Austria’s Ministry of Finance has recently provided some guidance on the question of an Austrian home office as it applies to an Austrian tax resident employee and whether such a setup can qualify as an Austrian permanent establishment for a non-Austrian enterprise.

A permanent establishment for Austrian domestic tax purposes is a fixed place through which an enterprise’s business is carried out.

Such an establishment can be an employee’s private flat, provided that employee renders his/her work at least partly from such home an office. The threshold test is simply the carrying out of the foreign enterprise’s business from his/her home office through the use of a laptop and a mobile phone provided by the enterprise.

The test establishes that a home office does not qualify if it is only intermittently or incidentally used by the employee (as in that case, the home office is not at the disposal of the enterprise). Conversely, if a home office is used on a continuous basis, then it is clear from the facts and circumstances that the enterprise has required the individual to use that location to carry on the enterprise’s business (e.g., by not providing an office to an employee in circumstances where the nature of the employment clearly requires such an office). In this case, the home office may be considered to be at the disposal of the enterprise and thus qualifies as a permanent establishment.

Why is this relevant?

According to the Ministry of Finance, an indication for qualification of a home office as a permanent establishment is that the employee can claim tax-deductible expenses in connection with that home office.

So the life lesson is plan accordingly and deduct away!