How can taxpayers benefit from the Economic Strengthening Act?
The Economic Strengthening Act (“Konjunkturstärkungsesetz 2020 - KonStG 2020”) is intended to provide tax relief measures in order to strengthen Austria as a business location.
Change in income tax rate
The income tax rate will be reduced to 20% (instead of previously 25%) retrospectively from January 1, 2020 for income components between € 18,000.00 and € 31,000.00. For income exceeding € 1,000,000.00, the tax rate will remain at 55% until 2025 (previously until 2020). In addition, the surcharge on the annual deductible amount for travel expenses (“Verkehrsabsetzbetrag”) and the bonus on social security contributions are increased for employees with low incomes.
Changes regarding depreciation
As an alternative to linear depreciation for wear and tear (“Abschreibung für Abnutzung – AfA”), assets that are purchased or manufactured after June 30, 2020 can be depreciated at a fixed rate of up to 30% (degressive depreciation). For certain assets, however, the degressive depreciation is not permitted.
In addition, an accelerated depreciation is provided for buildings that were acquired or constructed after June 30, 2020. The depreciation of the acquisition or production costs can amount to a maximum of three times the previously applicable percentage in the first year and up to a maximum of the double previously applicable percentage in the following year.
Carrying back losses
Losses from business income that cannot be offset in 2020 can be deducted up to € 5,000,000.00 from the total amount of income before special expenses and extraordinary burdens as part of the 2019 tax assessment (loss carryback, “Verlustrücktrag”). If a deduction in 2019 is not possible, the losses can, under certain conditions and upon request, be carried back to the 2018 tax assessment. Under certain circumstances, the loss carryback can be effected even before the 2020 tax assessment is carried out. The applicable prerequisites are stipulated in an ordinance by the Austrian Minister of Finance.
If a financial year that differs from the calendar year ends in 2020, there is an option to carry back losses either from the 2020 tax assessment or from the 2021 tax assessment. If the loss is carried back from 2021, the rules and regulations mentioned above apply to the calendar years 2021, 2020 and 2019.
Also, there are additional regulations applying to loss carry-backs by tax groups.
Deferrals and installment payments
Tax deferrals that have been approved after March 15, 2020 and whose deferral period ends on September 30 or October 1, 2020 will be extended by law until January 15, 2021. Thereafter, under certain conditions, payment in installments has to be granted.
Other changes
Further measures include an adjustment of the flight tax and an adjustment of the COVID-19 special regulations for the performance of official acts. For employees who have received reduced regular salaries due to short-time working, the socalled “annual sixth” (“Kontrollsechstel”) for 2020 will be increased by a flat rate of 15% in order to avoid increased taxation on vacation and Christmas bonuses. Also, a subsequent waiver of the Family Bonus Plus (“Familienbonus Plus”) is made possible.
Stand: 22. Oktober 2020
