Austria-GmbH

Basic taxes (briefly)

Personal tax 25-55%
Corporate tax (in detail) The corporate tax rate in Austria is 25%. Even if the company does not receive income, there is a minimum tax of € 3.500 for joint-stock companies and € 1.750 for limited liability companies (for newly created - € 500 for the first five years and € 1,000 for the next five years). The minimum tax is credited against future income tax for an indefinite period.
Capital gains tax. Details Capital gains are usually taxed as part of the gains at the standard rate of 25%.
VAT. Details The standard VAT rate is 20%. A reduced rate of 10% applies to foodstuffs, pharmaceuticals, agricultural products, rent, tourist services, public utilities (except electricity) and entertainment. Professional services (such as lawyers and architects) are subject to 20% VAT. Certain supplies are zero-rated and some are exempt.
Other taxes real estate tax, transfer tax, social security contribution
Government fee
Stamp duty Yes

International tax agreement

   


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TAXATION

Overview

The principal taxes applicable to companies in Austria are the corporate income tax, municipal tax, real estate tax, value added tax (VAT), social security contributions, and customs and excise duties. There is no branch profits tax, excess profits tax or alternative minimum tax.
Reductions in the corporate tax rate in recent years have made Austria an attractive place to invest and have ensured that the country remains competitive.
Austria has fully implemented the EU parent-subsidiary, interest and royalties, merger and savings directives into domestic law.
Individuals in Austria are subject to personal income tax, withholding tax on passive income, social security contributions and real estate tax.

Personal Income Tax

For tax purposes, a resident is defined as an individual whose home is in Austria or who has been in Austria for more than six months.
Residents of Austria are subject to tax on their worldwide income, while nonresidents are subject to tax only on certain Austria-source income.
Taxable income includes income from employment (including certain fringe benefits), income from a trade or business, investment income and most capital gains. Most unearned income is taxable and as a rule tax is withheld at source.
Personal income tax is levied at progressive rates:
Income, EUR Tax rate,
0-11,000 0%
11,000 – 25,000 20.44%
25,000 – 60,000 33.73%
Over 60,000 50%

The first EUR 620 of special payments, such as the 13th or 14th salary, is tax free. Above that amount, tax is paid at 6% on these special payments unless the bonuses are higher than two months’ normal salary. In that case, any excess is taxed as part of annual salary if no other special tax benefits are applicable.
The tax year for individuals is the calendar year. Taxpayers that only derive employment income subject to wage tax withheld at source generally are not required to annual income tax return. Other income is self-assessed. The income tax return is due on 30 April (30 June for electronic submissions) following either the end of the relevant calendar year. Taxpayers represented by a tax adviser may file their tax returns until 30 April of the second year following the tax year if the tax office does not require an earlier filing.

Corporate Income Tax

A company is considered resident in Austria if its effective management is in Austria or if it is incorporated in Austria.
Resident corporations pay tax on worldwide income, but the liability for tax may be restricted or reduced by tax treaties. Nonresident companies (branches) are liable for tax only on Austrian-source income.
The corporate tax rate in Austria is 25%, which is payable by domestic companies and branches of foreign companies. Even if a company does not earn any income, there is a minimum tax of EUR 1,750 payable by a limited liability company and EUR 3,500 by a joint stock company. These rates apply as from the second year of operation; the minimum tax level in the first year is EUR 1,092.

Capital Gains Tax

Corporate capital gains are usually taxed as ordinary corporate income and taxed at the standard 25% corporate income tax rate. However, under the international participation exemption, there is no taxation of gains on the sale of shares in a nonresident corporation in which the Austrian parent company holds more than 10% for at least one year, unless the anti-abuse provisions for tax haven companies are triggered.

Losses

Loss carryforwards generally may be offset against 75% of the profits of a given year, with the remainder carried forward to be offset against 75% of the profits in future years. Loss carryforwards may not be used, however, where the identity of the corporation is changed as a result of changes to the ownership, the organizational and commercial structure unless the changes took place to facilitate the financial reorganization of the corporation aiming at maintaining a substantial number of jobs.
The carryback of losses is not permitted.

Tax Year

The tax accounting period generally may not exceed 12 months.

Withholding Tax

Dividends paid to a nonresident company are subject to a 25% withholding tax (which is usually a final tax) unless the rate is reduced under a tax treaty. Under Austria’s rules implementing the EU parent-subsidiary directive, no tax is imposed where the dividends are paid to an EU parent company that holds at least 10% of the payer for more than one year.
Interest paid to a nonresident corporate taxpayer is not subject to corporate tax in Austria, except where the income is secured by immovable property in Austria. For such income, the taxpayer has to file a tax return. In cases where the interest paid is not subject to corporate tax in Austria, withholding tax levied at source is refunded. In cases where the tax rate is reduced under a tax treaty, an exemption at source is possible.
Royalties paid to a nonresident corporation are subject to a 20% withholding tax. Under Austria’s rules implementing the EU interest and royalties directive, there is no withholding tax on Austrian-source royalty payments to an associated company (parent or sister company) resident in another EU member state or in Switzerland. A tax treaty may provide lower rates for other countries.

VAT

VAT is levied at each stage of the production and distribution chain. In general, taxable supplies of goods or services within the Austrian territory that are carried out by a VAT entrepreneur, as well as intra-community acquisitions and imports of goods, fall within the scope of Austrian VAT. Austria levies VAT on all goods and services, with a few exceptions, including air and sea travel, businesses with an annual taxable turnover that does not exceed EUR 30,000, banking transactions and exports. The assessment basis is the value of the goods or services (or the cost attributable to their consumption) or the customs value of the goods.
The standard VAT rate is 20%. A reduced rate of 10% applies to foodstuffs, pharmaceuticals, agricultural products, rent, tourist services, public utilities (except electricity) and entertainment. Professional services (such as lawyers and architects) are subject to 20% VAT. Certain supplies are zero-rated and some are exempt.

VAT Registration

Austrian entrepreneurs with annual turnover exceeding EUR 30,000 must register for VAT purposes. An exemption exists for entrepreneurs whose total sales do not exceed EUR 30,000 per year. Nonresidents that make taxable supplies of goods or services in Austria are also required to register regardless of the amount of annual sales.

VAT Tax Period and Returns

VAT returns must be submitted monthly, with a final return submitted electronically by 30 June of the following year (an extended deadline applies for taxpayers represented by a tax advisor). Quarterly filing is possible for entrepreneurs whose turnover did not exceed EUR 100,000 in the previous year.

Stamp Duty

Stamp duty is levied on a number of transactions (assignment of receivables, rent and lease contracts, among others). The stamp duty on loans and credit facilities has been abolished.

Government Fee

There is no government fee in Austria.

Other Taxes and Duties

Bank tax As from 1 January 2011, Austrian banks and foreign banks with an Austrian branch are subject to a banking tax based on the balance sheet total reduced by equity and secured contributions. The banking tax amounts to 0.055% to 0.085% of the tax base. In addition, a surcharge of 0.015% on the derivative transaction volume is levied.
Capital tax A capital tax of 1% is levied on compulsory shareholder contributions, as well as voluntary direct and hidden capital contributions to Austrian corporations if effected by the direct shareholder.
Real estate tax Municipalities levy annual real estate taxes on all Austrian-situs immovable property, regardless of whether the property is developed. Property used for charitable, medical, scientific, educational or similar purposes, however, is exempt. The real property tax is levied at a basic federal rate, multiplied by a municipal coefficient on rateable value. The basic federal rate is usually 0.2% and the municipal coefficients range up to 500%. The value assumed tends to be far below the market price.
Transfer tax Transfers of real estate are subject to an acquisition tax of 3.5%.
Customs duties levied on goods imported from outside the EU.
Excise duties levied on tobacco, alcohol and other beverages, and petroleum products.
Social security contribution Both the employer (3.83%) and the employee (3.82%) are required to make employment insurance and government pension plan contributions, with the amount based on the employee's earnings.

Anti-Avoidance Rules

Transfer pricing: Transactions between related parties must be at arm’s length. Payments to a foreign affiliate are generally deductible. However, it is common practice for tax authorities to look at such payments carefully, and they will be judged on the basis of the principles in the Austrian Transfer Pricing Guidelines 2010, which largely follow the OECD guidelines.
Thin capitalization: There are no formal thin capitalization rules in Austria.
Controlled foreign companies: In the case of shareholdings of 10% or more: The foreign subsidiary is subject to an effective corporate income tax burden of less than 15% and predominately earns passive income. If passive income accounts for more than 62.5% of the subsidiary’s total income, the threshold for the effective corporate income tax burden is 18.75%, according to the interpretation of the Austrian tax authorities. In case of portfolio dividends (i.e. shareholdings below 10%): The foreign subsidiary is not subject to a corporate income tax in its country of residence that is comparable to the Austrian corporate income tax, enjoys substantial tax exemptions or the applicable foreign nominal corporate income tax rate is below 15%.
General anti-avoidance rule: Austria has a general anti-avoidance rule, which relies on the substance over form concept. In tax matters, the true economic substance of a transaction will prevail over its formal appearance. Liability to tax cannot be avoided or reduce by abusing the instruments of civil law. In cases of abuse, the tax authorities have the power to levy tax as if the transaction was structured in line with the true economic circumstances.

Double Tax Agreements

Austria has exchange of information relationships with 97 jurisdictions through:
  • 91: Albania, Algeria, Armenia, Australia, Azerbaijan, Bahrain, Barbados, Belarus, Belgium, Belize, Bosnia and Herzegovina, Brazil, Bulgaria, Canada, Chile, China, Chinese Taipei, Croatia, Cuba, Cyprus, Сzech Republic, Denmark, Egypt, Estonia, Finland, Former Yugoslav Republic of Macedonia, France, Georgia,Germany, Greece, Hong Kong, Hungary, Iceland, India, Indonesia, Iran, Ireland, Israel, Italy, Japan,Kazakhstan, Korea, Kuwait, Kyrgyzstan, Latvia, Libya, Liechtenstein, Lithuania, Luxembourg, Malaysia, Malta, Mauritius, Mexico, Moldova, Mongolia, Montenegro, Morocco, Nepal, Netherlands, New Zealand, Norway, Pakistan, Philippines, Poland, Portugal, Qatar, Romania, Russian Federation, San Marino, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Syrian Arab Republic, Tajikistan, Thailand, Tunisia, Turkey, Turkmenistan, Ukraine, United Arab Emirates, UK, USA, Uzbekistan, Venezuela, Viet nam.
  • 6: Andorra, Gibraltar, Jersy, Guernsey, Monaco, Saint Vincent and the Grenadines.

Foreign exchange control

There are no foreign exchange controls in Austria.

ACCOUNTS

Financial Statements

Every Austrian GmbH must keep complete books and accounting records and prepare financial statements. The managing directors are obliged to maintain a financial accounting system and internal system of controls in line with the requirements of the business. Within five months of the end of each fiscal year, they must prepare annual financial statements and a management report.
Where the GmbH is a “parent company”, the GmbH will, as a rule, also be required to prepare consolidated financial statements and a consolidated management report.
As with all other incorporated entities, a GmbH must file its annual financial statements and management report (together with the proposal of the managing directors on appropriation of profits) with the Commercial Register no later than nine months from the end of the fiscal year. The documents so submitted are available for public inspection. The filing must be done electronically. In the case of small and mid-sized GmbHs, reliefis available regarding the annual financial statements to be submitted to the Commercial Register court; small GmbHs are generally required only to submit asummary balance sheet and summary explanatory notes to the accounts.

Audit

Where the GmbH exceeds a certain size and is classified as a “mid-sized” or “large” incorporated entity or for other reasons must have a supervisory board, an annual audit of the financial statements by a licenced chartered accountant must be carried out.
A small corporation is one that does not exceed two of the following three criteria: 50 employees, EUR 4.84 million in assets and EUR 9.68 million in turnover within two subsequent years (special rules apply for new foundations and restructurings).

Annual Return

Generally speaking, Annual Return is a short review on the current state of the company, which is prepared by the company secretary annually. As a rule it includes the following information:
  • Incorporation information (registration date, registered address);
  • Information about directors and their resignation;
  • Information about secretaries and their resignation;
  • Information about registered capital, nominal value of shares and amount of issued shares;
  • Information about shareholders and share transfer.

Austrian companies are required to prepare and file annual return. Annual return is publicly accessible.

Tax Returns

Austria operates a self-assessment system. Corporate income tax is paid in four installments based on tax paid in the previous year. These payments are due on the 15th of February, May, August and November, with the balance paid (or deducted) once the tax return has been processed. If corporate income tax is assessed by the authorities after 30 September of the year following the relevant calendar year, interest on the outstanding balance is due. Interest payments can be avoided by making an additional payment in the amount of the prospective balance.
The minimum tax is paid quarterly on the date the normal advance tax payments are due, but there is no refund for an overpayment (a credit in future years is available if sufficient profits are made).
The corporate income tax return must be filed electronically and submitted by 30 June of the year following the tax year. Taxpayers represented by a tax adviser may file their tax returns until 30 April of the second year following the tax year if the tax office does not demand an earlier filing.

    Taxes of Austria

    Min. rate for corporate tax 25%
    Capital gains tax Regular rate
    VAT 20%
    Withholding tax 25%/0%/20%
    Exchange control No
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