27 May 2014 – The agreement between the Austrian Republic and the United States named Foreign Account Tax Compliance Act (“FATCA”) was signed by both parties on 29th April 2014 in Vienna. By entering this agreement Austria avoided a 30 % withholding tax on capital income by U.S. Authorities. The US congress enacted the FATCA already in 2010 with the goal to ensure that U.S. taxpayers with bank accounts abroad must comply with the American Tax Law System. Generally speaking there are two alternative Models to comply with FATCA. Model 1 foresees an automatic exchange of tax-related information between the tax authorities. Austria decided to implement Model 2; meaning that Austria will enable and oblige Austrian Credit Institutions and other Financial Institutions to directly report accumulated information about so called “recalcitrant” account holders to the U.S. Tax Authorities (herein after “IRS”). An account holder is classified “recalcitrant” if he did not agree to disclosure his foreign accounts to the IRS. The accumulated information is the basis for further group queries, where IRS may request further detailed information from Austrian authorities. Austrian authorities have to deliver the requested information within at least eight months. This agreement is reciprocal, meaning that the United States will also provide similar tax information to Austria regarding individuals and entities from Austria with accounts in the United States.
Dr. Caroline Toifl (former Kindl) is a lawyer in Vienna specialized in white collar crime and compliance (for more information see www.carolinetoifl.at). She was admitted to the bar in 2015 and is as well approved as Tax Advisor in Austria since 2011. She worked at the University of Vienna in the department of tax law and wrote her PhD thesis on a new and fraud-resistant VAT system. Dr. Toifl also previously worked with BDO tax advisors and as part of the political staff for the Austrian minister of justice, where she was responsible for criminal law and budget issues. www.carolinetoifl.at