CFC Rules in Austria with Malta Ltd and Holding

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New member
Does anyone know and can explain to me if the income over a holding structure will be declared as passive or active income?

P.E I would move to Austria as Tax Resident and I have an active Malta company with substance (100% shares, office and two employees, one director ).

The Malta Setup Structure will be: active Ltd and additional Holing Ltd in Malta + LP in UK, 100% shares as limited partner

If I should pay out dividends from the Holding or the LP in UK, which I tax in Austria with 27.5% capital gains tax, is this income still active or is it considered passive because it comes from a holding structure and not directly from the active Ltd?

I am unsure about the passivity of the income in Holding Structure cases and if the CFC Rules would affect my business in Malta. The CFC Rules in Austria seem to be very lax and new.

The CFC rules in Austria will be triggered if the following requirements are fulfilled:
  • the foreign entity is “controlled” by an Austrian corporation, (i.e. when the Austrian corporation is directly or indirectly eligible for more than 50 % of the shares, profits, or voting rights),
  • more than one third of the income of the foreign entity is passive and
  • the actual tax burden of the foreign entity does not exceed 12.5 %.

However, the CFC regime does not apply, if the CFC carries out a substantial economic activity supported by staff, equipment, assets and premises (substance verification).

In that respect, new rules for the so-called change of method were set according to which dividend payments from foreign companies (participations exceeding 5 %) and capital gains from international intercompany holdings are not exempt from corporate taxation in Austria under certain circumstances.

The CFC rules do not apply if the controlled foreign company conducts “substantial economic activity” supported by staff, equipment, assets, and premises. This exemption will apply to both EU and third-country resident subsidiaries (and permanent establishments).


Resident in a high tax country and an active company with sufficient substance in a low tax country like Malta or Cyprus.
Does anyone have experience with such constellations?


Mentor Group Gold
In principle having enough aubatsn r and real operation should point towards an exemption from CFC rules, however Austria's local rules should be assessed carefully and please do not expect to find a solid solution upon which you can rely on from forums discussions

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