Article 25. EXCHANGE OF INFORMATION AND ADMINISTRATIVE

ASSISTANCE

   This Article provides for the exchange of information
between the competent authorities of the Contracting States and
for the provision of certain assistance in the collection of
taxes.

• Paragraphs 1 through 6 provide for the exchange of information. Paragraph 1 provides that the information to be

exchanged is that necessary for carrying out the provisions of
the Convention or the domestic laws of the United States or

Austria concerning the taxes covered by this Article insofar as

the taxation thereunder is not contrary to the Convention. Under

paragraph 6 of this Article and paragraph 4 of Article 2, for
purposes of the exchange of information provisions, the

Convention applies to taxes of every kind imposed by a

Contracting State. In applying the exchange of information
provisions to all taxes imposed by a Contracting State, this
provision conforms to Article 12 of the Estate and Gift Tax
Treaty between the United States and Austria.

   Paragraph 1 also clarifies that the carrying out of provi­

sions of the domestic laws of the Contracting States concerning

taxes includes penal investigations regarding fiscal offenses

relating to taxes covered by this Article. This provision makes

clear that information may be exchanged concerning penal, as well

as non-penal tax investigations. A provision in the Memorandum of Understanding clarifies the meaning of the term "penal inves­ tigations" by applying the term to proceedings carried out by

either judicial or administrative bodies and by providing an
example of a penal investigation carried out by an administrative
body. This example states that the commencement of a criminal
investigation by the Criminal Investigation Division of the

Internal Revenue Service constitutes a penal investigation. Therefore, the term "penal investigation" forms a basis for

disclosure under Austrian bank secrecy laws and practices.

  Another provision in the Memorandum of Understanding makes
clear that information may be exchanged at any stage in a tax

case, stating that a request for information cannot be rejected

by the requested State merely because the request was made for
the purposes of pending judicial proceedings in tax matters.

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Paragraph 1 also provides that information may be exchanged spontaneously or on request and that the competent authorities may agree on information which shall be furnished on a regular basis. The purpose of these references to specific forms of

exchange is to clarify, in addition to exchanging information
upon specific request, that the exchange of information spontane­
ously by a Contracting State of, as mutually agreed, routinely
between Contracting States is contemplated under the provisions
of the Convention. No inference should be drawn that these
references impose any restriction on the means that competent

authorities may use to exchange information. Thus, for example,

the exchange of information in connection with simultaneous

examinations is contemplated. Also, on the basis of this Arti­

cle, the presence of tax inspectors of a Contracting State on the
territory of another Contracting State is allowed by both States,
including, with the consent of the taxpayer, interviews with

taxpayers. However, such direct contacts would have to be agreed

upon by mutual agreement of the competent authorities and carried
out by duly authorized representatives.

   Paragraph 1 states that information exchange is not re­
stricted by Article 1 (Personal Scope). This means that informa­
tion may be requested and provided under this Article with
respect to persons who are not residents of either Contracting

State. For example, if a third-country resident has a permanent

establishment in Austria which engages in transactions with a

U.S. enterprise, the United States could request information with

respect to that permanent establishment, even though it is not a
resident of either Contracting State. Similarly, if a thirdcountry resident maintains a bank account in Austria, the United
States could request information with respect to that person's

account to the same extent that it could request the information regarding a resident of Austria or the United States.

Paragraph 1 also provides assurances that any information exchanged will be treated as secret, subject to the same disclo­

sure constraints as information obtained under the laws of the

requesting State. Information received may be disclosed only to

persons, including courts and administrative bodies, involved in
the assessment or collection of, the enforcement or prosecution

in respect of, or the determination of appeals in relation to, or

the oversight of the administration of the taxes covered by this
Article. The information may be used by these persons only in
connection with these designated functions.

  Under the Memorandum of Understanding, it is understood that
persons involved in the oversight of the administration of taxes
in the United States are the appropriate committees of the U.S.
Congress as well as the U.S. General Accounting Office, where
such access is necessary to carry out their oversight

responsibilities. Information received by these bodies is for

  Under the Memorandum of Understanding, it is understood that
persons involved in the oversight of the administration of taxes

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use in the performance of their role in overseeing the
administration of U.S. tax laws. It is also understood that
persons involved in the oversight of the administration of taxes
in Austria are the Accounting Court (Rechnungshof) and the
committees of Parliament as is necessary to carry out their
oversight responsibilities.

Paragraph 1 permits persons entitled to disclosure of information received to disclose it in public court proceedings

or in judicial decisions.

   It is contemplated that the Contracting States will utilize