Posted: 02 Nov. 2021 6 min. read



The EAS legal notice of the Austrian Federal Ministry of Finance (“BMF”) from 2 July 2021 deals with the issue of taxation of directors’ fees in the case of remote management. If an Austrian resident (sole) director of a GmbH with its registered office in Germany is predominantly active in Austria ("remote management"), the BMF is of the opinion that the special provision of Art 16 para 2 of the Double Taxation Agreement between Austria and Germany ("DTA AT-GER") applies to determine the right of taxation for directors' fees. However, this only applies if the company is resident in Germany for tax purposes under treaty law.

Legal basis

Art 16 para 2 DTA AT-GER stipulates that directors’ fees received by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in the State in which the company is a tax resident under the treaty. The provision expands the OECD-MC 2017 by additionally applying the home state taxation for remuneration from management activities and not only for remuneration from activities comparable to a position in the supervisory and administrative board. According to the wording of the provision, the prerequisite for the application of this special rule is that the tax residence of the director and the company is not in the same contracting state. If the present provision is not applicable, other treaty norms are to be applied. Thus, for the company established in Germany, the preliminary question to be examined is – irrespective of the (sole) director residing in Austria – whether the business management of the company is located in Germany. The standard of review under treaty law is the "place of effective management".

Mutual Agreement

The interpretation of the BMF results directly from the wording of the treaty, which means that this preliminary question must be examined individually in accordance with the specific facts of the case. However, the present answer provided in EAS 3433 has practical relevance against the background of an existing administrative agreement between Germany and Austria on the taxation of directors’ fees in the case of remote management:

In the framework of the Mutual Agreement of 1 June 1994 on the DTA AT-GER 1954, it was stated in a simplified manner that – as long as this is compatible with other OECD-uniform regulations – the place of effective management is deemed to be the place where the instructions of the managing bodies are received. As a result, this will regularly lead to taxation in the country in which the company has its registered office. According to the agreement and with an exception for letterbox companies, the same would apply to the assessment of the question of the "domicile" of a company within the meaning of the treaty. In general, this interpretation was maintained during consultation talks of 27 March 2006 between Austria and Germany on the DTA AT-GER 2000. Additionally, it was stated that in the case of remote management by a sole managing director, it must be examined in which contracting state the place of effective management of the company is located. Within the framework of a collective decree of 17 June 2021, the designated agreement has now been repealed as "no longer necessary".


A prerequisite for the applicability of the special provision of Art 16 para 2 DTA AT-GER in the case of remote management by a member of the board of directors is the residence of the company in the country of its registered office under treaty law. The place of effective management of the company within the meaning of the treaty and, not least, the relevant principles of interpretation developed by the OECD apply as a benchmark. If the aforementioned provision is not applicable, the contractual/factual terms of the director’s agreement must be examined. The allocation of the right of taxation under treaty law then takes place, for example, for income from employment (bound by instructions) or for income from self-employment/commercial activity.

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Sandra Rusnak, LL.M. (WU)

Sandra Rusnak, LL.M. (WU)

Associate Steuerberatung | Deloitte Österreich

Sandra Rusnak ist in der Steuerberatung bei Deloitte Wien beschäftigt. Ihre Tätigkeitsschwerpunkte liegen im internationalen Steuerrecht und der Konzernsteuerberatung.