Austria country tax guide

German. Foreign documents must generally be translated into German. Recently, Austrian tax authorities accept English documents without any translation into German more and more. 

Austrian limited liability companies (Gesellschaft mit beschränkter Haftung - GmbH) and stock companies (Aktiengesellschaften - AG) are subject to corporate income tax. 

Currently, the corporate tax rate amounts to 24% from taxable income, regardless of the amount of income. In the case of losses or low income, there is a minimum tax in the amount of five per cent of one quarter of the statutory minimum amount of the share capital or nominal capital for each full calendar quarter, whereby a reduced minimum tax is payable for newly established limited liability companies in the first 10 years from incorporation. 

The Austrian government plans to reduce the corporate tax rate in 2024 to 23%. 

There is no corporate wealth tax in Austria. 

Dividends are generally exempt from corporate income tax if they originate from the following companies: 

Austrian companies; 

• EU companies (in the sense of the Parent-Subsidiary-Directive); or 
• other foreign companies that are comparable 
• to Austrian companies 
• if Austria has a comprehensive administrative cooperation with their country of residence.  

The exemption for dividends (and capital gains, see below) no longer applies under the following conditions: 

• the participation amounts to at least 5%, 
• the foreign company has a passive business focus (e.g. interest income, royalty income); and 

• the foreign company is taxed at a rate of 12,5% or less in its country of residence. 

Interest income is subject to 25% corporate income tax. Interest expenses are deductible with the following limitations: An interest surplus (interest expense minus interest income) is only deductible to the extent of 30% of the tax EBITDA. However, an interest surplus is deductible in any case up to an amount of EUR 3m. 

Capital gains from the sale of participations in EU companies (in the sense of the Parent-SubsidiaryDirective) or other foreign companies are exempt from corporate income tax under the following conditions: 

1. the foreign company is comparable to an Austrian company; 
2. the participation amounts to at least 10%; and — the participation is held for at least 1 year. 

Generally, Austrian tax law does not provide for any regime of exemption or taxation at a reduced rate for ordinary, profit-oriented companies. 

Corporate bodies with a charitable, non-profit or religious purpose can be exempt from corporate income tax. 

The tax residence of an individual is the basis for their unlimited tax liability in Austria. An individual’s tax residence is either established by a domicile (Wohnsitz) or their habitual residence (gewöhnlicher Aufenthalt) in Austria. 

Subject to applicable double taxation treaties, Austrian tax residents are liable to personal income tax on their worldwide income. Other persons are subject to personal income tax if they have income sources in Austria. 

For parts of income above EUR 1m, the tax rate is currently 55% (however only limited until 2025). 

For the fourth group the tax will be reduced from 41 % to 40 % (starting in 2024). 

There is no joint taxation regime for married couples or individuals living under a civil union. 

However, there are tax benefits available if the taxable person has minor children. 

Dividends, interest and capital gains from the sale of capital assets are taxed at a flat rate of 27.5%. 

Capital gains from the sale of real estate are taxed at a flat rate of 30%. 

Generally, there is no beneficial tax regime for newcomers or foreign investors. 

However, expatriates who are posted to Austria by a foreign employer may claim 20% of their remuneration as deductible expenses (maximum EUR 10,000 per year). 

There is no personal wealth tax in Austria. 

There is no gift or inheritance tax in Austria. 

However, gifts must be reported to the Austrian tax authorities if they exceed certain thresholds. 

Austria does not offer golden visas for passive investment (e.g. government bonds or real estate). 

Under certain conditions, the Austrian government may grant foreign nationals the Austrian citizenship if this is in the national interest of the Republic because of the foreigner’s “extraordinary contributions”. Such extraordinary contributions could be substantial investments in the Austrian economy that create a significant number of jobs. Thereby, the foreigner has a chance to acquire the Austrian citizenship without fulfilling the general requirements (e.g. ten-year residence in Austria or knowledge of the German language). 

Generally, third country nationals may obtain a residence permit by proving they 

1. have a certain level of wealth /income that secures their living; 
2. have a health insurance that is liable to pay compensation in Austria; 
3. have an accommodation in Austria; and 
4. are no threat to the Austrian public safety or security. 

For longer-term residence permits, additional requirements may apply (e.g. knowledge of the German language). 

As Austria belongs to the Schengen Area, Austrian citizens and persons having an Austrian visa or residence permit are allowed to travel within the European Union. 

Private foundations (Privatstiftungen) are a common vehicle in Austria. It is a separate legal entity that uses contributed assets to fulfill a certain purpose defined by its founder. The founder transfers his assets to the private foundation and thereby loses his ownership. It is mainly used in succession planning (e.g. to avoid family businesses being divided between the heirs). 

Trusteeships (Treuhandschaften) are a contractual agreement under civil law but no separate legal entity. In such trust agreement, it is agreed that the trustor (Treugeber) transfers the civil-law ownership in his assets to the trustee (Treuhänder). However, the trustor remains the economic and beneficial owner of the transferred assets. 

In case of similar foreign vehicles, Austrian tax authorities would check if the vehicle is comparable to an Austrian company or private foundation. From a tax perspective, the critical question is if the assets and income of the foreign vehicle are attributable to the vehicle itself or directly to its beneficial owners (tax transparency). This is decided on a case-by-case basis. 

As of 2024, the implementation of the EU-Unshell Directive is expected. There is no draft legislation available yet. 

Austrian private foundations are separate tax entities and subject to corporate income tax (with some special rules in comparison to companies). In addition, contributions to private foundations are subject to 2,5% foundation entrance tax. 

A trusteeship is no separate tax entity. From a tax perspective, the assets and income remain attributable to the trustor.