Partial suspension of double tax agreement between Austria and Belarus

For the period June 2024 to December 2026 the application of Article 10 (dividends), Article 11 (interest) as well as Article 13 (gains from the alienation of property) of the double taxation agreement are suspended in both countries, resulting in a double taxation risk for Austria-Belarus transactions.

For the period 1 June 2024 to 31 December 2026, Belarus has unilaterally suspended Article 10 (dividends), Article 11 (interest) as well as Article 13 (gains from the alienation of property) of the double taxation agreement (DTA) between Austria and Belarus (Austrian Federal Law Gazette (BGBl) III 69/2002 as amended by BGBl III 129/2015). Austria reacted to the suspension by also suspending the application of Articles 10, 11 and 13 from 28 June 2024 to 31 December 2026.

Due to the suspension of Article 10 (dividends), Article 11 (interest) as well as Article 13 (alienation gains), Austria as well as Belarus may tax the income on the basis of national provisions. This might lead to a double taxation:

• Example 1: A Belarusian corporation holds shares in an Austrian corporation and sells them. Due to the suspended Article 13 DTA, both countries (Belarus and Austria) have the full taxation right for the capital gains (i.e., no exclusive taxation for Belarus).
• Example 2: Interest of a Belarusian corporation paid to an Austrian company face full Belarusian interest withholding tax (i.e., without a reduction to 5% pursuant to Article 11 DTA). The corresponding interest income is subject to Austrian corporate income tax, (without the possibility to credit the withholding tax pursuant to Article 23 DTA).

Due to the suspension of Articles 10, 11 and 13 of the DTA also Article 23 is inapplicable for dividends, interest and capital gains, i.e., there is no possibility to apply a credit or exemption method and it is not possible to initiate a mutual agreement procedure within the meaning of Article 25 in connection with the suspended allocation rules. However, it should be checked if there is a possibility to apply for an Austrian unilateral elimination of the double taxation (for the specific requirements, see our newsletter dated 13 June 2024 on the suspension of the DTA Russia.

Other Articles of the DTA remain applicable, whereby the allocation of the right of taxation of income that does not constitute dividends, interest or gains from the alienation of property within the meaning of Articles 10, 11 and 13 remains unaffected.

We recommend that all affected taxpayers assess the impact this suspension will have on their structures and transactions and, if necessary, take corresponding adjustment or relief measures (e.g., based on section 48 BAO). We are happy to support you with this matter.