Double Taxation Convention with Austria Now Approved

Law 27803, published in the Official Gazette on April 10, 2026, approves the Convention between the Argentine Republic and the Republic of Austria for the Elimination of Double Taxation with respect to Taxes on Income and on Capital, and the Prevention of Tax Evasion and Avoidance. This Convention had been signed by both countries on December 6, 2019.

The Convention seeks to eliminate or mitigate the effects of double taxation on income and capital between both countries, by distributing tax powers, reducing withholding tax rates, and implementing a tax credit or exemption mechanism, as applicable. The Convention also includes a clause on the exchange of information between the competent authorities of the contracting states.

Broadly speaking, the Convention grants certain benefits over domestic legislation of both countries, applicable to source withholding taxes on payments of dividends, interest, royalties, and capital gains (among others) made by residents of one country to residents of the other. Most of these benefits are aligned with those provided for in other conventions of the same type that Argentina has signed with other countries.

Accordingly, among other provisions, the Convention establishes the following preferential tax rates:

The Convention also establishes specific rules for income derived from immovable property, shipping and air transport, independent personal services, employment, directors' fees, entertainers and sportspersons, pensions, government service, and students.

The residual rule under the Convention is that any income a company obtains without specific treatment in it will be considered a “business profit” taxed only in the beneficiary’s country of residence, unless it is attributable to a permanent establishment of such business in the other country. Accordingly, the Convention includes a broad definition of “permanent establishment,” in line with the OECD’s Model of Convention on Income and on Capital.

The Protocol also establishes, regarding certain types of income and the scope of the permanent establishment definition, that if Argentina grants more favorable treatment as a result of the conclusion of a new double taxation treaty or the amendment of an existing one, such more favorable treatment  must  automatically apply to the Convention, under the same conditions established in the treaty concluded with the other country. Argentina must adopt the domestic measures necessary to implement this provision.

In the area of capital taxation, the Convention provides that the immovable property of a resident of one contracting state that is located in the other contracting state may be taxed in both countries, except in the case of ships or aircraft used for international transportation, which may be taxed only in the contracting state in which the business’ place of effective management is located.

Likewise, the Convention determines methods to eliminate double taxation: while Argentina allows a tax credit for the tax paid in Austria (subject to certain limitations), Austria applies a combination of the credit method and the exemption method, depending on the type of income or capital involved.

On the other hand, the Convention incorporates an uncommon provision on mutual assistance in the collection of taxes between the contracting states. Under this clause, at the request of one country, the other country is required to collect the tax as if it were its own tax, applying its domestic legislation and even adopting interim or precautionary measures to ensure its collection. Nevertheless, there are certain limits applicable to such assistance, which suspend it when it is contrary to the public policy of the requested country, its domestic law, or where it would entail a disproportionate administrative burden in relation to the benefits that the other country could obtain.

The Convention includes an anti‑abuse clause—commonly referred to as the Principal Purpose Test or PPT—which denies the application of the benefits of the Convention in cases where it is reasonable to conclude that obtaining such benefits was one of the principal purposes of any arrangement or transaction that results, directly or indirectly, in those benefits. This clause also limits the application of the benefits of the Convention where the income is attributable to permanent establishments located in third countries, subject to certain conditions.

For the Convention to enter into force, each contracting state must notify the other, through diplomatic channels, that it has completed the internal legal procedures required for that purpose. Austria completed such notification in 2019. However, Argentina’s notification is still pending.

Indeed, the Convention will enter into force after Argentina’s notification, and its provisions will take effect for both countries as from January 1 (inclusive) of the calendar year following such notification. Accordingly, if Argentina notifies Austria of the fulfillment of the relevant domestic requirements during 2026, the Convention will begin to have effect as from January 1, 2027.