2. Table (Nako/Selimi/Schindler)

DTT
Albania/Austria

DTT Albania/Austria vs OECD-MC
Income and Capital Tax Treaty (2008)

Entry into force

1 September 2008

Effective Date

1 January 2009

Art 4 Resident

Art 4 of this Convention does not contain any special provisions in contrast to the OECD-MC.

Art 5 Permanent establishment

Art 5 para 3 lit a of this Convention foresees that a building site, a construction, assembly or installation project or supervisory activities in connection therewith constitutes a permanent establishment only if it lasts more than nine months in the calender year concerned.
In addition to that, Art 5 para 3 lit b of this Convention foresees that the term „permanent establishment“ likewise encompasses the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged for such purposes, but only where activities of that nature continue within the country for a period or periods exceeding in the aggregate six months in the calender year concerned.

Art 6 Income from immovable property

In contrast to the OECD-MC, Art 6 para 4 of this Convention stipulates that the provisions of para 1 and para 3 of this Art shall also apply to income from immovable property in use for the performance of independent personal services. This means that income derived from such immovable property situated in the other Contracting State is taxable in the other Contracting State.

Art 7 Business profits

Art 7 of this Convention corresponds to Art 7 of the OECD-MC.

Art 8 International traffic

Art 8 of this Convention corresponds to the OECD-MC.

Art 10 Dividends

In accordance with the OECD-MC, Art 10 para 2 lit a of this Convention states that dividends may be taxed in the Contracting State of which the legal entity paying the dividends is a resident and according to the laws of that State, but the withholding tax shall not exceed 5 per cent of the gross amount of the dividends if the beneficial owner is a company (other than a

partnership) which holds directly at least 25 per cent of the capital of the company paying the dividends.
Art 10 para 2 lit b, in accordance with the OECD-MC, provides that in all other cases the withholding tax shall not exceed 15 per cent of the gross amount of the dividends.

Art 11 Interest

According to Art 11 para 2 of this Convention, interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner is a resident of the other Contracting State, the withholding tax shall not exceed 5 per cent of the gross amount of the interest.
Art 11 para 3 of this Convention provides that, notwithstanding the provisions of para 2, interest arising in a Contracting State and paid to the Government of the other Contracting State or interest paid in respect of a loan or credit granted, guaranteed or insured by the Oesterreichische Kontrollbank AG or a similar Albanian public entity, the objective of which is to promote export, shall be exempt from tax in the firstmentioned Contracting State.
Art 11 para 6 states – in addition – that interest shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, a local authority or a resident of that State.

Art 12 Royalties

In contrast to the OECD-MC, Art 12 para 2 of this Convention stipulates that royalties may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the beneficial owner is a resident of the other Contracting State, the withholding tax shall not exceed 5 per cent of the gross amount of the royalties. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.
Furthermore, Art 12 para 5 states that royalties shall be deemed to arise in a Contracting State when the payer is a person who is a resident of that State.

Art 13 Capital gains

Art 13 of this Convention does not contain a special provision concerning gains from the alienation of

shares of a company, the property of which consists directly or indirectly principally of immovable property.

Art 14 Independent personal services

This Convention still includes an Art 14 (which is deleted in the OECD-MC) stating that income derived from professional activities or other similar services of an independent character shall be taxable only in the state of residence, except if the earner has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities or if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the calendar year concerned (and this only applies to the income that is attributable to the fixed base or activities performed in that State).

Art 15 Income from employment

Art 15 of this Convention corresponds to the OECD-MC.

Art 16 Directors' fees

Art 16 of this Convention corresponds to Art 16 of the OECD-MC, including special provisions concerning directors' fees.

Art 17 Artistes and sportsmen

Art 17 para 3 of this Convention, in contrast to the OECD-MC, provides that income mentioned in this Article shall be exempt from tax in the Contracting State in which the activity of the artist or sportsman is exercised, provided that this activity is wholly or mainly supported out of public funds of this State or a political subdivision or a local authority thereof or by an institution which is recognised as a non-profit institution.

Art 21 Other income

Art 21 of this Convention – corresponding to Art 21 of the OECD-MC – states that income not dealt with in the other articles of the Convention shall be taxable only in the state of residence.

Art 23 Elimination of double taxation

According to Art 23 of this Convention, double taxation shall be avoided in Austria by the exemption method with progression and in Albania by the credit method.

Art 26 Exchange of information

Art 26 of this Convention stipulates that the competent authorities of the Contracting States shall exchange information concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to the provisions of this Agreement.