Corporate tax in Austria

Corporate tax in Austria

Austria has an enticing tax system for businesses. There are double taxation accords with several different foreign nations to prevent double taxes. A summary of the most significant tax-related topics may be found here.

Businesses taxes

The tax base for enterprises

The entire amount of a corporation’s (domestic and non-resident) revenue is subject to unlimited taxes in Austria if the corporation (LLC, GmbH in Austria, or stock corporation, AG) has its legislative site of an efficient administration in Austria. A non-native corporate tax resident is only subject to restricted taxes on particular types of income in Austria if there is no effective administration in place.

The corporate income tax rate

A difference must constantly be established between tax repercussions at the level of the organisation and those occurring at the stockholder level since companies qualify as separate tax subjects. Revenues are taxed at the regular CIT rate of 25%, whether they are dispersed or kept.

Profit distributions are often subject to withholding taxes at the stockholder level, which is typically 25% for businesses and 27.5% for other beneficiaries.

Additionally, there is a minimum CIT that businesses with a tax loss must pay. The minimal CIT can be held forward indefinitely and used for the firm’s future CIT obligations.

For an AG, the minimum CIT is €875 for each whole quarter of the year.

A GmbH’s CIT must be at least €437.50 for each whole quarter of the year. The minimum CIT, nevertheless, is €125 for each whole quarter of the initial 5 years and € 250 for the following five years for GmbHs established after 2013.

Pros of group taxation for head offices

The group taxation law is the most advantageous to corporations. The requirements for moving operations to Austria offer significant benefits to both multinational enterprises and smaller foreign companies with subsidiaries, particularly when setting up offices in the Eastern European area.

The foundation for computing corporation tax is reduced thanks to group taxation regulations, which allow for the balance of domestic group members’ earnings and losses against those of their international subsidiaries. A 50% ownership stake plus one subsidiary share allows businesses to benefit from group taxes.

The ability to write off goodwill over a 15-year period in the event of acquisition is another benefit not currently offered in other nations.

Contribution taxes

The overall tax burden is reduced to 22% by several tax deductions.

Following BAK Taxation Index 2021, the actual tax burden for limited liability firms in Austria is at a rate of 22.5%. This benefit is due to the multiple tax deductions that are available, such as loss deductions and quiet reserve carryover.

Research Permit

The environment supporting business innovations has been further improved with the increase in the research premium from 12 to 14% at the start of 2018. This premium covers both research and development costs as well as those for contract researchers.

Personal Taxes

Personal income tax is imposed on those who keep a home or regular abode in Austria. All domestic and international sources of profit are subject to an unlimited amount of taxation. People only have a small amount of tax duty for income with an Austrian source otherwise. If a person is not visiting Austria briefly, Austria is where they usually reside. In any event, there is an infinite tax duty in Austria if the stay is longer than 6 months.

Following the Income Tax Act, there are seven different forms of income that can be used to calculate income tax. There are:

income from forestry and agriculture

  • earnings from self-employed (professional) services
  • earnings from a trade or business earnings from employment earnings from capital investments
  • revenue from leases, rents, royalties, and other particular sources of income

Thus, sources of income that are not among these categories of income are exempt from taxation. Depending on the level of income, individual income tax rates can range from 0% to 55%.

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