The Austrian tax administration takes the position that, if home office work is performed only temporarily during the COVID-19 pandemic, the home office will not create a PE for the foreign employer.
As regards Austrian income taxation, there is no difference to scenario 1. Also, in the event that home office work is only performed temporarily in Austria, the foreign employer will still have to deduct and pay monthly Austrian wage tax. Only in the event that company X is a German resident company, Austrian income tax (and by that, wage tax withholding) could be avoided. This is due to the fact that, according to a mutual agreement on the tax-implica-tions of COVID-19 concluded between the German and Austrian tax administration, the employee could opt (no obligation) to remain subject to German income taxation.
As regards social security, the competent Austrian ministry takes the view that temporary restrictions on cross-border employment imposed by COVID-19 do not constitute relevant changes as regards the applicable social security legislation. This means that, in the case of COVID-19-related temporary home office work, the employee will remain within the applicable foreign social security legislation of country X.