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INTERNATIONAL TAX
Domestic Residence During Long‑Term Assignment Abroad
Whether a person is subject to unlimited tax liability in Austria largely depends on whether they have a residence or habitual abode in Austria. A mere sleeping place in the parents' home does not constitute a residence if there is neither autonomous living nor actual possession.
An employee was registered at his parents' address from 2009 to 2017. In 2011 he was posted abroad, initially for a fixed term of three years. Shortly before its expiry the posting was extended until 2017, but it was terminated early in July 2015. Just over a year later a further posting took place.
During his periods abroad the employee could use his sister's room in the parents' home when visiting home. It was disputed whether the employee was subject to unlimited tax liability from January 2015, i.e. before his return to Austria, or only from July 2015.
Decision of the Federal Fiscal Court (Bundesfinanzgericht, BFG)
Crucial for the existence of unlimited tax liability for the whole year is whether the taxpayer already had a domestic residence from January. A habitual abode could only be assumed after the posting ended and the return to Austria in July 2015.
The employee could indeed stay temporarily in the parents' home on home visits, but since the start of his posting his former room had been used by his sister. Accordingly, the room was only available to him on an as‑needed basis. Moreover, the bathroom, toilet, kitchen and living room were jointly available to all family members.
Case Law of the Federal Fiscal Court (BFG)
According to BFG case law, the occasional shared use of a room in the parents' home does not suffice to be regarded as a separate residence. A residence requires that the dwelling enables autonomous living. In addition, there was no possession of the dwelling. The mere provision of a room for occasional overnight stays does not confer a legal and factual right of disposal.
In this case it was further added that, given more than three years of activity abroad, it was unlikely that the employee had maintained his residence in his father's flat during that time. During the period of his posting abroad the individual therefore had neither a residence nor a habitual abode in Austria. Consequently, the conditions for unlimited tax liability in Austria were not met. There were also no indications for limited tax liability, as the activity was carried out exclusively abroad. The income earned from that activity was therefore not subject to Austrian tax, either unlimited or limited, and was not to be taken into account in the income‑tax return. Only the income from the activity in Austria after his return was subject to Austrian income tax.
During his periods abroad the employee could use his sister's room in the parents' home when visiting home. It was disputed whether the employee was subject to unlimited tax liability from January 2015, i.e. before his return to Austria, or only from July 2015.
Decision of the Federal Fiscal Court (Bundesfinanzgericht, BFG)
Crucial for the existence of unlimited tax liability for the whole year is whether the taxpayer already had a domestic residence from January. A habitual abode could only be assumed after the posting ended and the return to Austria in July 2015.
The employee could indeed stay temporarily in the parents' home on home visits, but since the start of his posting his former room had been used by his sister. Accordingly, the room was only available to him on an as‑needed basis. Moreover, the bathroom, toilet, kitchen and living room were jointly available to all family members.
Case Law of the Federal Fiscal Court (BFG)
According to BFG case law, the occasional shared use of a room in the parents' home does not suffice to be regarded as a separate residence. A residence requires that the dwelling enables autonomous living. In addition, there was no possession of the dwelling. The mere provision of a room for occasional overnight stays does not confer a legal and factual right of disposal.
In this case it was further added that, given more than three years of activity abroad, it was unlikely that the employee had maintained his residence in his father's flat during that time. During the period of his posting abroad the individual therefore had neither a residence nor a habitual abode in Austria. Consequently, the conditions for unlimited tax liability in Austria were not met. There were also no indications for limited tax liability, as the activity was carried out exclusively abroad. The income earned from that activity was therefore not subject to Austrian tax, either unlimited or limited, and was not to be taken into account in the income‑tax return. Only the income from the activity in Austria after his return was subject to Austrian income tax.