CONVENTION

BETWEEN

THE KINGDOM OF SAUDI ARABIA AND

THE REPUBLIC OF AUSTRIA

FOR THE AVOIDANCE OF DOUBLE TAXATION

AND THE PREVENTION OF TAX EVASION

WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL

The Kingdom of Saudi Arabia and the Republic of Austria, desiring to conclude a Convention for the avoidance of double taxation and the prevention of tax evasion with respect to taxes on income and on capital,

Have agreed as follows:

Article 1

PERSONS COVERED

This Convention shall apply to persons who are residents of one or both of the Contracting States.

Article 2

TAXES COVERED

1.       This Convention shall apply to taxes on income and on capital imposed on behalf of a Contracting State or of its political subdivisions or local authorities, irrespective of the manner in which they are levied.

2.       There shall be regarded as taxes on income and on capital all taxes imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation.

3.       The existing taxes to which this Convention shall apply are in particular:

(a)  In the case of the Kingdom of Saudi Arabia:

i.    the Zakat;

ii.   the income tax including the natural gas investment tax;

(hereinafter referred to as the “Saudi Tax”);

(b) In the case of the Republic of Austria:

i.    the income tax (die Einkommensteuer);

ii.   the corporation tax (die Körperschaftsteuer);

iii.  the land tax (die Grundsteuer);

iv.  the tax on agricultural and forestry enterprises (die Abgabe von land- und forstwirtschaftlichen Betrieben);

v.   the tax on the value of vacant plots (die Abgabe vom Bodenwert bei unbebauten Grundstücken);

(hereinafter referred to as the “Austrian Tax”).

4.       The provisions of this Convention shall also apply to any identical or substantially similar taxes which are imposed after the date of signature of this Convention in addition to, or in place of, the existing taxes. The competent authorities in both Contracting States shall notify each other of any significant changes that have been made in their respective taxation laws.

Article 3

GENERAL DEFINITIONS

1.       For the purposes of this Convention, unless the context otherwise requires:

(a)  The term "Kingdom of Saudi Arabia" means the territory of the Kingdom of Saudi Arabia which also includes the area outside the territorial waters, where the Kingdom of Saudi Arabia exercises its sovereign and jurisdictional rights in their waters, seabed, sub-soil and natural resources by virtue of its law and the international law.

(b) The term "Austria" means the Republic of Austria.

(c)  The term “a Contracting State” and “the other Contracting State” means the Kingdom of Saudi Arabia or the Republic of Austria as the context requires.

(d) The term “person” includes an individual, a company and any other body of persons, including the State, its political sub-divisions or local authorities, and foundations.

(e)  The term “company” means any juridical person or any entity which is treated as a juridical person for tax purposes.

(f)  The terms “enterprise of a Contracting State” and “enterprise of the other Contracting State” mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State.

(g) The term “national” means:

i.  any individual possessing the nationality of a Contracting State;

ii. any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State.

(h) The term “international traffic” means any transport by a ship or aircraft operated by an enterprise which has its place of effective management in a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State.

(i)  The term “competent authority” means:

i.  In the case of the Kingdom of Saudi Arabia: the Ministry of Finance represented by the Minister of Finance or his authorised representative;

ii. In the case of the Republic of Austria: the Federal Minister of Finance or his authorised representative.

2.       As regards the application of this Convention at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which this Convention applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.

Article 4

RESIDENT

1.       For the purposes of this Convention, the term “resident of a Contracting State” means:

(a)  Any person who, under the laws of that State is liable to tax in that State by reason of his domicile, residence, place of management or any other criterion of a similar nature;

(b) Any of the two Contracting States or any of its legal institutions, agencies or its local authorities;

(c)  A legal person organized under the laws of a Contracting State and that is generally exempt from tax in that State and is established and maintained in that State either:

i.  exclusively for a religious, charitable, educational, scientific, or other similar purpose; or

ii. to provide pensions or other similar benefits to employees pursuant to plan.

2.       Where by reason of the provisions of paragraph 1 of this Article, an individual is a resident of both Contracting States, then his status shall be determined as follows:

(a)  He shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both Contracting States, he shall be deemed to be a resident only of the Contracting State with which his personal and economic relations are closer (“center of ‘vital’ interests”);

(b) If the Contracting State in which he has his center of ‘vital’ interests cannot be determined, or if he has not a permanent home available to him in either Contracting State, he shall be deemed to be a resident only of the Contracting State in which he has an habitual abode;

(c)  If he has an habitual abode in both Contracting States or in neither of them, he shall be deemed to be a resident only of the Contracting State of which he is a national;

(d) If he is a national of both Contracting States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.

3.       Where by reason of the provisions of paragraph 1 herein, a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated.

Article 5

PERMANENT ESTABLISHMENT

1.       For the purpose of this Convention, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

2.       The term “permanent establishment” includes but is not limited to:

(a)  a place of management;

(b) a branch;

(c)  an office;

(d) a factory;

(e)  a workshop;

(f)  a mine, a quarry or any other place of extraction of natural resources.

3.       The term “permanent establishment” also includes:

(a)  A building site, a construction, assembly or installation project, or supervisory activities, in connection therewith, but only where such site, project or activities continue for a period of more than six months;

(b) The furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within the country for a period or periods aggregating more than six months within any 12-month period;

(c)  A person acting in one of the two Contracting States on behalf of an enterprise of the other Contracting State - other than an agent of an independent status to whom the provisions of paragraph 6 of this Article apply - if this person has in the first mentioned Contracting State an authority to conclude contracts in the name of that enterprise and has habitually exercised such authority in it.

4.       Notwithstanding the preceding provisions of this Article a permanent establishment does not include a fixed place of business used only for one or more of the following:

(a)  The use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;