Corporate income taxes
Last reviewed 15 Jan 2025
Object of taxation
Income
Tax rate
as of 2023: 24%; as of 2024: 23%
5% minimum corporation income tax on Austrian minimum capital for SE, AG, GmbH, and comparable corporations with unlimited tax liability (e.g., Ltd.); reductions for new companies in the first 10 years
Tax liability
Unlimited
Corporations resident or managed in Austria, on worldwide income.
Limited
Foreign legal entities neither resident nor managed in Austria, on certain income in Austria
Domestic public-law entities with certain types of income (e.g., capital gains, real estate sales) and commercial enterprises
Domestic entities exempt from unlimited tax liability with certain types of income (e.g., capital gains, real estate sales) and taxable enterprises
Financial year
Calendar year, Deviating fiscal year is possible
Accounting
Generally, double-entry bookkeeping in accordance with Austrian Business Code (UGB)
Loss carryback
not possible
Loss carryforward
Basically possible, certain set-off restrictions have to be observed; generally, not more than 75% of the annual profit (exemptions for tax group members) can be compensated
Shell company purchase
Under certain circumstances, loss carryforwards may be lost in case of acquisition of shares and restructuring
Operating expenses
Expenses of the business
Transfer prices
Arm’s-length basis, documentation required
Transfer pricing guidelines of Federal Ministry of Finance (BMF) as well as the Transfer Pricing Documentation Act (including guidelines) have to be observed
Interest on debt financing of acquisition of shares
generally deductible; no deductibility for acquisitions within the group and for interest payments to low-taxed corporations within the group;
Interest affected by the (old) general deduction prohibition may be deducted later in the event of a taxable sale, provided that it exceeds the tax-free profit distributions.
Debt / equity
No legally defined limits, administration: a certain equity ratio must exist, borrowing must be on normal market terms and conditions. The interest barrier rule is in force since January 1, 2021 (see also chapter Mergers & Acquisitions)
Tax depreciation
Depreciation methods: straight-line depreciation, units-of-production method or degressive (for acquisition/production of certain assets after 30.6.2020 and recognition in the UGB balance sheet as of 01.01.2023).
Annually or semi-annually (in case of purchase in second half-year); exceptions e.g. for goodwill
Depreciation for extraordinary wear and tear, or write-offs to the lower actual value; write-offs of investments in companies generally to be spread over 7 years
Immediate depreciation of low-value assets worth less than EUR 1,000
Provisions
Provisions for severance and long-service benefits provisions for current and future pension claims; provisions for other uncertain liabilities or
impending losses on open transactions
Not allowed: provisions for future expenses, provisions for business anniversaries
Long-term provisions for liabilities and impending losses (longer than 1 year) are discounted with a fixed interest of 3.5% pa. for tax purposes depending on their duration.
Motor vehicle expenses
Depreciation over at least 8 years (new cars)
Maximum allowable acquisition costs: EUR 40,000 (new cars); special rules for “Fiskal-LKWs” (trucks qualifying for input VAT deduction)
Non-deductible expenses
Representation expenses (in the case of predominantly advertising: 50%)
Monetary and non-monetary benefits subject to penalties
Generally penalties and fines (in particular association penalties), tax increases under the Fiscal Penal Code, payments made in connection with diversion
Certain voluntary contributions (however, donations are deductible under certain conditions)
Personal taxes and sales tax attributable to non-deductible expenses
Remuneration to supervisory board members and similar at 50%, to certain board members (monistic system) at 25%
Expenses directly related to non-taxable or finally taxed income/earnings (in particular capital income)
Distribution-related partial write-down on the investment in a distributing subsidiary
Partial write-down of an intermediate company due to subsidies from the grandparent company to cover losses of a grandchild company
Usually partial write-down on investment in group member (disadvantage of group taxation)
Interest on externally financed profit distribution, insofar as there is a tax repayment of contributions
Interest surplus exceeding 30% of EBITDA and EUR 3 million (interest barrier)
Salaries and remuneration to employees and other integrated persons exceeding (extrapolated) EUR 500,000 per person in the financial year and within the group (also applies to pension settlements)
Interest and license payments within the group and within affiliated companies if they are taxed at less than 15% (simplified) at the recipient or beneficiary of the payments, either nominally or effectively (also in connection with subsequent tax refunds).
25% special tax on payments to unnamed recipients, in addition to the non-deductibility of the expense
Interest barrier
Interest surplus which exceeds 30% of the EBITDA and EUR 3 million (interest barrier) with rules for carryforwards
Interest and royalties to intra-group companies
non-deductible:Interest and royalty payments to intra-group companies, if the applicable tax rate is lower than 15% (nominal or effective, also in connection with later tax refunds) at the level of the receiving company.
Withholding taxes
Generally 20%; in the case of investment income, as a rule 27.5%.
A DTA can provide for a lower rate of taxation, relief is granted by refund or reduction at source (Double Taxation Relief Regulation: detailed evidence of entitlement required).
Austrian taxpayer’s liability.
Interest
no withholding tax
Royalties
At 20 %, or per applicable DTA and applying EU Interest and Royalty Directive for group purposes
Dividends
At 27.5 % / 25% or per applicable DTA and applying the EU Parent-Subsidiary Directive for group purposes
Controlled foreign corporation (CFC) rules
Taxation of certain income of foreign corporations/permanent establishments at the level of the controlling Austrian corporation. The CFC rules will not apply if the controlled foreign company performs a substantial economic activity.
Requirements:
- Control of the foreign entity
- The passive income represents more than 1/3 of the foreign corporation’s total income
- The effective taxation of the foreign entity in the foreign country is 12.5% or less
Control:
Exists if the shareholding within the group of companies represents more than 50% of the voting rights or capital, or if the profit entitlement exceeds 50%.
Passive income is:
- Interest and other income from financial investments
- Licenses and other income from intellectual property
- Dividends and capital gains from shares that would not be tax-exempt in Austria
- Income from finance leases
- Income from insurance and banking activities (with exceptions)
- Income from clearing companies (group companies that generate
- income from the sale of goods and the provision of services acquired from and sold to affiliated companies without adding economic value)
Hybrid mismatches
Mismatches which, due to differing fiscal recognition methods, lead to a different tax treatment in different countries and may under certain circumstances lead to profit shifting or profit reduction must be neutralized, i.e. as a rule, the related expenses are treated as non-tax-deductible.
Tax protection
No further regulations apart from withholding tax; liability for withholding tax by the resident, reporting obligations for certain payments abroad.
Repayment of capital contributions to shareholders
Generally tax-neutral (even if repayment is made by way of a distribution), leads to a reduction in the tax base of the investment; a positive deposit balance is required
If the deposit repayment is higher than the tax acquisition cost or the tax base of the investment, this generally results in a taxable gain
National parent- subsidiary exemption
No minimum holding period / no threshold
- Dividends are tax exempt
- Capital gains and write-ups are subject to tax
- Capital losses, liquidation losses and write-downs are generally deductible over 7 years
International investments
Investment more than 1 year and at least 10%
- Dividends are basically tax exempt
- Capital gains, losses and any other changes in value are generally tax exempt, nevertheless actual and final asset losses are tax deductible, but have to be reduced by tax-exempt dividends received within the last 5 years; an option for taxable status is possible, then capital losses, liquidation losses and write-downs are generally deductible over 7 years
International parent- subsidiary exemption and portfolio investments
Switch to credit method (“switch over”) in case of foreign dividends and capital gains resulting from low-taxed passive income. A tax credit carryforward of foreign corporate income tax in certain cases is possible.
Portfolio investment:
Investment less than 1 year or less than 10%
Subsidiary in EU or certain EEA and third countries with extensive administrative cooperation agreement:
- Dividends basically tax-free
- Capital gains subject to tax
- Switch to credit method (“switch over”) in case of qualified portfolio investments (>= 5%).
Goodwill amortisation
see also chapter Mergers & Acquisitions
Asset Deal
Goodwill amortization over 10 years in accordance with company law or exactly 15 years in accordance with tax law
Share Deal
Goodwill amortization is only possible within a group of companies if the investment was acquired by February 28, 2014, and was included in the group by 2015 at the latest.
Group taxation / pooling
Tax groups
Companies linked in a financial hierarchy can under specified circumstances constitute a group for tax purposes. The taxable profits or losses of the members of a group are added to those of the taxable company in the group without consolidation (parent company, generally a limited liability company). Limitation regarding the deduction of losses of foreign group members.
possible group members
Corporations subject to unlimited tax liability, as well as commercial and economic cooperatives
Foreign entities subject to limited tax liability
- that are financially vertically linked to the aforementioned companies and
- that are resident in EU countries or countries with which a comprehensive administrative assistance agreement exists.
Pooling
Pooling only exists for the purposes of VAT
Loss compensation, carryforward, and offsetting limits
75% offsetting or carryforward limit for the group parent, however, 100% in particular for profits from the sale of businesses (including those of a group member)
A maximum of 75% of domestic income can be offset against losses of foreign group members
No offsetting or carryforward limit for group members for pre-group and non-group losses
Private foundation
Taxation similar to that of a corporation, additional tax reductions, especially for profits from the sale of shareholdings and, in some cases, real estate
