Austria - a haven for the super-rich By Ivonne Marshall

dpa German Press Agency
Published: Tuesday October 24, 2006

By Ivonne Marshall, Vienna- Europe's rich and famous have found in Austria a convenient place to park their fortunes. The country of eight million now hosts more than 3,300 super-rich individuals, and private assets in Austria are estimated around 580 billion euro (729 billion dollars).

A significant number of Austria's moneyed hail from Germany, with others coming from the Netherlands, Sweden, Britain and the United States.

At first glance, Austria sounds like an unlikely place to invest your fortune, as income tax levels are higher than in most OECD countries.

Similarly, value-added tax levels and taxation of earnings from capital are at the top end of the OECD scale.

A look at taxation of assets however, shows a very different picture.

Tax on assets is among the lowest in the OECD. Only 1.3 per cent of the total taxes Austrians pay are taxes on assets, compared with Britain, for example, where the respective share is 11.9 per cent.

In Austria, earning a fortune comes with a very high tax burden, but passing it on costs very little because of very low inheritance taxes low taxation of private foundations.

Major incentives to locating your fortune in Austria are the generous rules concerning private foundations

One or several founders can endow property to fulfil the foundation's purpose as set out in the founding deed.

By setting up a foundation to benefit the family, payment of inheritance taxes can be avoided, too, as under Austria's rules domestic and international investment earnings are free of taxation.

While capital gains are theoretically taxed at 12.5 per cent, paying the taxes can be avoided or postponed through contributions to beneficiaries or acquiring an interest in another corporation.

Also, taxation of assets is among the lowest in the European Union, 5 per cent, while returns on investments are taxed at 4.7 per cent, the lowest in the OECD.

Austria is especially tempting for well-to-do sports stars.

Celebrities such as Formula 1 driver Ralf Schumacher and German soccer legend Franz Beckenbauer have taken advantage of a special regulation stipulating that only one-third of athletes' incomes is subject to income tax.

Other advantages have to do with Austria's convenient location between West and Central Europe, a high quality of life and low crime rates.

Austrians are also known for being welcoming to celebrities while at the same time being discreet enough to let them roam the streets undisturbed.

© 2006 dpa German Press Agency