Inflation relief package parts II and III – government bills published
Following the approval of the first inflation relief package in the Austrian Parliament at the end of June (see our newsletter of 28 July 2022), the Austrian government published the government bills for the inflation relief package parts II and III on 14 September 2022. At the heart of the package – alongside other relief measures – is the abolition of ‘bracket creep’. Here is an overview of the rules:
Income tax
Abolition of bracket creep
From 1 January 2023 (or the assessment for 2023), it is planned that income tax bands will be adjusted in line with inflation – with the exception of the highest tax bands, as well as various deductions. This applies to the following:
- sole earner or single parent deduction
- maintenance payment deduction
- transport deduction (including premium)
- pensioner deductions
- refund of sole earner or single parent deduction
- social security refund and social security bonus
The increased amounts for 2023 are already contained as a legislative amendment in the government bill for the inflation relief package II.
For periods from 1 January 2024 (or the assessment for 2024), a separate mechanism for inflation adjustment is planned. The main method will be a fixed automatic adjustment by two-thirds of the inflation rate. In addition, for the remaining third, annual relief measures will be agreed by the legislator based on a ‘progression report’. It is planned that the adjusted amounts will be published in an ordinance by 31 August of the ongoing calendar year for the following year.
The revised brackets will also need to be taken into account within the wage tax system.
Tax exemption in connection with CO2 emission-free vehicles
Bonuses paid directly by employers to carsharing providers, or provided in the form of vouchers, which do not exceed EUR 200 per calendar year, may be granted tax-free if provided for the use of CO2 emission-free vehicles. Such vehicles may be cars, bicycles, or motorbikes.
Increase of the assessed value threshold for agricultural and forestry lump-sum taxation
The threshold for claiming lump-sum taxation will be increased from an assessed value of EUR 130,000 to EUR 165,000.
Decrease of the employer contribution
In any case, it is planned that that from the calendar year 2025, the employer contribution to the family allowance fund will be reduced from 3.9% to 3.7%.
A decrease of the employer contribution may already be possible in the years 2023 and 2024 if this is envisaged, for example, by other federal regulations, regulations of local government bodies, collective bargaining agreements, or works agreements. Alternatively, a reduction may be determined unilaterally by the employer for all employees or for groups of employees. Ultimately, this means that every employer will be able to profit from the reduction in the employer contribution.
Inflation relief package, part III
Similarly, the government bill for the inflation relief package part III has also been published. This includes a stable-value provision (indexing) for sick pay, rehabilitation and reintegration pay, unemployment benefits, childcare payments, student grants, and other family support payments.
