The Austrian Federal Finance Court (BFG) has overturned a Tax Office decision that fully taxed a Liechtenstein accident-insurance pension received by an Austrian resident who also collects domestic pension income. In Decision RV/1100362/2022, published 17 February and circulated by the Ministry of Finance on 20 February, the court held that the foreign accident pension is exempt under Article 18 of the Austria-Liechtenstein tax treaty because it compensates for a work-related injury.
The appellant, disabled in a 1987 workplace accident, draws multiple pensions: a standard Austrian retirement pension, an Austrian accident annuity and two foreign accident pensions from Liechtenstein and Switzerland. While the domestic accident pension is already tax-free, the Tax Office had argued the Liechtenstein payment was fully taxable. The BFG disagreed, stating that treaty provisions override domestic rules and that the compensation’s nature—non-contributory and injury-related—places it outside Austrian income tax.
![Finance Court Ruling Clarifies Tax on Foreign Accident Pensions for Austrian Residents]()
For practitioners handling the logistical side of cross-border assignments, VisaHQ can help streamline the visa and residence-permit process for Austria and many other countries. Their online platform (https://www.visahq.com/austria/) consolidates up-to-date entry requirements, application checklists and concierge support, freeing HR teams to focus on complex tax questions like those raised in this case.
Why does this matter for global mobility? Cross-border assignees and retirees often receive mixed pension streams. The judgment underscores that foreign accident and disability benefits may enjoy treaty protection if analogous domestic benefits are exempt. Payroll and tax-equalisation teams should revisit compensation packages for outbound Austrian assignees and inbound foreign retirees to verify treaty relief and avoid over-withholding.
More broadly, the ruling may influence ongoing negotiations to modernise Austria’s 90-plus bilateral tax treaties as part of the EU’s forthcoming Omnibus on Taxation. Multinationals should track whether similar clauses are inserted into treaties with key assignment destinations to minimise double taxation risk for internationally mobile employees.
The appellant, disabled in a 1987 workplace accident, draws multiple pensions: a standard Austrian retirement pension, an Austrian accident annuity and two foreign accident pensions from Liechtenstein and Switzerland. While the domestic accident pension is already tax-free, the Tax Office had argued the Liechtenstein payment was fully taxable. The BFG disagreed, stating that treaty provisions override domestic rules and that the compensation’s nature—non-contributory and injury-related—places it outside Austrian income tax.
For practitioners handling the logistical side of cross-border assignments, VisaHQ can help streamline the visa and residence-permit process for Austria and many other countries. Their online platform (https://www.visahq.com/austria/) consolidates up-to-date entry requirements, application checklists and concierge support, freeing HR teams to focus on complex tax questions like those raised in this case.
Why does this matter for global mobility? Cross-border assignees and retirees often receive mixed pension streams. The judgment underscores that foreign accident and disability benefits may enjoy treaty protection if analogous domestic benefits are exempt. Payroll and tax-equalisation teams should revisit compensation packages for outbound Austrian assignees and inbound foreign retirees to verify treaty relief and avoid over-withholding.
More broadly, the ruling may influence ongoing negotiations to modernise Austria’s 90-plus bilateral tax treaties as part of the EU’s forthcoming Omnibus on Taxation. Multinationals should track whether similar clauses are inserted into treaties with key assignment destinations to minimise double taxation risk for internationally mobile employees.
