Austria: Tax reform plans include proposed reduction of tax rates

The government presented its plans for tax reform that include proposed reduction of tax rates.

Tax reform plans include proposed reduction of tax rates

Austria’s government on 3 October 2021 presented its plans for tax reform.

Currently, there is no draft legislative language or bill available, but based on the announced plans for tax reform, the following tax measures would be proposed:

  • Corporate tax rate reduction:
    • Effective 2023—reduced to 24% (from 25%)
    • Effective 2024—further reduced to 23%
  • Tax-free employee participation up to €3,000
  • Increase in write-off of low-cost assets to €1,000 (from €800)
  • Investment allowance including “greening components” (total of €350 million and absolute cap per company)
  • Reduction of the progressive individual (personal) income tax rates:
    • Effective from July 2022—reduction of the second bracket to 30% (from 35%)
    • Effective from July 2023—reduction of the third bracket to 40% (from 42%)
  • Increase in profit allowance to 15% (from 13%) for individual businesses
  • Increase in the “family bonus” to €2,000 per year / per child, effective from July 2022
  • Reduction of health insurance contributions for “small incomes” (starting at 1.7% contribution rate) effective from July 2022
  • Introduction of a carbon dioxide (CO2) tax
    • Effective from 1 July 2022—€30 per ton (which corresponds to an increase of 8-cents per liter of fuel)
    • Effective 2023—€35 per ton
    • Effective 2024—€45 per ton
    • Effective 2025—€55 per ton
  • Regionally graduated climate bonus (four levels, from €100 to €200 per year), financed by the CO2 tax
  • Carbon leakage relief, for particularly CO2-intensive companies generally based on the German model and relief for particularly burdened companies
  • Exemption from own electricity tax of €50 million


For more information, contact a KPMG tax professional in Austria:

Christoph Plott | +43 1 31332 3697 | cplott@kpmg.at

Markus Vaishor | +43 1 31332 3652 | mvaishor@kpmg.at

 

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