A New Tax Blow

We had barely recovered from the U.S. President’s tariff escapades when the next blow hit. This time it’s about how foreign money is treated in the United States – and by “foreign” they mean us.

The tax bill the U.S. administration wants to push through Congress runs to 1,000 pages. What’s heating European tempers is Section 899: it would permit a tax hike of up to 20 percentage points above the current rate.

Status quo: Thanks to a double-taxation treaty (DTT), investors resident in Austria pay 15% U.S. withholding tax on dividends at source. Back home another 12.5% is added – making the familiar overall burden of 27.5%.

The draft bill would raise the U.S. tax by five percentage points per year, capped at 20%. The base would be the 15% rate set by the DTT, not the standard U.S. rate of 30%. It sounds harmless, but it’s an elegant move to bypass the treaty: 15% + 20% equals 35%, and under Austrian rules only the original 15% can be credited.

Plain English: 35% in the U.S. + 12.5% in Austria = 47.5% total burden.

And why? Because Trump – no surprise – views this bill as a weapon against supposedly “unfair foreign taxes.” He is presumably referring to the digital levies Europe is considering for social-media giants.

So what now? Breathe and wait

I admit it annoys me to turn this Gutmann Viewpoint into a burial ground of numbers, but sometimes politics leaves me no choice.

My answer to the obvious question – “What should we do?” – is, as so often: don’t rush. The U.S. Senate must approve first. Only then will we see what the real tax burden will be for us. Earliest start date: 2026.

For comparison: other countries already impose more than Austria’s 27.5%. Switzerland withholds 35%, plus our 12.5% again, giving the same 47.5% total. You can reclaim some of it, but that usually makes sense only for larger individual positions. In many other countries the effort involved is so great that most people simply leave it.

When it comes to your personal situation, no general statement helps – only the advice of a tax professional you trust.

And in the next Viewpoint, I’ll turn to more pleasant topics again.