25. March 2026 In times of increasing geopolitical uncertainty, the international planning of assignments and secondments of employees is also facing serious challenges. Ideally, such assignments are planned long-term, and all tax and social security aspects should be clarified before the secondment begins. But what happens if such a cross-border assignment is interrupted prematurely or even terminated, and employees resume work in their home country?
At the employee level, tax residency is of central importance for the correct taxation of income. An overview of how tax residency is determined considering Austria’s bilateral double taxation agreements (DTAs) and the implications of such classification can be found in our blog post dated March 9, 2026.
Implications for the employee
If it was originally assumed that tax residency would shift abroad for example, because the employee’s family accompanied them during the planned assignment it must be examined whether, in the case of premature termination of the assignment in what has now become a crisis region, such a relocation of the center of vital interests occurred for tax purposes.
Recent Austrian case law has ruled that in cases of premature termination and for assignments not exceeding 24 months, a relocation of the center of vital interests should generally not be assumed.
If this administrative practice is applied analogously to cases where foreign assignments are terminated early due to force majeure and employees return to their home country, this could result in income that was originally taxed abroad, based on the assumption of a shift in the center of vital interests, becoming taxable in Austria. Consequently, Austria may regain the right to tax such income, meaning that the activity performed abroad could be considered taxable in Austria from the outset.
If taxes have already been paid in the host country, it must be assessed to what extent these taxes can be reclaimed or credited in Austria under the applicable double taxation agreement.
Implications for the employer
Additionally, in cases where employees receive remuneration from foreign companies while working from a home office in Austria for those same companies, it must be examined to what extent Austria has the right to tax this income and whether the company establishes a permanent establishment in Austria.
Such a permanent establishment may have not only corporate tax consequences but also far-reaching payroll tax implications. If the Austrian tax authorities assume that a permanent establishment exists due to the employee’s home office, the remuneration may have to be taxed through a monthly (shadow) payroll in Austria.
Conclusion
The international assignment of employees is a key component of business operations for many companies. It enables the development of global structures, knowledge transfer, and the servicing of international markets. However, when geopolitical crises, such as the sudden outbreak of war or similar exceptional situations, force companies to terminate assignments at short notice and repatriate employees, a wide range of tax issues arises.
In particular, the correct allocation of taxing rights for employment income under double taxation agreements at the employee level, as well as the proper withholding and reporting of payroll taxes by employers, requires thorough analysis.
Your ARTUS team will be happy to assist you with the proper handling of these matters info@artus.at.
