The Austrian corporate income tax is flat with a rate of 25%. The Austrian Corporation Tax Act defines the tax framework for corporations, setting an annual minimum tax of EUR 3,500 for public companies (AG) and a minimum tax per year of EUR 1,750 for limited liability companies (GmbH). These minimums are to be considered as a tax in advance, and as such, the amounts can be set off against any future corporate tax obligation. The company’s profits are computed by summing up the income generated by business activities performed, the passive income and the capital gains. In principle, all expenses linked to the conduct of the business are deductible. Losses can be carried forward indefinitely (but only 75% of one year’s profit can be offset), carry back is not permitted. Incentives concerning R&D are provided in the form of a 14% premium in cash for certain types of expenditure. An expert report from the FFG (“Forschungsförderungsgesellschaft”) is compulsory to request this tax incentive.
|Transfer pricing in Austria|
|Arm’s lenght principle||since 1998|
|Documentation liability||since 1988 / 2016|
|Lack of documentation||CbCR not provided up to KEUR 50|
|Tax shortage||late payment interest if fraud: fiscal penal code|
|Related parties||20% <||direct or indirect ownership|
Level of attention paid by Tax Authority:
Thin capitalization is not subject to any specific regulations. However, in order to avoid insolvency, the reorganization law stipulates guidelines. The standard tax rate on capital gains is 27.5%. Dividends paid out from resident companies to the resident shareholder (not individuals) in Austria are exempt regardless of the participation percentage. Several important exemptions exist, such as an international participation exemption for dividends from non-resident companies. These dividends are tax free if a minimum of 10% direct or indirect shareholding has existed for at least one year (applicable also for less than 10% shareholding if extensive mutual assistance exists with such countries). Royalties and interests are also subject to exemptions in accordance with tax treaties and EU directives; otherwise the standard tax rate is 20%. Austria, with 90 tax treaties, offers double taxation conventions with a large number of countries.
Austria has a group taxation regime: profits and losses of the group members are attributed to the group holder and the aggregated balance is subject to taxation. Losses from nonresident companies can be used in Austria (again, the 75% limitation is applicable and the foreign losses have to be calculated by applying Austrian accounting rules if extensive mutual assistance exists. These losses can be subject to a recapture in cases of liquidation or if they are used abroad.
The general rate is 20% for the sale of goods and services. A reduced rate of 10% is used for agricultural products and rentals with a residential purpose (in certain cases 13% for entertainment, art). Exemptions are in place for banking transactions, and no VAT is levied on exports. Entrepreneurs with annual sales below EUR 30,000 are exempted from VAT obligations. Non-residents trading in Austria are also subject to registration. Monthly returns are electronically recorded, and annual returns are to be completed by 30 June of the following year. Companies represented by a tax advisor can have the deadline substantially extended.
|VAT Options in Austria||Applicable / limits|
|Distance selling||EUR 35,000/year|
|VAT group registration|
|Cash accounting||EUR 700,000/year|
|Import VAT deferment|
|Local reverse charge||gas, electricity, heating, emission quotas, mobile phones, game consoles, construction services, scrap, compulsory auction of immovable property|
|Option for taxation|
|- letting of real estate|
|- supply of used real estate|
|VAT registration threshold*||EUR 30,000/year|
* Not applicable for capital companies
The Austrian income tax rate is progressive (maximum of 55%). The personal income tax progression adds up as follows:
Concerning capital gains, a 27.5% tax rate is applied to all capital income from both Austrian and foreign sources.
In Austria a statutory compulsory social security system is in use. All employees are subject to this system. The two most important schemes are the Austrian General Social Insurance Act (“ASVG”), which is used for dependent employees (blue and white-collar workers) and the Austrian Commercial Social Insurance Act (“GSVG”) which is used for the self-employed.
Minimum wages depend on the sector’s collective agreement. Therefore, no standard minimum wage exists.
|Wage related taxes in Austria||Minimum wage||Average wage in private sector|
|in EUR||in EUR|
|1 806,7*||1 806,7*|
|TOTAL WAGE COST||2746||130,27%||3487||130,24%|
|Employer's SS and other contributions***||638||30,27%||810||30,24%|
|Personal income tax||41||1,95%||256||17,98%|
* Payroll accountant in Austria, 2nd professional year
** Average monthly salary of full time employed persons in Austria in 2017.
*** In addition to SSC contribution to family equalization fund, surcharge, severance pay and community tax is also payable
**** Monthly gross salary (12 months)