Austrian National Council approves COVID-19 support measures in tax law

On 21 December 2021, the Austrian Parliament passed two legislative packages on pandemic-related support measures. These concern both tax relief in the Income Tax Act (EStG), Corporate Income Tax Act (KStG), VAT Act (UStG) and others, as well as simplifications in connection with tax payments. Here we have provided an overview of the key points:

Income Tax Act

Extension of the COVID-19 bonus

As was the case for the year 2020, a COVID-19 bonus in the amount of EUR 3,000 will also be tax-free for the calendar year 2021. The bonus payment must be made by February 2022. Bonuses of this kind are also exempt from social security contributions.

Tax exemption for Christmas vouchers

As in the previous year (see newsletter of 14 December 2020), Christmas vouchers of up to EUR 365 per employee will also be tax-free in 2021 if the tax-free allowance for participation in company events (§ 3 subpara 14 EStG) is not exhausted. Vouchers must be issued by 31 January 2022.

Tax exemption for meal vouchers

Meal vouchers granted by employers for the purpose of providing workplace catering are already tax-free up to EUR 8 per working day. In this context, the existing administrative practice, according to which the tax exemption also applies to meals delivered by a delivery service, has now been anchored in law.

New flat rate for workspaces

As an alternative to the (tax-deductible) work room, the so-called ‘workspace flat rate’ is being introduced. Within the scope of business income, the flat rate can be claimed starting from the tax assessment for 2022 if the taxpayer has no other room available from which to carry out the business activity. The workspace flat rate can also be claimed as an additional business expense within the framework of the basic flat rate under § 17 EStG. For a single financial year, the flat rate will be:

• • • EUR 1,200, provided that the taxpayer does not earn any other income from active employment in the calendar year in excess of EUR 11,000 for which another room is available outside the home. The flat rate is intended to cover all expenses arising from business use of the home.
    • EUR 300, if the taxpayer earns other income from active employment in the calendar year in excess of EUR 11,000 for which another room is available outside the home. In addition to the flat rate, expenses for ergonomic furniture for a home workspace of up to EUR 300 can be claimed in accordance with § 16 para 1 subpara 7a item (a) EStG.

Austrian Federal Fiscal Code – (extension) Simplifications for tax payments

Simplified tax deferrals

Any deferrals applied for between 22 November 2021 and 31 December 2021 will be approved using a simplified process by 31 January 2022.

No default interest

In addition to the simplified tax deferrals, no default interest will be imposed for the period between 22 November 2021 and 31 January 2022. From 1 February 2022 to 30 April 2024, default interest will be (only) two percent above the applicable base rate (instead of four percent).

COVID-19 instalment payment model

It is possible to submit further applications for redistribution of instalment payments within the COVID-19 instalment payment model.

Repayment of credits despite tax debts being due

Credit transactions recorded in the tax account between 21 November 2021 and 31 December 2021 (based on corresponding assessment notices or findings after 21 November 2021) can be repaid even if there are tax debts. A request must be submitted via FinanzOnline by 31 December 2021.

Corporate Income Tax Act

Profits from extrajudicial restructuring

The taxation of restructuring gains within the meaning of § 23a KStG is being expanded to include extrajudicial restructuring. Extrajudicial restructuring is now also subject to 100 percent loss carry-forwards for restructuring gains. Both rules should be applied from the assessment for the calendar year 2021.

Hybrid companies

For reverse hybrid entities (Austrian partnership deemed to be an entity subject to corporate income tax under foreign tax law), a new rule has been introduced in accordance with which the income of a controlling (foreign) corporation is subject to limited tax liability. This provision will apply regardless of any relevant DTTs. The provision will enter into force on 1 January 2022.

VAT Act

Tax exemption for services in connection with the COVID-19 pandemic

A tax exemption has been introduced for supplies of goods and services in connection with the COVID-19 pandemic to the Commission or agencies established under European Union law. A corresponding tax exemption has been introduced for the import of such goods under specific conditions. Both provisions enter into force on 1 January 2021 and should be applied to sales made after 31 December 2020.

Tax Liability for distance sales

The liability procedure (§ 27 para 4 UStG) will also be introduced for cases subject to distance selling rules. This provision will enter into force on 1 July 2021 and should be applied to sales made after 30 June 2021.

VAT exemption for protective masks

The 0% VAT rate for the supply of protective masks will be extended to 30 June 2022 (see the newsletter of 22 January 2021).

Tax rate for ‘gastronomy’ revenues

No extension of the 5% VAT rate for sales in the food & beverage service industry (‘gastronomy’) (see the newsletter of 24 November 2020) is planned.