Eco-social Tax Reform Act 2022 published in Federal Law Gazette
The three parts of the Austrian Eco-social Tax Reform Act 2022 were published in the Federal Law Gazette on 14 February 2022. The changes made since the consultation draft (see German Tax Newsletter of 12 November 2021) and the bill (see Tax Newsletter of 20 December 2021) are listed below:
Eco-social Tax Reform, Part I
Changes to the bill
In relation to the bill, the final version of the Eco-Social Tax Reform Act Part I 2022 contains only minor adjustments to § 124 subpara 393 Austrian Income Tax Act (EStG) and § 40 para 1 Austrian Transparency Database Act (TDBG).
Effect of changes in tax rates on the calculation of deferred taxes
The previously announced gradual reduction in the corporate income tax rate from 25% to 24% in calendar year 2023, and subsequently to 23% from calendar year 2024, now has legal substance.
This will impact upon the accounting for deferred taxes in the financial statements. According to AFRAC Opinion 30, item 34, the reduced tax rates apply if the Austrian Parliament (National Council) approved the bill in its 3rd reading on or before balance sheet date. Approval took place on 20 January 2022. Accordingly, the new reduced tax rates are to be used for the calculation of deferred taxes for annual financial statements with reporting dates from 20 January 2022, and in particular from 31 January 2022 (applicable rates are 24% in 2023, and 23% in 2024).
Effect of the tax rate change on profit distributions
The tax on income from capital (KESt) applicable to distributions to corporations will also now be reduced: to 24% for income received in calendar year 2023, and to 23% for income received from calendar year 2024 onwards.
Eco-social Tax Reform, Part II: Climate Bonus Act
No changes were made to the Climate Bonus Act during parliamentary approval.
Eco-social Tax Reform, Part III: Commercial Social Security Act (GSVG) and Farmers’ Social Security Act (BSVG)
Due to an amendment, significant changes have been made in the area of social security (relief for low and medium-income self-employed persons):
The staggered reduction in contribution rates originally envisaged in the bill was replaced by a right to a credit for health insurance contributions. The prerequisites in accordance with § 27f Austrian Commercial Social Security Act (GSVG) and the identically worded § 24f Austrian Farmers’ Social Security Act (BSVG) are that compulsory or self-insurance exists within the health insurance scheme (cut-off date of 31 May of the current calendar year), and that the monthly contribution base of EUR 2,900 is not exceeded. Under the new regulation, eligible persons receive a lump-sum payment between EUR 90 and EUR 315, depending on the amount of the contribution base. Payment is made in the form of a contribution credit in the course of the contribution prepayment notifications for Q3 (GSVG) or Q2 (BSVG).
Authors: Katarina Zivojinovic / Michael Wenzl