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Austria Investment Income Guide (KESt 2026)

Dividends and interest in Austria are subject to Kapitalertragsteuer (KESt) — a flat withholding tax. Dividends and fund distributions are taxed at 27.5%. Interest from bank accounts and bonds is taxed at 30%. Austrian banks and brokers withhold the tax automatically and remit it to the Finanzamt. All amounts in EUR (de-AT locale).

Investment income taxation in Austria has been steadily simplified. Since the 2016 tax reform, most investment income is subject to a final withholding tax (KESt) regardless of the investor's marginal tax rate. This means high earners benefit from a flat rate that is lower than their marginal income tax rate, while low earners cannot reclaim the difference (there is no Günstigerprüfung — favourable rate check — as exists in Germany). For related reading, see our Capital Gains Guide → and Personal Tax Guide →.

Dividend Taxation

  • 27.5% KESt on dividends: Dividends from domestic and foreign shares are subject to KESt at 27.5%. Austrian banks withhold the tax on domestic dividends automatically. For foreign dividends, the Austrian bank also withholds KESt — but the foreign withholding tax (e.g., 15% US WHT, or 15–25% EU WHT) may be credited against the Austrian KESt liability under double tax treaties or the EU Parent-Subsidiary Directive.
  • Withholding tax treated as final (endbesteuert): For individual investors, the 27.5% KESt on dividends is a final tax. You do not need to declare dividend income on your tax return if you use an Austrian broker. The tax is considered discharged — even if your marginal income tax rate is higher than 27.5%, you cannot be charged additional tax on dividends. Conversely, if your marginal rate is lower, you cannot reclaim the difference.
  • Corporate shareholders: If a corporation (KöSt taxpayer) receives dividends, the 27.5% KESt is not final. The corporation must include the dividend in its tax return, and the 27.5% withholding is credited against the corporate tax liability (23%). The participation exemption (Internationales Schachtelprivileg) may apply if the corporation holds ≥10% of the shares — the dividend is then tax-free, and KESt is not withheld (or refunded if withheld).

Interest Taxation

  • 30% KESt on interest: Interest income from bank deposits (Sparbuchzinsen, Tagesgeld, Festgeld), bonds, and other debt instruments is taxed at 30%. This is a higher rate than the 27.5% on equity-type income.
  • Interest on Austrian bonds: Interest from Austrian government bonds (Bundesanleihen), corporate bonds (Unternehmensanleihen), and mortgage bonds (Pfandbriefe) is subject to 30% KESt withheld at source if held with an Austrian bank.
  • Foreign interest: For foreign-currency deposits or foreign bond interest received through an Austrian bank, KESt is still withheld at 30%. If you hold foreign bonds directly (without an Austrian intermediary), you must declare the interest on your tax return and pay KESt of 30% yourself.

Income From Investment Funds (ETFs, Mutual Funds)

  • Fund distributions (ausschüttende Fonds): Distributions from Austrian or foreign funds are subject to 27.5% KESt. The fund reports the distribution amount to the Austrian tax authorities (OeKB reporting system). Your Austrian bank withholds KESt on the distribution automatically.
  • Accumulating funds (thesaurierende Fonds): For funds that reinvest income rather than distributing it, the Austrian tax system uses the concept of a deemed distribution (ausschüttungsgleiche Erträge). The fund must report the accrued income (dividends, interest) each year, and KESt at 27.5% is withheld on the deemed distribution — even though no cash is paid to the investor. This is the standard Austrian approach to prevent tax deferral on accumulating funds.
  • Partial exemption for equity funds: If a fund invests at least 51% in equities (according to the fund prospectus), then 60% of the fund's distributions and deemed distributions are taxable — 40% are tax-free (the so-called Quotenbesteuerung quota taxation). This means the effective KESt rate on an equity fund distribution can be lower than 27.5%. Example: A fund with >51% equity allocation distributes €1,000. Only €600 is taxable at 27.5% = €165 KESt. The remaining €400 is tax-free. Effective rate: 16.5%.
  • Mixed funds and bond funds: Funds below the 51% equity threshold are fully taxable on all distributions (no quota exemption). Bond funds, money market funds, and mixed funds with low equity exposure are fully subject to 27.5% KESt on income.