In its decision of 28 April 2004 the German Federal Tax Court (Bundesfinanzhof) requested a preliminary ruling from the ECJ concerning the compatibility of the German withholding tax regime for business income derived by a non-resident taxpayer. The authors examine the arguments raised by the German court from a general European law perspective and analyse the discriminating effects of special withholding taxes for non-resident taxpayers as well as potential justifications in the light of the fundamental freedoms of the EC Treaty. Furthermore, the consequences of this case on the Austrian tax law are analysed. The impact of recent amendments of the Austrian Income Tax Act by the Steuerreformgesetz 2005 as well as influences of the latest proposal for further amendments with regard to the taxation of non-resident taxpayers (AbgÄG 2004) have also been taken into account in this article.