It is unlimited in the sense that they are basically subject to income tax on all their worldwide income and gains. Moreover, natural persons without domestic or habitual residence in Austria may have to pay taxes on certain income earned in Austria.
Double taxation agreements (or DTA) are in place to avoid dual taxation and regulate the distribution of tax income between member countries depending on the income source. A DTA member country may use their taxation rights in accordance with their national laws. Currently, Austria has DTAs with over 90 countries.
Most DTAs allocate taxation rights to the country of residence of the self-employed person, unless the self-employed person operates from a permanent establishment in Austria (i.e. office or studio). A permanent establishment is defined as a concrete and permanent center for work activities. In such cases, only income from work at the permanent establishment is taxed in Austria. Nevertheless, tax liabilities for performing artists are regulated separately in many DTAs, even when a permanent establishment exists; under certain conditions, Austria receives the right of taxation.
Income from employed work in Austria is generally also taxed in Austria. Exceptions in DTAs are typically made for individuals residing in Austria for less than 183 days within a (usually calendar) year, for employers without residence in Austria, and in cases when payments are not distributed from a workplace or permanent establishment in Austria.
In general, tax rates for taxable income from persons with limited tax liabilities are the same as for persons with unlimited tax liabilities in Austria.
Depending on the method of avoiding double-taxation in the applicable DTA,
a) income taxed in Austria is tax-exempt in the country of residence; the tax-exempt income is usually included and increases the overall income progressively (tax exemption, generally with progression provision), or
b) taxes paid in Austria are credited in the country of residence (tax credit).
In case of point b), the country of residence taxes the entire world income and then deducts taxes paid in Austria from the total tax debt.
Special regulations for performance artists
In accordance with applicable DTAs, performance artists are exclusively individuals who directly (on stage) or indirectly (in film or on television) appear in public. This provision applies inter alia to actors, musicians, stunt performers, artists, supporting actors, models, and similar individuals. Inclusion in this group is based on the entertainment character, not the artistic quality of the work. In the context of taxation, it is irrelevant whether the work is performed in an employed or self-employed situation. This provision does not apply to manufacturing artists and crew members, such as the director, camera people, set designers, choreographers, sound engineers, etc.
In accordance with the basic rules of applicable DTAs, performing artists are taxed in Austria for work and services performed and compensated in Austria. This provision also applies when the work or services are not paid directly to the artist but to a third party (i.e.: marketing agency; a process also known as “Kuenstlerdurchgriff” in Austria). It should be noted, however, that certain DTAs include regulations with regard to performing artists which deviate from the general tax code, e.g. the DTA with the United States stipulates that Austria only has the right to tax an annual gross income exceeding USD 20,000, including reimbursed or incurred expenses.
In general, a 20% flat tax is withheld on the gross income (including all reimbursed expenses and benefits in kind but excluding any potential sales tax) at the point of payment (employer/client), independent of the artist’s employment status (employed/self-employed).
Expenditures directly related to the income may be deducted from the gross income at the time of tax deduction, if the income recipient of limited tax liability resides in an EEA country, and if the expenses were presented to the debtor in writing. In such a case, tax rates of 35% for all natural persons and of 25% for all others apply.
The debtor may be exempt from mandatory tax deduction under certain conditions, if the debtor does not directly pay the artist of limited tax liability but instead an artist agency (i.e. AKM, Austro-Mechana, Literar-Mechana); the agency shall perform the tax deduction when transferring the agreed amount to the creditor.