The tax reform measures include what would be significant changes in respect of Austrian tax groups—e.g., limiting group taxation treatment to entities located in EU/EEA-countries, limiting the use of foreign losses, and repealing a provision allowing for amortization of goodwill in corporate acquisitions.
There are also proposals for the repeal of the Austrian “capital duty” (tax) relief and imposition of new restrictions on the deductibility of certain business expenses.
The following discussion provides an overview outlining these proposed changes to Austrian tax law.
Group taxation proposals
The changes to the group taxation rules include the following proposals:
- Limitation of the Austrian group tax regime to entities located in EU/EEA-countries and in countries with which Austria has concluded an income tax treaty that includes a provision for full mutual assistance
- Losses of foreign group members would only be allowed as an offset against 75% of the positive taxable income of the current year
- Third-party acquisitions of Austrian operating entities via share deals would no longer be eligible to claim amortization (depreciation) of goodwill on inclusion of the acquired corporation into a tax group; existing goodwill amortization related to past acquisitions of Austrian operating group members, however, could continue to be tax deductible
The proposed changes to the “capital duty” (tax) regime provide that the Austrian capital duty of 1% that is triggered whenever a direct shareholder provides (contributes) equity to an Austrian corporation would be repealed, effective 1 January 2016.
Other business-related proposals
Among the tax reform proposals are measures that would:
- Limit the tax deductibility of expenses on setting up accruals for third-party obligations
- Limit the tax deductibility of payments to top-level employees to €500,000 per year, and extend the solidary surcharge that subjects “extra payments” made to top level earners in Austria to an increased, progressive tax-rate
- Repeal of tax benefits for “golden handshakes” made by companies to departing executives
- Possibly extend the Austrian withholding tax system to non-Austrian residents—which could affect income from capital investment and financing structures
Tax professionals in Austria believe that the proposed changes could be enacted and effective at a point in the spring of 2014. Further details as well as transitional rules are expected to be announced and published in the near future.
For more information, contact a tax professional at with the KPMG member firm in Austria:
Hans Zoechling, Tax Partner
+43 1 313 32 - 259
Christoph Plott, Tax Director
+43 1 313 32 - 697
Bettina Matzka, Senior Tax Manager
+43 1 313 32 - 407