Austria Tax Regime

Austria operates a classical corporate income tax system combined with a comprehensive progressive personal income tax. Corporations are taxed at entity level at a flat 23% rate, with a second layer of taxation on distributions to shareholders. The regime is closely aligned with European Union directives — including the Parent-Subsidiary, Interest-Royalties and Anti-Tax-Avoidance Directives — and with OECD standards on treaty policy, transfer pricing and the Pillar Two global minimum tax, which Austria has implemented with effect from 2024. The overall system is mature and administration is predictable, with a well-developed rulings and horizontal-monitoring practice.

1.1 Sources

Primary legislation includes the Corporate Income Tax Act (Körperschaftsteuergesetz), the Income Tax Act (Einkommensteuergesetz), the VAT Act (Umsatzsteuergesetz), the Federal Fiscal Code (Bundesabgabenordnung) and the Minimum Tax Act (Mindestbesteuerungsgesetz).

1.2 Recent developments

The corporate income tax rate was reduced in steps from 25% to 24% (2023) and to 23% from 2024, where it remains for 2026. Austria enacted its Minimum Tax Act transposing the EU global minimum taxation directive with effect from 1 January 2024, applying an income inclusion rule, an undertaxed profits rule from 2025 and a domestic top-up tax (QDMTT), together with CbCR-based transitional safe harbours. The minimum corporate tax for a GmbH was reduced to EUR 500 per year from 2024 in connection with the lowering of the minimum share capital. Personal income tax brackets continue to be indexed annually under the abolition of 'cold progression'.

Headline statutory corporate income tax rate for a resident company. Where sub-national (state, provincial, cantonal or municipal) corporate taxes apply, the combined rate reported by the OECD is shown. Projected 2026–2028 rates carry the current rate forward unless a change is already enacted or officially scheduled. As-of 2026.

Top marginal statutory personal income tax rate on employment income for a resident individual. Where sub-national (state, provincial, cantonal or municipal) income taxes are a standard part of the system, the combined top rate is shown. Projected 2026–2028 rates carry the current rate forward unless a change is already enacted or officially scheduled. As-of 2026.

2.1 Rates and residence

Corporations — principally the GmbH (limited liability company) and AG (stock corporation) — are subject to corporate income tax at a flat rate of 23% on worldwide income if they have their legal seat or place of effective management in Austria. Non-resident corporations are taxed only on specified Austrian-source income, such as income attributable to an Austrian permanent establishment or Austrian real estate. Profits are taxed at the same 23% rate whether retained or distributed; distributions then attract withholding tax at shareholder level (23% where the recipient is a corporation, 27.5% for other recipients, subject to exemptions and treaty relief).

A minimum corporate income tax applies to companies in a loss position: EUR 3,500 per year for an AG (EUR 875 per full quarter) and, since 2024, EUR 500 per year for a GmbH (EUR 125 per quarter). Minimum tax is creditable against future corporate income tax without time limit.

2.2 Dividends and participation exemption

Dividends received by an Austrian corporation from another Austrian corporation are exempt without a minimum holding. Dividends from qualifying international participations — at least 10% of the share capital of a comparable foreign corporation held for an uninterrupted period of at least one year — are exempt, and capital gains on such participations are likewise exempt unless the company opts irrevocably into taxability on acquisition. Portfolio dividends from EU/EEA and treaty-partner companies are generally exempt as well, subject to switch-over rules where the foreign income is low-taxed and passive.

2.3 Income determination and deductions

Taxable income follows the statutory accounts prepared under the Austrian Commercial Code, adjusted for tax rules. Business expenses are generally deductible; non-deductible items include 50% of supervisory board remuneration, certain entertainment costs, and salary components above EUR 500,000 per person per year. Interest and royalties paid to low-taxed related parties (effective tax below 10%) are non-deductible. Depreciation is generally straight-line; buildings at 2.5% (1.5% residential), with declining-balance depreciation up to 30% available for certain assets. Goodwill from asset acquisitions is amortised over 15 years.

2.4 Interest limitation

In line with the EU Anti-Tax-Avoidance Directive, net borrowing costs are deductible only up to 30% of tax EBITDA, with a EUR 3 million safe-harbour, an equity-ratio escape clause, and carryforward of denied interest and unused EBITDA capacity. Stand-alone entities and certain long-term public infrastructure loans are excluded.

2.5 Losses

Tax losses may be carried forward indefinitely, but may generally offset only 75% of taxable income in a given year; the remainder continues to carry forward. There is no loss carryback. Loss carryforwards can be forfeited on a change of ownership combined with a change of the company's economic identity (Mantelkauf rules).

2.6 Group taxation

Austria's group taxation regime (Gruppenbesteuerung) allows a parent holding more than 50% of the capital and voting rights to pool the results of domestic group members and to deduct losses (pro rata) of first-tier foreign subsidiaries from EU/EEA or comprehensive-assistance jurisdictions, subject to recapture on utilisation abroad or exit. A minimum group membership of three years applies.

2.7 Controlled foreign companies

Under ATAD-based CFC rules, passive income (interest, royalties, dividends, capital gains, financial leasing, insurance/banking and invoicing income) of a controlled foreign subsidiary is attributed to the Austrian controlling company where the foreign entity's effective tax rate does not exceed 12.5%, the passive income exceeds one third of total income, and no substantive economic activity is carried on.

2.8 Transfer pricing

Austria follows the OECD Transfer Pricing Guidelines, restated domestically in the Austrian Transfer Pricing Guidelines 2021. Statutory three-tier documentation (master file, local file, country-by-country report) applies to constituent entities of groups with consolidated revenue of EUR 750 million or more for CbCR, and master/local file obligations arise for Austrian entities with revenues above EUR 50 million in two consecutive years. Advance pricing agreements are available as binding rulings on transfer pricing, group taxation, international tax law, VAT and abuse questions.

2.9 Incentives

The flagship incentive is the research premium (Forschungsprämie): a 14% cash premium on qualifying in-house R&D expenditure (and on contracted R&D up to EUR 1 million per year), payable in cash even in loss years. An investment allowance (Investitionsfreibetrag) of 10% — 15% for eco-investments — applies to qualifying additions up to EUR 1 million per year. There is no additional state or local income tax at company level.

2.10 Pillar Two

Austria's Minimum Tax Act applies to groups with consolidated revenues of at least EUR 750 million in at least two of the preceding four financial years. The 15% minimum is secured through an income inclusion rule from 2024, an undertaxed profits rule from 2025 and a domestic top-up tax (QDMTT) that has priority over foreign charging rules. Transitional CbCR safe harbours (de minimis, effective-tax-rate and routine-profits tests) are available for financial years beginning before 2027, and a QDMTT safe harbour applies for recognised foreign regimes. Groups within scope face standalone registration and minimum-tax return obligations even where safe harbours reduce the top-up to zero.

2.11 Branch income and reorganisations

An Austrian branch (permanent establishment) of a foreign corporation is taxed at 23% on attributable profits determined under the authorised OECD approach; there is no branch profits or remittance tax. Domestic and cross-border reorganisations — mergers, demergers, contributions and changes of legal form — can be carried out tax-neutrally under the Reorganisation Tax Act (Umgründungssteuergesetz) where Austrian taxing rights are preserved, with book-value continuation and loss carryforward transfer subject to comparability of the loss-generating business. Where taxing rights are restricted, exit taxation applies with EU/EEA instalment relief.

3.1 Residence and rates

Resident individuals are taxed on worldwide income; non-residents on Austrian-source income. Residence follows a domicile or habitual abode in Austria, with habitual abode presumed after a six-month stay. Employment, business, professional, rental and other income is taxed at progressive rates. For 2026 the schedule runs from 0% on the indexed basic bracket (approximately the first EUR 13,700 of taxable income) through intermediate rates of roughly 20%, 30%, 40%, 48% and 50%, with a top rate of 55% on income above EUR 1 million. Bracket thresholds (other than the top bracket) are indexed annually for inflation. Family bonus, transport and sole-earner credits reduce the assessed liability directly.

3.2 Capital income and real estate

Investment income is generally taxed at flat final rates: 27.5% on dividends, capital gains on securities and crypto-assets, and most interest from securities (bank deposit interest 25%). The flat tax is generally final when withheld by an Austrian paying agent; foreign-held portfolios are self-assessed at the same rates. Gains on Austrian real estate are taxed at a special 30% rate, typically collected by the notary as real estate income tax on transfer, with reduced effective bases for long-held pre-2002 property. Rental income is taxed at progressive rates with building depreciation of 1.5%.

3.3 Social security and payroll

Employees pay social security contributions of approximately 18% on salary up to the contribution ceiling (roughly EUR 6,650 per month in 2026), with the employer bearing roughly 21% in addition, plus payroll-related levies (municipal tax, family fund and chamber surcharges). The 13th and 14th salary payments customary in Austria are taxed at favourable flat rates (6% within limits), which materially lowers the average burden on employment income. Wage tax is withheld monthly by the employer and reconciled through voluntary or mandatory assessment.

3.4 Inbound individuals

There is no net wealth tax and no inheritance or gift tax, although gifts must be notified above thresholds and real estate transfers attract transfer tax. Inbound researchers and scientists may qualify for a 30% expatriate-style allowance or the Zuzugsbegünstigung freezing the tax burden on foreign income; cross-border commuters and posted workers are governed by treaty and EU coordination rules. Exit tax applies to individuals on unrealised gains in substantial shareholdings upon emigration, with EU/EEA deferral.

Domestic withholding applies to dividends at 27.5% (23% where the recipient is a corporation), to certain interest, and to royalties paid to non-residents at 20%. The EU Parent-Subsidiary and Interest-Royalties Directives eliminate withholding on qualifying intra-EU payments (10%/25% participation thresholds respectively). Interest paid to non-resident corporates on ordinary loans is generally outside the scope of Austrian withholding. Austria's treaty network of roughly 90 conventions typically reduces dividend withholding to 5–15% and royalties to 0–10%. Refund and relief-at-source procedures require residence certification; anti-abuse substance tests apply to holding structures.

Relief at source for dividends to foreign parent companies requires substance documentation (activity, premises and staff declarations); otherwise tax is withheld and refunded on application, with a standardised electronic pre-notification procedure. For outbound royalty and interest flows within groups, the 10% low-tax deduction bar (section 2.3) operates alongside withholding rules, so payer-side deductibility and payee-side withholding must be analysed together. Austria applies no branch remittance tax, making branch repatriation withholding-free.

5.1 General anti-abuse and hybrids

Austria applies a general anti-abuse rule in the Federal Fiscal Code (substance-over-form and abuse of legal forms) alongside the ATAD GAAR. Hybrid mismatch neutralisation rules address deduction/non-inclusion and double-deduction outcomes involving hybrid instruments, hybrid entities and permanent establishment mismatches, denying the deduction or forcing inclusion as required. The switch-over rule converts the participation exemption into a credit method for low-taxed passive foreign participations.

5.2 Exit taxation and disclosure

Exit taxation applies on the transfer of assets, functions or residence out of Austria at fair market value, with instalment payment over five years for transfers within the EU/EEA. DAC6 mandatory disclosure applies to reportable cross-border arrangements bearing prescribed hallmarks, and DAC7 imposes platform-reporting obligations; public country-by-country reporting applies to large multinationals under the EU directive as implemented. Treaty relief is subject to the principal-purpose test following Austria's ratification of the multilateral instrument, and administrative practice scrutinises substance in intermediate holding companies before granting directive or treaty benefits.

6.1 VAT

VAT is levied at a standard rate of 20%, with reduced rates of 10% (food, books, pharmaceuticals, rents for residential purposes, passenger transport) and 13% (cultural events, domestic flights, certain agricultural supplies). Registration is required for taxable persons; the small-business exemption covers domestic turnover up to EUR 55,000 (2025 threshold, indexed). Intra-EU acquisitions, reverse-charge mechanisms and OSS schemes follow the EU VAT Directive; monthly or quarterly preliminary returns are due by the 15th of the second following month, with an annual reconciliation return. Input VAT is recoverable for taxed activities, with adjustment periods of up to twenty years for real estate.

6.2 Transaction, payroll and other taxes

Real estate transfer tax is 3.5% (with favourable rates and bases within families and, from 1 July 2025, tightened share-deal rules capturing 75% unifications and indirect transfers); stamp duties apply to certain contracts such as leases and assignments, though loan and credit agreements are exempt. Employers bear municipal payroll tax of 3%, family-fund and chamber surcharges of roughly 4–5% combined. Excise duties apply to energy, tobacco and alcohol; a digital services tax of 5% applies to large online advertisers; motor-vehicle and insurance taxes and the CO2 levy under the national emissions trading scheme complete the picture. There is no net wealth tax.

7.1 Filing, assessment and audit

The tax year is the calendar year; corporations may adopt a deviating financial year with taxation in the year in which the financial year ends. Corporate and personal returns are filed electronically via FinanzOnline, generally by 30 June of the following year when filed electronically, with extended deadlines under the quota system for taxpayers represented by tax advisers. Assessments are issued by the competent tax office (Finanzamt Österreich; Finanzamt für Großbetriebe for large businesses); audits are risk-based, and horizontal monitoring is available for large compliant groups as an alternative to ex-post audits. The general assessment limitation period is five years, extended to ten for evaded taxes.

7.2 Rulings, appeals and penalties

Appeals go to the Federal Fiscal Court (Bundesfinanzgericht) and on points of law to the Supreme Administrative Court or Constitutional Court; EU-law questions may be referred to the Court of Justice. Binding advance rulings are available for reorganisations, group taxation, international tax, transfer pricing, VAT and abuse questions, and mutual agreement and EU arbitration procedures address double taxation. Interest runs on late assessments and on appeal amounts; penalties under the Fiscal Penal Code can be significant, with voluntary self-disclosure relief available where made before discovery.

Advance payments not settled by the assessment attract claim interest from 1 October of the following year; taxpayers commonly make voluntary top-up payments before that date to stop the interest clock. Where a financial year deviates from the calendar year, filing deadlines track the calendar year of assessment rather than the balance-sheet date.

9.1 Entity choice

The GmbH is the standard vehicle: minimum share capital of EUR 10,000 (half paid in), one or more managing directors, and full corporate tax status. The AG suits capital-market ambitions. The flexible company (FlexKapG), introduced in 2024, targets start-ups with lighter formalities and employee-participation shares. Partnerships (OG, KG, GmbH & Co KG) are transparent for income tax and common for family businesses and real estate. Branches of foreign companies are taxed on attributable profits at 23% with no branch remittance tax.

9.2 Structuring and incentives

Holding structures benefit from the domestic and international participation exemptions and the absence of withholding on most outbound interest. The group taxation regime supports post-acquisition loss utilisation, while goodwill amortisation is no longer available for share deals. R&D-intensive operations should maximise the 14% research premium, which is cash-effective in loss years; capital-intensive investments can layer the 10%/15% investment allowance. Financing structures must be tested against the 30% EBITDA interest limitation, the 10% low-tax deduction bar for related-party interest and royalties, and hybrid rules.

9.3 Worked effective-rate illustration

An Austrian GmbH earns EBITDA of EUR 2,000,000, books depreciation of EUR 300,000 and net interest expense of EUR 200,000. The interest is fully deductible (below the EUR 3 million safe harbour). Taxable profit is 2,000,000 − 300,000 − 200,000 = EUR 1,500,000. CIT at 23% is EUR 345,000. A qualifying R&D spend of EUR 500,000 generates a research premium of 14%, i.e. EUR 70,000, paid in cash. The net corporate burden is 345,000 − 70,000 = EUR 275,000, an effective rate of 275,000 / 1,500,000 = 18.3% on taxable profit. If the after-tax profit of EUR 1,155,000 plus the premium were fully distributed to a resident individual, dividend withholding of 27.5% would apply at shareholder level, giving a combined burden on distributed profits of roughly 23% + (77% × 27.5%) ≈ 44.2% before the premium effect.

9.4 Compliance

Expect electronic filing throughout, monthly payroll and VAT compliance, statutory financial statements filed with the commercial register (with size-dependent disclosure), transfer pricing documentation above the thresholds in section 2.8, DAC6 monitoring for cross-border arrangements, and beneficial-ownership register (WiEReG) filings with annual confirmation. Large groups should budget for Pillar Two registration, data collection and minimum-tax returns even where safe harbours apply.