Austria: Draft Bill Of The Tax Reform Act Of 2015/2016

Last Updated: 12 October 2015
Article by Cynthia Pfister

On 16 June 2015, the Austrian government approved a draft bill of the Tax Reform Act of 2015/2016 for submission to Parliament. If adopted, most of the changes will become effective as of 1 January 2016. In particular, the draft bill includes the following amendments.

Income Tax Rate

One key element of the draft bill is the reduction of the tax rate for the first tax bracket from 36.5% to 25%. In addition, the number of tax brackets will be raised from currently three to six, meaning a flattening of the progressive rate. On the other hand, for the next five years a new maximum tax rate of 55% shall become applicable to income exceeding EUR 1 million.

Repayment of Capital

The current administrative practice allows for the qualification of a dividend for tax purposes either as profit distribution (which is subject to withholding tax) or capital repayment (which is free of withholding tax) provided that certain conditions are met. This freedom of choice shall be abolished; dividends are to be treated as profit distribution primarily, and only if no distributable profit exists, may they be regarded as a capital repayment.

Depreciation of Buildings Held as Business Assets

Regarding buildings held as business assets, the three currently applicable depreciation rates of 3%, 2.5% and 2% (which depend on the usage of the building) shall be replaced by a uniform depreciation rate of 2.5%. In case a building is rented out for residential purposes, a rate of 1.5% shall apply.

Treatment of Losses from Partnerships

The government plans to restrict the offsetting of losses incurred by individuals from certain types of partnerships to their actual partnership contribution. Any excess loss shall be put on hold and may only be offset against profits derived from the partnership in future years. This rule shall apply if a partner has no liability or only limited liability and if, in addition, he/she has more the position of a passive investor rather than an active entrepreneur.

Allocation of Acquisition Costs of Real Estate

Pursuant to current administrative practice, acquisition costs of real estate are currently allocated between the (depreciable) building and the (non-depreciable) land in a ratio of 80% to 20%. In the future, a statutory (refutable) presumption shall determine that 60% of the acquisition costs are to be allocated to the building, while 40% are attributable to the land.

Dividend Withholding Tax

Income from the letting of capital is currently subject to a uniform 25% withholding tax rate. In the future, two different tax rates shall be applicable: interest derived from cash deposits with banks shall be taxed at 25%, while all other income from the letting of capital shall be taxed at 27.5%. In particular, shareholders receiving dividends will be affected by the increased tax rate.

Sale of Private Property

Currently, income from the sale of property which does not form part of a business is subject to a special income tax rate of 25%. In the future, the rate shall be 30%. Also, the 2% inflation allowance will be abolished.

Research Premium

The premium for research & development activities shall be raised from currently 10% to 12%.

Tax Loss Carry-Forwards

Taxpayers that calculate their profit under cash basis accounting rules are currently entitled to carry forward their losses for three years only. In the future, no time limitation shall apply.

Relocation Incentive for Researchers and Scientists

The relocation incentive for researchers and scientists shall be made more attractive: On the one hand, 30% of the individual's wages shall be exempted from income tax for the first five years after relocation. On the other hand, the Austrian Minister of Finance shall, by way of regulation, be able to eliminate any increased tax burden resulting from the relocation by applying the average income tax rate applicable prior to relocation.

Value Added Tax

The reduced VAT rate regarding specific goods and services shall be raised from 10% to 13%. The new rate shall be applicable, for example, to cultural services, sports events and accommodation.

Real Estate Transfer Tax

In the past, the tax basis for the transfer of real estate was often the very low threefold "standard tax value" (Einheitswert), in particular for transfers between relatives. According to the draft bill, real estate transfer tax shall in the future always be based on the value of the consideration, even in case of transfers between relatives. In case of gratuitous transfers it shall be levied on the value of the transferred real estate.

Whereas previously the tax rate was 2% for transfers between relatives and 3.5% in all other cases, a special tax rate shall generally apply to gratuitous transfers. The rate shall vary as follows:

Base Rate
EUR 0 – 250,000 0.5%
EUR 250,000 – EUR 400,000 2%
Over EUR 400,000 3.5%

To all other transfers of real estate a tax rate of 3.5% shall be applicable.

Currently, real estate transfer tax also falls due in cases where 100% of the shares in a company holding real estate are pooled in the hands of a single shareholder (either a single person or several persons forming a VAT group). In the future, real estate transfer tax shall already be triggered upon the pooling of 95% of the shares in such a company. Furthermore, the reference to a VAT group shall be replaced by reference to a group of companies within the meaning of sec. 9 of the Austrian Corporate Income Tax Act. Another amendment specifies that shares held in trust shall be regarded as the shares of the trustor for real estate transfer tax purposes.

At present, transfers of real estate in the course of restructurings are subject to real estate transfer tax at a rate of 3.5% of the double tax value of the real estate. In the future, the real estate transfer tax shall amount to 0.5% of the property value.

Measures against Tax Fraud

In order to step up the fight against the "black market" economy, the government plans to make fraud-proof cash registers mandatory for companies effecting predominantly cash transactions and having a net annual turnover of at least EUR 15,000. Furthermore, companies shall be obliged to issue receipts to customers paying with cash, while customers shall be obliged to accept the receipt. In addition, payments of more than EUR 500 for construction works shall no longer be deductible if made in cash. Similarly, in the construction industry it shall not be possible to pay wages in cash anymore.

Fiscal Criminal Law

In this area, it is planned to make tax evasion only punishable in the event of gross negligence and willful intent (thus no prosecution in case of only slight negligence).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

    Disclaimer

    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

    Registration

    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

    Cookies

    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

    Links

    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

    Mail-A-Friend

    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    Security

    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions