Private Clients & Estate Planning

The tax implications of establishing a trust or foundation are highly complex and require meticulous attention (e.g., foundation entry tax, real estate transfer tax, exit taxation, withholding tax on securities transfers, ongoing taxation, gift taxation, and tax-neutral substance distributions).

For existing foreign foundations and trusts, distributions to the founder or beneficiaries often present significant tax challenges.

We analyze your foreign foundation or trust, assist in resolving historical tax issues, and optimize your structure for the future!

The Non-Profit Act of 2015 enhanced the attractiveness of the legal form of charitable or benevolent federal foundations under the Federal Foundation Act (BStFG). In addition, it is possible to establish charitable foundations under state legislation and the Private Foundation Act. Significant differences exist between these legal forms—particularly regarding supervisory requirements and transparency—making it essential for founders and philanthropists to carefully consider which structure best aligns with their objectives.

Closely linked to charitable status is the question of whether contributions to a charitable (benevolent or ecclesiastical) foundation are tax-deductible for the donor, and what organizational advantages charitable foundations offer compared to associations (e.g., greater international recognition, extended deductibility of donations).

We provide expert guidance on all tax matters related to charitable status and donation deductibility.

The purpose of an employee participation foundation is to transfer shares to employees (and their spouses/partners and children) free of charge or at a reduced price. Unlike workforce participation foundations, where beneficiaries receive income generated from the contributed shares, in an employee participation foundation the shares themselves become the property of the employees or their spouses/partners and children (the “beneficiaries”). However, the shares are held in trust by the private foundation, which also exercises the voting rights.

KPMG Estate Planning supports you in establishing such a foundation and advises on all matters related to employee participation foundations.

KPMG Estate Planning has been advising a wide range of internationally renowned artists and athletes for many years.

Our experts provide specialized support in international contexts and complex scenarios, including:

• Taxation of athletes
• Preferential tax regimes for inbound artists, athletes, scientists, and researchers
• Withholding tax on performances
• Taxation of trademark and personality rights
• Artist-owned corporations (Künstler-GmbHs)

With increasing global interconnectedness, cross-border family relationships have become more common in recent decades. Individuals often wish to transfer wealth within the family during their lifetime, or cross-border inheritances occur. From a tax perspective, these situations present unique challenges, as inheritance and gift taxes—unlike income and corporate taxes—are neither harmonized globally nor within the EU, frequently resulting in double or multiple taxation. Although Austria does not levy inheritance or gift taxes, the implications under foreign tax regimes must be considered. Moreover, Austria itself can trigger tax consequences that are often overlooked, such as real estate transfer tax, capital gains tax, or penalties for failing to report gifts.

Timely planning of cross-border gifts and inheritances is a cornerstone of effective estate planning. If a cross-border gift or inheritance has already taken place, we work with our international estate planning network to help you manage the resulting tax implications.

Currently, there are approximately 3.000 private foundations in Austria. Many were originally established for inheritance tax planning purposes. However, since the abolition of inheritance tax at the end of July 2008, these considerations are now obsolete. Founders often find themselves wishing to regain direct control of their assets rather than relying on management by the foundation’s board. Due to the so-called “mouse trap effect”, repatriating assets typically incurs a tax burden of 27.5%, leaving founders caught in a “tax trap”. Furthermore, the Tax Reform Act 2015/16 has made it more difficult to reverse interim tax accounts for beneficiaries residing abroad and to dissolve foundations across borders.

Similar questions frequently arise regarding the dissolution of long-standing Liechtenstein foundations with Austrian founders or beneficiaries.

KPMG Estate Planning supports you in optimizing the tax implications of a foundation exit.

KPMG Estate Planning has extensive experience in business succession and supports you in achieving a tax-efficient transfer of your company. The fact that Austria currently does not levy inheritance or gift tax does not mean that gratuitous business transfers are entirely tax-neutral. On the contrary, significant income tax implications may arise (e.g., due to waivers of inheritance and compulsory portions, mixed gifts, or estate divisions involving compensation payments to departing co-heirs), as well as VAT and real estate transfer tax consequences.

In addition, a successful business succession requires a solid civil, corporate, and inheritance law foundation. Our experts work in an interdisciplinary manner to provide you with a legally and economically optimized overall solution.

The tax implications of inbound and outbound relocations should never be overlooked to avoid unpleasant surprises later. Tax structuring advice is therefore recommended in both the departure and destination country.

We cover the Austrian perspective and, through our international network, provide you with competent local contacts in the other jurisdiction. With careful and timely planning, we can develop solutions that rival those offered by internationally recognized relocation hubs (e.g., the United Kingdom or Switzerland).

Austria also offers an attractive inbound regime for scientists, researchers, artists, and athletes.

Regarding foreign clients at Austrian banks, the tax authorities have implemented safeguards through the Capital Outflow Reporting Act and the Account Register Act. These ensure that, even when Austrian accounts are closed by foreign taxpayers, sufficient data is available for potential group requests from foreign tax authorities. When transferring foreign assets to Austrian bank accounts, Austrian institutions must exercise increased diligence to verify whether the funds have been properly taxed, in order to avoid exposure to financial criminal liability.

If foreign income from bank assets held by Austrian taxpayers has remained untaxed in the past, a comprehensive analysis of the situation is strongly recommended to determine appropriate next steps.

KPMG Estate Planning offers highly specialized expertise and extensive experience in this area and is ready to support you throughout the process.