Tax reform 2021 - 2024 | Schedule | Ministerial Council January 30th 2020
LBG Austria has analyzed the Austrian federal government's plans for taxes, social security, balance sheet and choice of legal form, summarized in the LBG entrepreneurs’ guide „Was bringt das Regierungsprogramm 2020 – 2024 | Analyse & Empfehlungen“ and supplemented by recommendations for entrepreneurs, self-employed, liberal professions, farmers, managing directors, board members and employees. In the LBG guide you will find all the details on the tax reform and our first professional assessment.
Up till now it was unclear when which measures would come into effect. With the decision of the Ministerial Council on January 30th 2020, the schedule for the tax projects is set. Here are the key points (as of Ministerial Council decision January 30th 2020):
Measures entering into force 2021
- Reduction of the first tariff level of income tax (currently for income components over € 11.000 to € 18.000, also applies to income tax) from 25% to 20%. The top income tax tariff of 55% introduced for the calendar years 2016 - 2020 (for current income components over € 1 million, also applies to income tax) will be extended (for an indefinite period).
- Relief for agriculture: Increasing the accounting limit to € 700.000, lowering the fictitious level to 10%, increasing the PV contribution base for full-time employees up to 27 years, aligning the minimum KV contribution base to the ASVG level, 3-year distribution for profits in agriculture.
- Ecological measures (first step): The ticket charge is set at a uniform € 12. The car registration tax (Normverbrauchsabgabe "NoVA”) will be increased, the CO2 formula will be revised with a lifting of the cap and an increase in the spread between zero-emission and high-emission new cars. Greening of the existing truck toll (e.g. through a greater spread according to Euro classes). Greening the company car privilege for new company cars with the aim of creating stronger incentives for CO2-free company cars. Increased accuracy of the commuter allowance. The Federal Government intends to take all measures permitted by EU law as well as national measures to prevent tank tourism and reduce heavy goods vehicle traffic.
Measures entering into force 2022
- Reduction of the second tariff level of income tax (currently for income parts over € 18.000 to € 31.000, also applies to wage tax) from 35% to 30% and the third tariff level for income tax (currently for income parts over € 31.000 to € 60.000, also applies to income tax) from 42% to 40%.
- The Family Bonus Plus is to be increased to € 1.750 and the additional child amount to € 350. With the additional child allowance, the group of beneficiaries is extended to all employed persons.
- Introduction of a tax-privileged employee profit sharing scheme, analogous to the subsidy for employee shares in the capital of a company.
- Increase of the not to investments related tax-free profit allowance from € 30.000 to € 100.000 (affects sole proprietorships, natural persons as partners of partnerships / co-partnerships).
- Increasing the limit for the immediate depreciation of low-value assets from current € 800 to € 1.000.
- Introduction of a carry-back of profit for persons with cash accounting analogous to the solution for artists.
- Ecological measures (second step):
Development of the most efficient economic instrument for gradual true-cost pricing for CO2 emissions in sectors that are not subject to the EU ETS, e.g. through CO2 pricing through existing taxes or a national emissions trading system; determination of the economic costs of CO2 emissions as a reference value for true costs; development of an implementation path including concrete measures for true-cost pricing for CO2 emissions, which have clear steering effects, ensure predictability, and enable the Paris climate goals to be achieved; development of sector-specific relief measures for companies and private individuals to ensure that there are no additional burdens for the economy and for private individuals, taking into account existing switchover options, sectoral impacts, regional differences in living conditions and social cushioning while at the same time maintaining the CO2 control effect; creation of options and incentives for switching for companies and private individuals.
Further measures
Further measures that will be implemented during the 2020-2024 legislative period, however no specific timing for entry into force has yet been specified:
- reduction of the corporate tax rate from 25% to 21% (particularly affects limited liability company, public limited company, cooperative).
In February 2020, the Federal Government will introduce the "Task Force on Eco-Social Tax Reform" agreed in the government program to elaborate and prepare the two steps of the eco-social tax reform in a legislative manner.
The federal government intends to work out all the details of the tax reform by summer 2020. We therefore expect a comprehensive draft assessment by then and, subsequently, a decision by the National Council in the course of 2020.
In order to promote the clarity of the schedule, we have listed the individual measures briefly. A detailed description with practical contexts and initial recommendations can be found in the LBG entrepreneurs' guide LBG-Unternehmerleitfaden „Was bringt das Regierungsprogramm 2020 – 2024 | Analyse & Empfehlungen“, which we published for you already on January 7th 2020.
January 30th, 2020 | Author: Heinz Harb | LBG
Contact & Advice: This information naturally shows basic aspects of the topic - for completeness and correctness no guarantee can be given despite careful preparation. LBG will gladly advise you in your individual situation. Please contact one of our 31 Austria-wide locations (www.lbg.at) or welcome@lbg.at - we will gladly bring you together with one of our experts, who is very familiar with your request.