Austrian Administrative Supreme Court (VwGH) about the certificate of residence for capital gains tax relief

Following up on recent case law from the tax court (BFG), in a different legal matter, the Austrian Administrative Supreme Court (VwGH) now also addressed the requirement to provide a certificate of residence on specific Austrian forms (ZS-QU1 or ZS-QU2) to benefit from a withholding tax relief at source in its decision dated 9 October 2024 (Ra 2023/15/0066-7).

Facts

The VwGH decision was based on the following facts:

• The appellant offers seminars in Austria as part of the business and employed S, who is resident in Switzerland, as a speaker.
• S was subject to limited tax liability in Austria for his income from the engagement. Payments to S were subject to withholding tax in accordance with section 99 Austrian Income Tax Act (EStG).
• Based on to the DTA AT-CH, Switzerland has the exclusive right to tax the income. Therefore, the appellant applied for a relief at source in accordance with the DTA Relief Ordinance (DBA Entlastungsverordnung).
• A certificate of residence on the Austrian forms (ZS-QU1 or ZS-QU2) was not obtained, nor was a certificate of residence in other form (e.g. on foreign forms) or documents provided.

Decision of the VwGH

Generally, the VwGH dismissed the case on procedural grounds, but nonetheless mentioned the following:

The DTA Relief Ordinance provides that for relief at source, tax residency “can” be proven with a certificate of residence using certain forms (ZS-QU1 or ZS-QU2). According to the VwGH, based on the specific wording of the DTA Relief Ordinance, the certificate of residence does not have to be exclusively provided on the ZS-QU forms.

Since for payments under EUR 10,000, a written statement with certain information suffices for withholding tax relief instead of a certificate of residence, the VwGH implied that for relief at source for payments over EUR 10,000, a certificate of residence generally must be submitted. However, since no other prove of S’ residence in Switzerland was provided, the VwGH did not address the specific requirements how such a certificate of residence needs to be provided or whether residence could be proven by other documents.

Take-aways and implications

• According to the view of tax authorities (e.g., EStR Rz 8021b), the application of the DTA Relief Ordinance mandatorily requires the use of the forms ZS-QU1 or ZS-QU2 to obtain the certificate of residence. An exception applies only for Mexico, Thailand, Turkey, USA, Chile, Spain, Portugal, Belgium, and Greece (see the decree on the use of foreign forms for certificates of residence).
• The judgement itself is not a decision on the merits, but rather, the VwGH dismissed the complaint on procedural grounds. Nonetheless, in its decision, the VwGH suggests that the certificate of residence does not necessarily have to be provided on the respective forms (ZS-QU1 or ZS-QU2).
• However, it remains unclear in what form the certificate of residence will be accepted and whether residency can alternatively be proven by other, equivalent documents.
• The VwGH does not comment on the timely obtainment of the certificate of residence in this decision. However, the tax authorities and the BFG consider a certificate of residence issued within one year before or after the withholding obligation as timely.
• Even though the VwGH’s decision contradicts the strict view of the tax authorities, in order to avoid any discussions and to document the residency for a relief at source, it remains advisable to timely obtain the certificate of residence on the respective forms (ZS-QU1 or ZS-QU2).

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