a. How the Use of One or More Independent Contractors Creates a Permanent Establish-ment in Country and the Ramifications
In case of cross-border action foreign enterprises may be subject to Austrian taxation. Generally, an enterprise, which engages standard employees within the Austrian bor-ders, has to redirect income taxes as required by Austrian tax law. On the contrary, the enterprise does not have to pay taxes if it engages independent contractors such as bro-kers, general commission agents or other agents of an independent status. This complies with the fact that independent contractors are generally obliged to settle their income tax payments by themselves. Therefore, in this case, the foreign enterprise itself is not affected by Austrian tax law. However, there may be exceptions or specific regulations in the double taxation agreement between Austria and the respective country. Therefore, a foreign enterprise should seek legal advice concerning the question of whether there is a double taxation agreement and whether this contains any exceptions or special regula-tions relevant for the individual case.
b. How the Employment of One or More Individuals Creates a Permanent Establishment in Country and the Rramifications
As mentioned in the preceding chapter, an enterprise, which engages standard employ-ees within the Austrian borders, has to redirect income taxes as required by Austrian tax law. This applies regardless of whether or not the particular enterprise has a permanent establishment in Austria. However, as stated above, there may be special regulations in the double taxation agreement between Austria and the respective country. Addition-ally, the foreign enterprise is generally obliged to contribute to the social insurance of a standard employee. Since the precise conditions depend on a case-by-case basis, it is advisable in any case, to seek legal advice when engaging standard employees within the Austrian borders.