosovo.
According to the treaty, construction and installation
projects in progress for more than 12 months, and consultancy
services provided through personnel engaged for such purposes
in progress for more than six months, in a 12-month period will
be considered as constituting a permanent establishment.
The treaty defines a maximum withholding tax on dividends at
the rate of 15%. Interest will be taxed at 10% while royalties
will only be taxed in the state where the beneficial owner is
As regards the actual elimination of double taxation, both
countries will allow deduction from taxes in the amount of tax
paid in the other state.
The convention is expected to provide the opportunity to
strengthen the Kosovo economy and legal framework and to
attract more high-profile Austrian foreign investment into
Kosovo. We advise legal entities in both Kosovo and Austria
that are trading with the other country to seek professional
advice as regards the implications of the new treaty.
Lorina Pirgu (firstname.lastname@example.org)
Tel: +355 69 40 96 400