The Austrian government earlier this week released two draft bills that include tax measures that are intended to boost Austria’s economy and facilitate further investments all in response to the coronavirus (COVID-19) pandemic.
The proposals include an investment premium, tax loss carryback rules, declining balance depreciation method, accelerated depreciation of buildings, and tax rate reform for individual taxpayers.
The investment premium is intended to create government-sponsored incentives for investments in fixed assets.
Detailed administrative guidelines on the requirements and application process for the investment premium would be expected.
Tax loss carryback
Currently, Austria only provides for tax loss carryforwards—losses can be carried forward indefinitely and for corporations may be used for up to 75% of taxable income in any given year.
The proposal would introduce limited tax loss carryback rules for entrepreneurs (that is, those subject to income tax) and corporations.
In general, any business income tax losses incurred in 2020 would be available to apply against taxable income in 2019 up to a maximum amount of €5 million. If application of the tax loss carryback would not be possible for 2019 (e.g., because the taxable profit is too low), the 2020 loss carryback could be further carried back and applied against taxable profit for 2018 (subject to further requirements to be published in an ordinance to be issued by the Ministry of Finance). Any tax losses from 2020 that are not carried back would treated as “normal” tax loss carryforwards that could be used against taxable income in future years.
For Austrian tax groups (as defined by Article 9 of the corporate income tax law) additional rules would need to be considered, including:
Declining balance depreciation
The proposal would introduce the declining balance method as a depreciation method, to be used alternatively instead of the already existing linear depreciation method.
Accelerated depreciation of buildings
In general, the standard depreciation rate applied annually for buildings for Austrian tax purposes is 1.5% for residential buildings and 2.5% for all other buildings. However, it is proposed to introduce accelerated depreciation as follows:
Tax rate reform
Austria’s regular (individual / personal) income tax rates are progressive (ranging from 0% to 55%) and depend on the applicable “income bracket.” The tax rate for the taxable income from €11,000 - €18,000 is currently 25% but is proposed to be reduced (retroactively) to 20% as from 1 January 2020. The maximum tax rate for income over €1 million of 55% would be extended until 2025.
For more information, contact a KPMG tax professional in Austria:
Markus Vaishor | +43 1 31332 3652 | email@example.com
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