All current Austrian Tax Rates at one glance
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1. Digital Economy & Taxation
The year 2018 was dominated by the debates on the taxation of the “digital economy”. Still no agreement in this regard exists on EU level. However, the Austrian Government plans to enact respective laws in a national solo effort, which could enter into force in 2020.
One of the objectives of the BEPS (“Base Erosion and Profit Shifting”) action plan is, amongst others, that profits are taxed where the company creates added value and the actual economic activity is carried out. The multilateral instrument (MLI) entered into force to implement numerous measures from the BEPS Action Plan into the international DTA network. Regarding Austria it is currently only applicable to the double taxation agreements (DTA) with Poland and Slovenia.
3. CFC rules for low-taxed passive income entities and change of method
Austria implemented the comprehensive CFC (controlled foreign company) regime as part of the EU Anti-Tax Avoidance Directive („ATAD”), which entered into force January, 1st 2019. Certain passive income positions of low-taxed foreign subsidiaries shall be included in the tax base of an Austrian parent company with the foreign tax being deducted from the tax due in Austria. The CFC rules also apply to comparable permanent establishments and override the DTAs’ tax exemption method (Treaty Override). Foreign losses are not taken into account when the Austrian tax base is calculated.
The CFC rules will be triggered if the following requirements are fulfilled:
- the foreign entity is “controlled” by an Austrian corporation, (i.e. when the Austrian corporation is directly or indirectly eligible for more than 50 % of the shares, profits, or voting rights),
- more than one third of the income of the foreign entity is passive and
- the actual tax burden of the foreign entity does not exceed 12.5 %.
However, the CFC regime does not apply, if the CFC carries out a substantial economic activity supported by staff, equipment, assets and premises (substance verification).
In that respect, new rules for the so-called change of method were set according to which dividend payments from foreign companies (participations exceeding 5 %) and capital gains from international intercompany holdings are not exempt from corporate taxation in Austria under certain circumstances.
4. Horizontal Monitoring
Instead of an external audit, from January 1st, 2019 certain taxpayers may submit an application for horizontal monitoring. The following major requirements have to be fulfilled in order to apply for a horizontal monitoring:
- Revenues exceeding EUR 40 million in the two years prior to application (exceptions apply to banks/ credit institutions and insurance companies)
- Implementation of an effective tax control system, peer reviewed by a tax advisor/ auditor
- Obligation to refrain from particular tax planning
- No fiscal penalty assessed during the last five years
If the requirements are met a tax audit will be initiated covering all years that are unaudited and not yet time-barred. The Horizontal Monitoring includes all major types of taxes except those covered by the wage tax audit.
5. Family Bonus Plus
From the calendar year 2019 on, the Family Bonus Plus replaces the tax deductibility of childcare costs and the child allowance. The Family Bonus Plus reduces the tax payable as a tax allowance and is valid for those months in which family allowance was received. For children in the EU/EEA region or Switzerland, the Family Bonus Plus is indexed. Children living in third countries are not eligible. Depending on the age, the family bonus amounts to EUR 1,500 pa (up to the age of 18) or EUR 500 pa (from the age of 18) and can be claimed through current payroll accounting or claimed in the employee tax assessment at the end of the year. The Family Bonus Plus may be split between both parents.
6. VAT Changes in Austria
- As of November 1,st 2018 the tax rate for accommodation services has been reduced again from 13 % to 10 %.
The tax exemption for educational institutions is now based on the evidence of comparable objectives with public schools. Previously, a comparable activity was seen as the key criterion. Details are outlined in a regulation by the Ministry of Finance.
7. Reduction of the chamber contribution/ charge 1
Since January 1st, 2019, input VAT on investments in fixed assets have been excluded from the tax base. Furthermore, the tax rate from 0.3 % has been lowered and is now degraded according to the tax base
- 0.29 % up to the tax base of EUR 3 million
- 0.2755 % exceeding a tax base of EUR 3 million
- 0.2552 % exceeding EUR 32,25 million.
More about current Tax Rates in Austria
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