Austrian Budget Stabilisation Measures Act 2025 passed

On 7 March 2025, the new Austrian National Council already introduced first measures to stabilise the budget. The Austrian Budget Stabilisation Measures Act 2025 (hereinafter BSMG 2025) includes measures to increase the tax revenue at short notice, such as the elimination of the zero VAT for photovoltaic systems, the extension of the energy crisis contributions, adjustments to the bank levy, the engine-related insurance tax and the Austrian Law on Motor Vehicle Tax. Other tax provisions that were announced as part of the government programme (e.g. provisions in connection with foundations, the real estate transfer tax or various reliefs and simplification measures) are expected to be passed within the legislation process in spring.

The key measures of the BSMG 2025 at a glance:

Austrian Income Tax Act (EStG)

  • Section 33 para. 1 EStG: Extension of the maximum tax rate of 55% for 4 years until 2029.

Austrian Value Added Tax Act (Austrian VAT Act)

  • Section 28 para. 62 Austrian VAT Act: Elimination of zero VAT for photovoltaic systems
    • As of 1 April 2025, the zero VAT on supplies, intra-EU acquisitions, imports and installations of photovoltaic modules is eliminated.
    • For contracts concluded before 7 March 2025, the zero VAT still applies until
      31 December 2025.
    • All requirements for the zero VAT (such as delivery to the operator) have to be fulfilled regardless of the period of application (until 31 March 2025 or
      31 December 2025).

Austrian Fee and Duties Act (GebG)

  • Increase of the betting duties from 2% to 5% of the bet amount as of 1 April 2025.

Austrian Insurance Tax Act (VersStG)

Elimination of tax exemption for electric vehicles: Up to now, all electric vehicles were exempt from the engine-related insurance tax. This exemption is eliminated as of 1 April 2025. As of 1 April 2025, only electric mopeds are exempt from the tax.

Redefinition of the tax calculation in general: The provisions regarding the calculation of the engine-related insurance tax are rearranged to improve clarity and comprehensibility. What is new is that, in addition to the engine power, the vehicle’s own weight (due to the lack of CO2 emissions) will also be a significant factor calculating the insurance tax in the future, but only for electric vehicles. For owners of registered electric vehicles, this means a significant increase in insurance costs, while for the government it represents an initial change of direction in terms of promoting e-mobility, which may also be subject to further cuts in the future.

The values entered in the registration certificate (in particular kW and kg) are decisive for calculating the engine-related insurance tax. Fractions of kW and kg must be rounded up to full kilowatts and kilograms. The calculation for electric vehicles is now regulated in detail as follows:

  • For motorcycles (vehicle category L) whose electric engine power in kilowatts exceeds 4 kilowatts, EUR 0.50 per kilowatt of the electric engine power reduced by 5 kilowatts, whereby at least 4 kilowatts must be applied.
  • For motor vehicles (vehicle category M; separate formula for motorhomes in section 6 para. 1 subsec. 3 VersStG) per kilowatt of the power of the electric engine in kilowatt reduced by 45 kilowatts for the first 35 kilowatts EUR 0.25, for the next 25 kilowatts
    EUR 0.35, and for the exceeding kilowatts EUR 0.45 (but at least 10 kilowatts must be applied); and EUR 0.015 per kilogram of the vehicle’s own weight reduced by 900 kilograms for the first 500 kilograms, EUR 0.030 for the next 700 kilograms and EUR 0.045 for the exceeding kilograms (however, a minimum of 200 kilograms must be applied).
  • Adjustments have also been made for hybrid vehicles that have an electric engine in addition to a combustion engine. The engine-related insurance tax is now calculated exclusively based on the power of the combustion engine.

The amendments are to be applied to payments of insurance premiums that fall due from 1 April 2025 and relate to insurance periods after 31 March 2025, whereby the following transitional provision is provided for: The policyholder must pay the engine-related insurance tax due on insurance premiums that fall due before 1 October 2025 and to which the new provisions were not applied, to the extent of the difference between the new and the old tax rate upon request to the insurer. The difference must be paid by the insurer by 17 December 2025.

Amendments to the Austrian Law on Motor Vehicle Tax (KfzStG)

Adjustment to the engine-related insurance tax: As the engine-related insurance tax is essentially a form of collection of the motor vehicle tax, the amendments to the engine-related insurance tax are also reflected in the KfzStG. The exemption for electric motor vehicles will be restricted to light motorcycles and those motor vehicles that are normally subject to motor vehicle tax.

Redefinition of the tax calculation: The tax calculation for electric motor vehicles is based on engine power and the vehicle’s own weight in the same way as the engine-related insurance tax.

Entry into force: The amendments also enter into force on 1 April 2025.

Extension and increase of the energy crisis contribution for electricity (EKB-S)

  • Extension of the energy crisis contribution for electricity until 1 April 2030, the future reference periods are from 31 March until 1 April of the following year.
  • Increase of the energy crisis contribution for electricity to 95% (from 90%) of the surplus revenues, i.e. the difference between the market revenues and the legal cap per MWh of electricity.
  • By reducing the cap per MWh of electricity (from EUR 120/MWh to EUR 90/ MWh and EUR 100/MWh for electricity generation plants put into operation as of 1 April 2025), the assessment basis has effectively been increased as of 31 March 2025.
  • The extension and increase of the energy crisis contribution for electricity enters into force as of 1 April 2025.

Extension of the energy crisis contribution for fossil fuels (EKB-F)

  • Extension of the energy crisis contribution for fossil fuels until calendar year 2029.

As of calendar year 2024, the assessment basis is still the amount by which the taxable profit is 5% above the average amount resulting from a comparison of the taxable profit of the respective tax period and the average of the taxable profits of the comparative calendar years 2018 to 2021.

  • The extension of the energy crisis contribution for fossil fuels enters into force as of 1 April 2025.

Bank levy

In the course of the BSMG 2025, significant special contributions are introduced with regard to the bank levy for credit institutions. It is planned that credit institutions have to a pay special contribution in each calendar year 2025 and 2026 on top of the existing current bank levy. Besides the planned special contributions for the years 2025 and 2026, the percentage of the current bank levy will be increased by approximately one third.

The provisions enter into force as of 1 January 2025 and are to be applied for the first time to payments that are made for tax debts that accrued after 31 December 2024.

The new law introduces various amendments and adjustments that are of great relevance for the practice and will lead to extensive consequences for some industries. It is important for the affected companies to react accordingly to the amendments that were passed at very short notice.

 

Authors: Martin Jann / David Hunger / Bruno Knechtsberger / Marlies Ursprung-Steindl

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