October 4, 2026

Double Taxation Agreement (DTA) Between Austria and the UAE

Unlike Germany, Austria has a double taxation agreement (Doppelbesteuerungsabkommen, DBA) with the United Arab Emirates. It dates from 2003 and has applied since 2005. What matters, however, is what happened to it in 2023, because since then it works completely differently for people moving to the UAE than it did before.

The change that altered everything

On 30 June 2021, both countries signed an amending protocol. After the exchange of instruments of ratification in December 2022, it entered into force on 1 March 2023 and has applied since 1 January 2023.

The most important change concerns the article on the method for eliminating double taxation. Until the end of 2022, the exemption method applied from the Austrian perspective: income whose taxation the treaty allocated to the Emirates was exempt from tax in Austria. Since the UAE does not levy income tax at the level of the individual, this resulted in many cases in legal double non-taxation.

Since 2023, the credit method has applied. Austria taxes the income and credits the tax paid in the Emirates. Where no tax arises there, there is nothing to credit, and the Austrian tax remains in full.

Point	until 31.12.2022	since 01.01.2023
Method	Exemption	Credit
Effect with 0% in the UAE	no taxation	full Austrian tax
Portfolio dividends from Austria	no withholding tax	10% withholding tax
Exchange of information	limited	full OECD exchange-of-information standard

What this means in practice

For persons resident in Austria with income from the Emirates, the level of taxation is raised to the higher of the two countries, which in this constellation is practically always the Austrian level.

So if you live in Austria and receive income from Dubai, you can no longer rely on the exemption since 2023. The treaty still prevents double taxation, but it no longer provides a tax advantage.

For the reverse case, residence in the Emirates and income from Austria, the treaty nevertheless remains the decisive framework.

Withholding tax on dividends

For dividends paid after 31 December 2022, the source state may withhold ten per cent. This affects individuals resident in the Emirates who receive distributions from an Austrian company.

There is an exception for substantial holdings: with a shareholding of at least ten per cent of the capital, the dividend remains free of tax in the source state. For holding structures, this is the key difference from a portfolio shareholding, and a reason to set the size of the shareholding deliberately.

How the treaty determines residence

Unlike the situation with Germany, there is an order of priority here for disputes. If an individual has a home in both states, the centre of vital interests decides.

Permanent home in one of the two states
If there is a home in both: centre of vital interests
Then habitual abode
Finally, nationality

This is a considerable advantage over the German situation. If a conflict arises, there is a rule that resolves it, and a mutual agreement procedure between the tax administrations.

The other allocation rules

Immovable property: taxed in the state where the property is located. Austrian rental income remains taxable in Austria
Business profits: taxed in the state of residence, unless there is a permanent establishment in the other state
Permanent establishment: building sites constitute one after twelve months
Employment income: generally taxed in the state where the work is performed

What has been added since UAE Corporate Tax

Since June 2023, the Emirates have levied Corporate Tax of 9% on profits above AED 375,000. For applying the treaty, this is a noticeable change: for the first time, a tax arises at company level that can actually be credited.

For free zone companies with Qualifying Free Zone Person status, however, the rate remains 0% on qualifying income, and therefore there is nothing to credit. If you use this structure and remain resident in Austria at the same time, you bear the full Austrian tax burden.

The certificate of residence also becomes more important. If you rely on the treaty vis-à-vis the Austrian tax administration, you need proof that you are resident in the Emirates. The Tax Residency Certificate issued by the Federal Tax Authority is the usual document for this; it requires a minimum period of stay and a home in the UAE.

The full exchange of information

With the revision, the information exchange clause was brought into line with the OECD standard. Both administrations can exchange information comprehensively, not only for treaty purposes but also to enforce national tax law.

Together with the automatic exchange of information under the Common Reporting Standard, this means that accounts and shareholdings in the Emirates are known to the Austrian tax administration. The idea of foreign assets going unnoticed holds no more water here than it does in the German context.

How we assess it

For Austrian clients, the situation is better in one respect and worse in another than for German clients.

Better, because a treaty exists: there is an order of priority for residence, a mutual agreement procedure and clear allocation rules. If you move cleanly, you have more legal certainty than a German client in the same situation.

Worse, because the credit method neutralises the advantage as long as residence remains in Austria. The former effect of making income from the Emirates tax-free in Austria no longer exists since 2023.

This leads to a clear consequence: relief does not come from the treaty but from actually relocating your residence. Half-measures, such as a home in Austria and a company in Dubai, no longer work from a tax perspective.

Our division of roles: we build and document the UAE side. Assessing the Austrian consequences is a matter for your tax adviser there; on request, we coordinate with them directly.