Austria tax system - taxation of Austrian AG companies and individuals: VAT, income tax and capital gains. Tax treaties of Austria

Residents are subject to income tax on their worldwide income, while nonresidents on income from Austrian sources.

Income tax is levied at the following rates:

• 0% - on income up to EUR 12 465;
• 20% - on income from EUR 12 465 to 20 397;
• 30% - on income from EUR 20 397 to 34 192;
• 40% - on income from EUR 34 192 to 66 178 EUR;
• 48% - on income from EUR 66 178 EUR to 99 266;
• 50% - of income from EUR 99 266 to 1 000 000;
• 55% - on income over EUR 1 000 000.

A company is considered tax resident in Austria if it has its place of effective management in Austria or is incorporated in Austria.

Resident companies pay tax on their worldwide income. Nonresident companies only pay tax on income derived from sources in Austria.

The Austrian corporate tax rate is 23% (until 2022 this rate was 25%, in 2023 it was 24%).

The minimum corporate tax for a GmbH is 437.50 EUR for each full quarter of the year. However, for GmbH founded after June 30, 2013, the minimum corporate tax is 125 EUR for each full quarter for the first 5 years and 250 EUR for the following 5 years.

Profits from the sale of foreign company shares are exempt from tax if the shareholding is not less than 10% and the ownership period is not less than a year. There are also exemptions for dividends.

The Minimum Tax Law implements EU Directive N 2022/2523 of December 14, 2022 on the global minimum tax into national law. Large groups of companies with net sales of at least EUR 750 000 000 000 in 2 out of the last 4 financial years are subject to the law, regardless of whether the group is exclusively national or multinational.

A global minimum tax rate of 15% is enforced through the Income Inclusion Rules (IIR) and from 2025 also through the Undertaxed Tax Payment on Profits Rules (UTPR). For Austrian founders with an effective tax rate below 15%, a domestic tax on gains (QDMTT) is introduced prior to the IIR and UTPR. This prevents the outflow of the Austrian tax base to the jurisdiction of the foreign ultimate parent company. On the other hand, the tax on the domestic tax base increase results in Austrian companies that are part of groups of foreign companies also having to comply with the relevant Austrian obligations.

The new rules are effective as of January 1, 2024.

Social security contributions in relation to the employee’s remuneration are paid at the following rates:

Contributions are paid on a maximum salary of 5 370 per month.

In addition, employers pay a Family Burdens Equalisation Levy of 3,9%, a municipal payroll tax at a rate of 3%, a mandatory pension fund contribution at a rate of 1,53%, and a number of others.

Dividends paid to foreign companies are subject to withholding tax at the rate of 23%.

Interest paid to foreign companies is not subject to withholding tax unless the loans are secured by Austrian real estate.

Royalties paid to foreign companies are subject to withholding tax at the rate of 20%.

Withholding taxes may be reduced under the relevant double tax treaties and EU Directives.

The standard VAT rate is 20%. The reduced rates of 10% and 13% apply to certain goods and services.

Local authorities have the right to levy tax on Austrian real estate. The tax base is determined by special rules, the effective tax rates are determined depending on the purpose of use and several other factors.

This tax is usually levied at the rate of 3,5% on the transfer of ownership of Austrian real estate.

There are exemptions and reliefs.

When registering ownership of real estate, a fee of 1.1% is charged.

Transfer of shares in companies and partnerships owning Austrian real estate may attract a 0,5% tax.

Stamp duty applies to a number of transactions for which contracts are signed. The rates vary depending on the transaction.

Capital tax is levied at a rate of 1% on mandatory contributions from shareholders and on voluntary or hidden capital contributions to Austrian companies.

A controlled foreign company is a foreign company taxed at a low tax rate (less than 50% of Austrian tax), in which an Austrian company owns, directly or indirectly, individually or together with related parties, more than 50% of the capital.

CFC rules have a number of exemptions.

The undistributed profit of a CFC is included in the tax base of the Austrian parent company if this profit arises from tax evasion transactions. The analysis of transactions for these purposes takes into account the functions performed in Austria for the controlled company.

Austria has signed 92 Double Tax Treaties (DTC) and 7 Tax Information Exchange Agreements (TIEA) with the following jurisdictions:

92 DTCs: Albania, Algeria, Argentina, Armenia, Australia, Azerbaijan, Bahrain, Barbados, Belarus, Belgium, Belize, Bosnia and Herzegovina, Brazil, Bulgaria, Canada, Chile, China, Croatia, Cuba, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Hong Kong, Hungary, Iceland, India, Indonesia, Iran, Ireland, Ireland, Israel, Italy, Japan, Kazakhstan, Korea, Kosovo, Kuwait, Kyrgyzstan, Latvia, Libya, Liechtenstein, Lithuania, Luxembourg, Macedonia, Malaysia, Malta, Mexico, Moldova, Mongolia, Montenegro, Morocco, Nepal, Netherlands, New Zealand, Norway, Pakistan, Philippines, Poland, Portugal, Qatar, Romania, Russia, San Marino, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Syria, Taiwan, Tajikistan, Thailand, Tunisia, Turkey, Turkmenistan, Ukraine, United Arab Emirates, United Kingdom, United States, Uzbekistan, Venezuela, Vietnam.

7 TIEAs: Andorra, Gibraltar, Guernsey, Jersey, Mauritius, Monaco, Saint Vincent and the Grenadines.

Austria has also signed and ratified the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). The Multilateral Convention entered into force for Austria on July 1, 2018.

There are no foreign exchange controls in Austria.