{"id":31331,"date":"2026-03-09T08:49:24","date_gmt":"2026-03-09T08:49:24","guid":{"rendered":"https:\/\/artus.at\/?p=31331"},"modified":"2026-03-09T08:49:24","modified_gmt":"2026-03-09T08:49:24","slug":"taxation-of-expats-part-1-shift-of-tax-residence-whats-behind-it-tax-implications","status":"publish","type":"post","link":"https:\/\/artus.at\/en\/blog\/taxation-of-expats-part-1-shift-of-tax-residence-whats-behind-it-tax-implications\/","title":{"rendered":"Taxation of Expats \u2013 Part 1: Shift of Tax Residence \u2013 What\u2019s Behind It? Tax Implications?"},"content":{"rendered":"<p><span data-contrast=\"auto\">To ensure that an expatriate (\u201cexpat\u201d) is taxed correctly, the first step is to\u00a0determine\u00a0in which country he or she is considered\u00a0<\/span><b><span data-contrast=\"auto\">tax resident<\/span><\/b><span data-contrast=\"auto\">.\u00a0But what does \u201cexpat\u201d actually mean \u2013 and what is meant by \u201ctax residence\u201d?<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<h3><span style=\"color: #99cc00;\">Who is considered an expat?\u00a0<\/span><\/h3>\n<p><span data-contrast=\"auto\">An expat is generally understood to be a\u00a0person who works across borders \u2013 for example, employees who work abroad for a fixed or indefinite\u00a0period of time.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<h4><span style=\"color: #99cc00;\">Tax residence \u2013 the basics\u00a0<\/span><\/h4>\n<p><span data-contrast=\"auto\">A person is considered\u00a0<\/span><b><span data-contrast=\"auto\">resident<\/span><\/b><span data-contrast=\"auto\">\u00a0in the country in which he or she either<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"2\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">has a place of\u00a0<\/span><b><span data-contrast=\"auto\">residence<\/span><\/b><span data-contrast=\"auto\">, or<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"2\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">has his or her\u00a0<\/span><b><span data-contrast=\"auto\">habitual abode<\/span><\/b><span data-contrast=\"auto\">.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\n<\/ul>\n<h3><span style=\"color: #99cc00;\">Place of residence:\u00a0<\/span><\/h3>\n<p><span data-contrast=\"auto\">Under the Austrian Federal Fiscal Code (Bundesabgabenordnung \u2013 BAO), a place of residence is a location that is available at any time and is equipped in such a way that it is suitable for permanent living, combined with the intention to\u00a0retain\u00a0it.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">Does a derived place of residence with one\u2019s parents also qualify as a place of residence under the BAO?<\/span><\/b><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"3\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">Minor taxpayers or those still in education may have a\u00a0<\/span><b><span data-contrast=\"auto\">derived place of residence<\/span><\/b><span data-contrast=\"auto\">\u00a0with their parents.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"3\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">However, the Federal Fiscal Court (Bundesfinanzgericht \u2013 BFG) recently held that sporadic visits by adult children to their parents\u00a0<\/span><b><span data-contrast=\"auto\">do not<\/span><\/b><span data-contrast=\"auto\">\u00a0constitute a derived place of residence, particularly where no separate key exists, visits take place only with consent, the former children\u2019s room is also used by siblings, and personal belongings have been removed.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\n<\/ul>\n<h4><span style=\"color: #99cc00;\">Habitual abode:\u00a0<\/span><\/h4>\n<p><span data-contrast=\"auto\">Irrespective of a place of residence, a person is\u00a0deemed\u00a0to have his or her habitual abode in the place where he or she stays for\u00a0<\/span><b><span data-contrast=\"auto\">more than 183 days<\/span><\/b><span data-contrast=\"auto\">\u00a0per year.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">As a result, it is possible for someone to be considered resident\u00a0<\/span><b><span data-contrast=\"auto\">in several states at the same time<\/span><\/b><span data-contrast=\"auto\">\u00a0\u2013 for example, if places of residence exist in two countries. Anyone who is resident in a country is subject there to\u00a0<\/span><b><span data-contrast=\"auto\">unlimited tax liability<\/span><\/b><span data-contrast=\"auto\">. To avoid\u00a0<\/span><b><span data-contrast=\"auto\">double taxation<\/span><\/b><span data-contrast=\"auto\">, Austria has concluded double taxation agreements (DTAs) with around 90 countries.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<h4><span style=\"color: #99cc00;\">Dual residence and the \u201ctie-breaker\u201d rule\u00a0<\/span><\/h4>\n<p><span data-contrast=\"auto\">If dual residence exists, the so-called\u00a0<\/span><b><span data-contrast=\"auto\">tie-breaker rule<\/span><\/b><span data-contrast=\"auto\">\u00a0determines\u00a0which state has the right to tax worldwide income. The criteria are applied in the following order:<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<ol>\n<li aria-setsize=\"-1\" data-leveltext=\"%1.\" data-font=\"Arial\" data-listid=\"4\" data-list-defn-props=\"{&quot;134224900&quot;:false,&quot;335552541&quot;:0,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:[65533,0],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;%1.&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Permanent home<\/span><\/b><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\n<li aria-setsize=\"-1\" data-leveltext=\"%1.\" data-font=\"Arial\" data-listid=\"4\" data-list-defn-props=\"{&quot;134224900&quot;:false,&quot;335552541&quot;:0,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:[65533,0],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;%1.&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Centre of vital interests<\/span><\/b><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\n<li aria-setsize=\"-1\" data-leveltext=\"%1.\" data-font=\"Arial\" data-listid=\"4\" data-list-defn-props=\"{&quot;134224900&quot;:false,&quot;335552541&quot;:0,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:[65533,0],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;%1.&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Habitual abode<\/span><\/b><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\n<li aria-setsize=\"-1\" data-leveltext=\"%1.\" data-font=\"Arial\" data-listid=\"4\" data-list-defn-props=\"{&quot;134224900&quot;:false,&quot;335552541&quot;:0,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:[65533,0],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;%1.&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Nationality<\/span><\/b><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\n<li aria-setsize=\"-1\" data-leveltext=\"%1.\" data-font=\"Arial\" data-listid=\"4\" data-list-defn-props=\"{&quot;134224900&quot;:false,&quot;335552541&quot;:0,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:[65533,0],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;%1.&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Mutual agreement procedure between the two states<\/span><\/b><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\n<\/ol>\n<p><span data-contrast=\"auto\">In practice, particular importance is attached to the\u00a0<\/span><b><span data-contrast=\"auto\">centre of vital interests<\/span><\/b><span data-contrast=\"auto\">. This involves examining the closer personal and economic ties, with greater weight given to\u00a0<\/span><b><span data-contrast=\"auto\">personal relationships<\/span><\/b><span data-contrast=\"auto\">. Relevant factors include family ties, social, religious or cultural engagement, as well as private activities (club memberships, collections, etc.). The place where the family lives on a permanent basis is generally decisive, whereas the main source of income or a mere registration of residence has only indicative value.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<h4><span style=\"color: #99cc00;\">Foreign assignment: when does residence shift?\u00a0<\/span><\/h4>\n<p><span data-contrast=\"auto\">In the case of<\/span><b><span data-contrast=\"auto\">\u00a0temporary foreign assignments<\/span><\/b><span data-contrast=\"auto\">, the tax authorities assess a shift in residence\u00a0based on the duration of the work performed abroad\u00a0as follows:<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"5\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">less than 2 years:<\/span><\/b><span data-contrast=\"auto\">\u00a0generally no change of residence \u2013 even if the family\u00a0relocates,<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"5\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">more than 5 years:<\/span><\/b><span data-contrast=\"auto\">\u00a0regular shift of the\u00a0centre\u00a0of vital interests if the family\u00a0relocates\u00a0as well,<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"5\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">2 to 5 years:<\/span><\/b><span data-contrast=\"auto\">\u00a0case-by-case assessment.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-contrast=\"auto\">In a 2023 decision, the Federal Fiscal\u00a0Court\u00a0stated\u00a0that even an\u00a0<\/span><b><span data-contrast=\"auto\">unplanned shortened<\/span><\/b><span data-contrast=\"auto\">\u00a0stay abroad (in the specific case, 23 months in the USA)\u00a0may lead\u00a0to a shift in residence, even if the domestic place of residence is\u00a0retained.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"6\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Factors in\u00a0favors\u00a0of the USA included:<\/span><\/b><span data-contrast=\"auto\">\u00a0relocation of the entire\u00a0family\u00a0including pets, an originally planned three-year stay with\u00a0an extension option, children attending school in the USA, job and training activities of the spouse in the USA, and a US salary account.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"6\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Factors in\u00a0favors\u00a0of Austria included:<\/span><\/b><span data-contrast=\"auto\">\u00a0continued Austrian social security coverage, donations to Austrian recipients, transactions via Austrian bank\/savings accounts, and planned reintegration of the children into the Austrian school system.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-contrast=\"auto\">Due to the absence of a clear\u00a0centre\u00a0of vital interests,\u00a0the\u00a0Federal Fiscal\u00a0Court (Bundesfinanzgericht\u00a0\u2013 BFG)\u00a0ultimately based\u00a0its decision on the\u00a0<\/span><b><span data-contrast=\"auto\">habitual abode<\/span><\/b><span data-contrast=\"auto\">\u00a0in the USA. However, the Administrative\u00a0Supreme Court\u00a0(Verwaltungsgerichtshof\u00a0\u2013\u00a0VwGH) overturned this\u00a0decision\u00a0and considered the continuing ties to Austria \u2013 in\u00a0particular\u00a0the ongoing Austrian employment contract and the school planning for the children \u2013 to be stronger, with the result that tax\u00a0<\/span><b><span data-contrast=\"auto\">residence remained in Austria.<\/span><\/b><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<h3><span style=\"color: #99cc00;\">Conclusion\u00a0<\/span><\/h3>\n<p><span data-contrast=\"auto\">In practice, we\u00a0increasingly encounter cases in which\u00a0taxpayers attempt to avoid Austrian unlimited tax liability by establishing a place of residence in a low-tax country. However, this\u00a0<\/span><b><span data-contrast=\"auto\">does not always succeed<\/span><\/b><span data-contrast=\"auto\">, particularly if an Austrian place of residence is maintained.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">In this context, the recent case law of the Federal Fiscal Court regarding derived\u00a0<\/span><b><span data-contrast=\"auto\">places of residence with parents<\/span><\/b><span data-contrast=\"auto\">\u00a0is welcome, as it does not\u00a0recognize\u00a0mere \u201cvisits\u201d by adult children as constituting a place of residence.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Anyone\u00a0seeking\u00a0to change their tax residence while\u00a0retaining\u00a0their Austrian place of residence during a stay abroad may consider, as a risk-minimizing\u00a0measure,\u00a0<\/span><b><span data-contrast=\"auto\">renting<\/span><\/b><span data-contrast=\"auto\">\u00a0out the property for the duration of the foreign assignment.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Your ARTUS advisors\u00a0will be\u00a0happy to support you with advice and assistance (<span style=\"color: #99cc00;\"><a style=\"color: #99cc00;\" href=\"mailto:info@artus.at\">info@artus.at<\/a><\/span>).<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>To ensure that an expatriate (\u201cexpat\u201d) is taxed correctly, the first step is to\u00a0determine\u00a0in which country he or she is considered\u00a0tax resident.<\/p>\n","protected":false},"author":15,"featured_media":30955,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1801,1802],"tags":[2232,2233,2235],"class_list":["post-31331","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-law-taxation","category-international-en","tag-expat","tag-international","tag-residence"],"acf":[],"_links":{"self":[{"href":"https:\/\/artus.at\/en\/wp-json\/wp\/v2\/posts\/31331","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/artus.at\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/artus.at\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/artus.at\/en\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/artus.at\/en\/wp-json\/wp\/v2\/comments?post=31331"}],"version-history":[{"count":7,"href":"https:\/\/artus.at\/en\/wp-json\/wp\/v2\/posts\/31331\/revisions"}],"predecessor-version":[{"id":31405,"href":"https:\/\/artus.at\/en\/wp-json\/wp\/v2\/posts\/31331\/revisions\/31405"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/artus.at\/en\/wp-json\/wp\/v2\/media\/30955"}],"wp:attachment":[{"href":"https:\/\/artus.at\/en\/wp-json\/wp\/v2\/media?parent=31331"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/artus.at\/en\/wp-json\/wp\/v2\/categories?post=31331"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/artus.at\/en\/wp-json\/wp\/v2\/tags?post=31331"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}