Corporate income taxes
Last reviewed 15 Jan 2025
Object of taxation
Income
Tax rate
as of 2023: 24%; as of 2024: 23%
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
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;
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
epreciation 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
Entertainment expenses
(if predominantly for advertising purposes: 50%)
Illegal gifts and donations
Income taxes and VAT on non-deductible expenses
Remuneration of supervisory board members
Expenses directly related to non-taxable or tax-paid income/revenues (particularly for investment income)
Write-downs of subsidiaries, where write-downs are the result of distributions
Write-down of investment in tax group member as a general rule (disadvantage of group taxation)
Salaries and remuneration payments to employees exceeding
EUR 500,000 (projected) per person per financial year within the group
25% special tax for payments to undisclosed recipients (in addition to the refusal of the tax deduction of the payment)
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 10% (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
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.
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
in case of asset deal: over 15 years
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.
Pooling
Pooling only exists for the purposes of VAT
