However, at a certain point this activity may create a tax presence.
A tax presence means that the local tax authorities consider your business as local enough to tax you — even if you have no legal entity, branch, or registration. In tax treaties this is called a permanent estabishment, but the concept is broader.
If your activities create a tax presence, this can trigger obligations such as:
corporate income tax on locally attributable profits
local bookkeeping and reporting requirements
registration with tax authorities
penalties or retroactive tax assessments if risks are missed
The difficulty is that tax presence is not always obvious.
Many companies assume that “no company” automatically means “no tax”, which is not always correct.
Tax presence risks often arise when a company:
has employees or directors working from another country
uses local sales agents or representatives
carries out long-term projects or on-site activities
operates warehouses or fixed facilities
manages local operations from a home office
Whether these activities create a tax presence depends on how authorities apply these tax rules in practice.
Tax presence questions in Austria are handled within a structured federal system with strong reliance on administrative guidance and court decisions.
Audits and assessments are carried out by the Austrian tax offices under the authority of the Federal Ministry of Finance (Bundesministerium für Finanzen, BMF), which also issues binding guidance on international tax matters (link).
Disputes are ultimately resolved by the Austrian Administrative Court (Verwaltungsgerichtshof, VwGH), whose decisions play a central role in defining when a foreign company is considered to have a permanent establishment in Austria (link).
Austrian practice is generally regarded as technical and consistent, with strong alignment to OECD principles and commentary.
Austria’s tax treaties largely follow the OECD model. Austrian authorities and courts frequently refer to the OECD Commentary when interpreting permanent establishment concepts, especially in cross-border service and sales structures.
A central question in Austrian analysis is whether activities carried out in Austria form an economically independent and durable part of the foreign enterprise’s business.
Remote work and home office arrangements have received increased attention in Austrian tax practice, particularly following the rise of cross-border telework.
According to Austrian administrative guidance and professional commentary, a home office may constitute a permanent establishment where it is used on a permanent basis for core business activities and is effectively at the disposal of the employer. Remote work performed merely for the employee’s convenience is generally considered lower risk (link).
During the COVID period, Austrian authorities acknowledged that temporary teleworking arrangements driven by public health measures would not normally create a permanent establishment, but this tolerance does not automatically apply to permanent remote setups (link).
Austria has a well-developed body of jurisprudence on dependent agent permanent establishments, with courts focusing on the actual role played by Austrian-based representatives.
In several VwGH decisions discussed in professional literature, Austrian courts have held that a permanent establishment may arise where Austrian-based sales representatives habitually participate in negotiations or effectively shape contractual outcomes, even if formal contract signature occurs abroad (link).
The analysis focuses on functional authority and economic substance rather than on formal job titles or contractual wording.
Scrutiny by Austrian tax authorities typically increases where employees or agents are permanently based in Austria, where Austrian-based roles are commercially decisive, where projects show continuity rather than isolated execution, or where home offices function as a stable operating base for the business.
Austrian audits tend to apply OECD-aligned reasoning in a methodical and documentation-driven manner.
If tax presence is established, Austria may assess corporate income tax on profits attributable to Austrian activities, accompanied by bookkeeping, profit attribution and transfer pricing documentation requirements.
Retroactive assessments are possible, particularly where activities have developed gradually without reassessment of the tax position.
In Austria, incorporation often becomes the cleaner option once personnel are permanently based in Austria, when sales or operational decision-making functions are exercised locally, or when the administrative burden of operating without a formal entity outweighs the flexibility of a remote structure. At that stage, incorporation typically provides greater certainty and simplifies both tax and operational compliance.
Across tax systems, the assessment of tax presence typically follows a consistent set of underlying principles:
Substance over legal form
Actual business activities and economic reality carry more weight than contractual labels or formal structures.
People and decision-making
Where key individuals work, negotiate, manage operations or make decisions is often decisive.
Continuity and regularity
Ongoing or recurring activities are treated differently from occasional or incidental involvement.
Economic value creation
Where value is created, managed or controlled is a central factor in tax attribution.
These principles explain why the absence of a legal entity does not automatically eliminate tax exposure.
Tax presence risk is most commonly associated with the following types of activities:
Employees or directors working structurally from another jurisdiction
Sales personnel or agents with decision-making authority
Long-term or recurring on-site projects
Fixed places of business such as offices, warehouses or workshops
Home offices used as a regular base for business operations
The decisive factor is rarely a single activity, but rather the combination, duration and functional role of these activities.
Certain activities are widely regarded as preparatory or auxiliary and typically do not, on their own, create tax presence:
Occasional business travel
Pure marketing or promotional activities
Independent agents acting in the ordinary course of their business
Short-term presence without operational continuity
Supporting functions without decision-making authority
Risk may still arise when these activities evolve or are combined with more substantive functions.