New DTT with Turkmenistan

UniCredit Bank Austria AG
Summary: 
New DTT between Austria and and Turkmenistan will become applicable as of 1 January 2017
Thu, 31/12/2015

The Government of Austria and the Government of Turkmenistan entered into a new Convention on the avoidance of double taxation in respect of taxes on income and on capital.

The maximum withholding tax rates stipulated in the treaty are as follows:

Article 10 – Dividends

(i) 15 % of the gross amount of the dividends

(ii) 0% of the gross amount of the dividends, if the beneficial owner is a company (other than a partnership) that holds directly at least 25% of the capital of the company paying the dividends

Article 11 – Interest

(i) Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State

(ii) Such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, however if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10% of the gross amount of the interest. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.

(iii) Notwithstanding the provisions of paragraph (ii), interest referred to in paragraph (i) shall be taxable only in the  Contracting State of which the recipient is a resident if the beneficial owner of the interest is a resident of that State, and

a) is that State or the central bank, an administrative-territorial subdivision or local authority thereof
b) if the interest is paid by the State in which the interest arises or by an administrative-territorial subdivision, a local authority or statutory body thereof
c) if the interest is paid in respect of a loan, debt-claim or credit that is owed to, or made, provided, guaranteed or insured by, that State or an administrative-territorial subdivision, local authority or export financing agency thereof

The convention is already into force and shall have effect in respect of taxes for any fiscal year beginning on / after 1 January 2017.

 

Impact on investors: The new DTT between Austria and Turkmenistan will create a more favorable tax environment for eligible investors from both countries.