Doing Business Tax matters
Austria holds a top position on the scale of business-friendly countries. In addition, the eco-social tax reform offers tangible tax relief for companies.
for international companies
The corporate income tax rate is 24% and will be reduced to 23% by 2024. There are no further taxes on corporate profits.
Attractive tax incentives such as the investment allowance and the 14% research tax credit further reduce the overall effective tax burden. According to the BAK Taxation Index 2022, the tax burden at 22.5% is lower than in France (27.1%), Germany (29.3%) and the USA (33.4%).
Moreover, the Austrian Federal Government adopted a far-reaching eco-social tax reform in January 2022 that offers tangible tax relief to companies and their employees and makes Austria even more attractive as a location for international companies.
The eco-social tax reform
Tangible tax relief for companies
The eco-social tax reform reduces the tax ratio (taxes and levies) down towards the 40% level and strengthens the competitiveness of Austrian industry. This results in a perceptible decrease in the tax burden for companies and employees.
Companies benefit from the following, among others:
- Gradual reduction of the corporate tax rate from 24% to 23% by 2024.
- Increase in the tax-deductible amount for low-value assets from € 800 to € 1,000.
- Investment allowance of 10% or 15% (for ecological investments) respectively with the assessment base (for acquisition and production costs) capped at € 1 million per year and company.
- Extension of existing tax benefits for electricity produced in Austria to all renewable sources of energy.
- From 1 July 2022 onwards, no electricity levy will be imposed upon self-generated and consumed electricity energy if it is derived from a renewable energy source.
- The 2nd rate bracket for income and payroll taxes of employees will be reduced from 35% to 30% as of July 2022; furthermore, the tax rate for the 3rd tack bracket will decline from 42% to 40% starting in July 2023. These measures will result in € 3.9 billion in tax relief.
Did you know...
This not only reduces paper consumption but ensure shorter lines of communication. For example, VAT tax credits are offset against other taxes and paid out directly.
…that you can handle your entire correspondence with the tax office online?
Taxes & Duties
The municipal tax serves exclusively as a municipal fee to be paid. It equals 3% of the gross monthly salaries of employees at a permanent establishment located in Austria.
The most important tax rates are:
- the general value added tax rate of 20% (standard tax rate)
- reduced tax rate of 10% or 13%
The following sales are subject to the value added tax in Austria:
- Deliveries and other services which an entrepreneur renders in Austria for a fee
- Own consumption in Austria (removal or private use of objects which are assigned to the company
- Import of objects from third countries to Austria (import sales tax)
Electronical publications such as e-books/e-paper (see VAT Guidelines 2000) and audio books have been subject to the reduced value added tax of 10% since 1 January 2020 (Tax Reform Act 2020 BGBl I Nr. 103/2019).
More information is available on the website of the Austrian Federal Ministry of Finance.
The 20% tax rate is the rule.
Sales in which the 10% or 13% tax rate apply are the exception. These are completely listed in Section 10 of the VAT Act.
For example, the 10% VAT rate applies to:
- Letting and leasing of properties for residential use
- Accommodation provided in furnished living rooms and bedrooms and regularly supplied additional services (including heating)
- The rental (transfer of use) of properties for camping purposes
- Passenger transport with all types of transportation (with the exception of 13% for domestic flights)
- Waste removal
- The delivery of books (incl. e-books and audio books), newspapers and magazines and food
For example, the 13% tax rate applies to:
- The delivery of living animals and plants and firewood etc.
- Sales from artistic work
- Films or circus performances
- Admission to sporting events
Group taxation and double taxation conventions
Group taxation is a means of increasing the competitiveness of regional headquarters and minimising the risk of entering new markets. The profits and losses of foreign subsidiaries can be offset against the profits and losses of the Austrian parent company. The basis is the participation of an Austrian stock corporation of more than 50% of the share capital.
In order to avoid double or multiple taxation of the same income in two or more countries, Austria has concluded double taxation conventions with numerous countries based on the OECD Model Tax Convention. These agreements regulate which country is entitled to the right of taxation for the particular income.
Tax benefits for new founders
The New Companies Promotion Act stipulates the exemption of startups from paying specified fees and taxes, including court and stamp duties as well as the land acquisition tax and certain charges linked to wages and salaries.
Generous tax deductoins
Austria is more generous than other countries in some cases when it comes to writing down items. Your tax adviser can work together with you to clarify which costs reduce the assessment base for your tax burden.
Tax benefits for expatriates
In order to simplify the payroll accounting of international employees who are posted to Austria, a flat-rate advertising allowance of up to € 10,000 can be claimed directly in payroll accounting.
Write off costs of up to € 1,000 immediately
The value threshold for immediately writing off "low value assets" equals € 1,000s.
Basic tax-free allowance for sole proprietorships and partnerships
Profits up to € 30,000 are subject to the basic tax-free allowance of 15%. If the profit exceeds € 30,000, an investment-related tax-exempt profit allowance can be claimed in addition to the basic tax-free allowance.
Research tax credit for companies
Companies with research and development costs can claim the so-called research tax credit. It amounts to 14% of total research costs incurred during a financial year, is credited by the tax office and also benefits companies which do not generate any profits.
Take advantage of the family bonus
From July 2022 onwards, the Family Bonus Plus has increased to € 2,000 per child and year. The supplementary child allowance has been raised to € 450. These measures support parents, employees as well as the self-employed in their work and strengthens their purchasing power.
The ABA makes it easy
All the tax benefits relating to your investment in Austria: We respond to your initial questions relating to corporate taxes in Austria and link you up with the right experts.