Corporate Income Tax
In Austria, companies - especially stock corporations and limited liability companies - are subject to corporate income tax on their entire income and their profits at a standard tax rate of 23%. Levies such as trade tax and net worth tax, which are common in other countries, do not exist in Austria.
According to the BAK Taxation Index 2023 (published by BAK Basel together with the German ZEW), the effective average tax burden in Austria is 21.2%. This means that the tax rate is lower than in Belgium (22.2%), the Netherlands (22,7 %), Italy (22,9 %), France (22.9%), Germany (29.3%), and Spain (29,6 %).
Group taxation is a big plus for headquarters
In the view of the tax experts at the global accounting firm KPMG, companies benefit most from the group taxation provisions. Both international companies but also smaller foreign firms with subsidiaries can reap enormous advantages from the rules in relocating operations to Austria, especially in establishing headquarters for the Eastern European region.
Under group taxation provisions, the profits and losses of domestic group members, along with the losses of foreign subsidiaries, are offset, reducing the basis for calculating corporate tax. Companies can capitalize on group taxation with an equity share of 50% plus one share in a subsidiary.
In the case of an acquisition, goodwill can be written off over a period of 15 years, a further advantage not currently available in other countries.
Tax deductions
A range of tax deductions lower the effective tax burden to 22%.
The effective tax burden of limited liability companies in Austria is at a level of 21.2%, according to the BAK Taxation Index 2023 (published by BAK Basel in cooperation with the German ZEW). This advantage is attributable to numerous available tax writeoffs like deductions for losses and the carryover of silent reserves.
Research allowance
As of the beginning of 2018, the research premium for expenditures relating to in-house R&D as well as contract researcher was raised from 12 to 14%, thus further improving conditions underlying corporate innovations. Companies are legally entitled to this research premium, which is paid in cash.
Capital Gains Tax
Interest earnings, bank interest and interest from securities held in Austrian deposit accounts and derived by an individual resident in Austria are subject to the 25% withholding tax. With this withholding tax deduction income tax is frequently deemed to be satisfied (final or definitive taxation).
Individuals maintaining residence or habitual abode in Austria are subject to personal income tax. Unlimited tax liability is extended to all domestic and foreign sources of income (worldwide income). Otherwise individuals are subject to limited tax liability for Austrian source income. An individual has his habitual abode in Austria if he is not just staying in the country temporarily. Where the stay in Austria does exceed six months (183 days), then in any case unlimited tax liability in Austria is applicable.
Income tax is based on such income as the taxpayer has earned within a calendar year from the seven types of income listed in the Income Tax Act:
- Income from agriculture and forestry
- Income from independent (professional) services
- Income from trade or business
- Income from employment
- Income from investment of capital
- Income from rentals, leases and royalties
- ”Other specific income” (as defined by the Austrian income tax act)
Sources of income not included in these seven types of income are thus not taxable.
The tax rates for the income of individuals range betweem 0% and 55%, according to the level of income.
