English Summary 4/2025

The Austrian Tax Amendment Act 2025 entails several smaller changes and clarifications in a lot of different Tax Acts such as the Income Tax Act, VAT Act, RETT Act and the Austrian implementation of Pillar II.

F. Kleemann / M. Vaishor

The quantitatively predominant part of the ministerial draft of the AbgÄG 2025 concerns amendments concerning Pillar II. At its core, it is intended to (a) implement the EU-law requirements in connection with DAC9 (Directive on Administrative Cooperation) and (b) incorporate some of the OECD’s Administrative Guidances. Overall, the adjustments envisaged in the ME/AbgÄG 2025 were therefore largely to be expected and are therefore not surprising.

C. Marchgraber

The Austrian Income Tax Act allows a special tax deduction for investments amounting to 10% of the acquisition or conversion costs of the asset or 15% in case of “eco-investments”. However, the tax deduction can only be made for acquisition/conversion costs up to MEUR 1 p.a.. Furthermore, certain assets are excluded from the application of this provision such as e.g. used assets, buildings, etc. Recently, an increase of the deduction was implemented according to which 20% (rather than 10%) or 22% (rather than 15%) in case of eco-investments, may be deducted for investments from Nov 1, 2025-Dec 31, 2026.

F. Kleemann / M. Vaishor

The Austrian Ministry of Finance (BMF) recently commented on the so-called "split profit distributions” and their tax treatment. These are situations where only individual shareholders receive distributions, while the profit shares of the other shareholders initially remain within the company and are intended to be distributed at a later date. The BMF considers split profit distributions permissible under certain conditions, meaning that no withholding tax needs to be paid on the retained profit shares until they are distributed later.

C. Plott

According to the Austrian Administrative Supreme Court (VwGH), the prohibition on deducting managerial salaries exceeding EUR 500k per year per person shall not be taken into account when calculating the basis for the research premium, since neither Art 108c of the Income Tax Act (EStG) nor the Research Premium Ordinance (FoPV) contains a corresponding reference. The FoPV provides a definitive list of reductions only for tax‑exempt subsidies. The exclusion of expenditures that have already received funding is, moreover, solely driven by the aim of preventing double funding. In practice, this raises the question of whether other non‑deductibility rules (e.g., concerning supervisory board remuneration, interest, or entertainment expenses) must likewise be disregarded. Any still‑pending proceedings related to the research premium should therefore be reviewed.

M. Deichsel / C. Halwachs / O. Mavher 

In principle, tax loss carry-forwards can be utilized indefinitely. However, tax loss carry forwards are disallowed according to the Austrian loss trafficking rules if the identity of the corporate taxpayer changes pursuant to a significant change of the organizational, economic and shareholder structure. All three requirements must cumulatively be fulfilled in order that tax loss carry- forwards are disallowed. However, the three criteria do not need to be fulfilled to an equal extent, e.g. if two criteria are very clearly fulfilled and the third one a little, the Austrian loss trafficking rules may still apply.

In a recent decision the Austrian Administrative Supreme Court was confronted with a case where the previous 100%-shareholder (and managing director) of a company sold 55% of the shares and the business of the company was changed from real estate development to real estate brokerage. Even though the company still did its business in the real estate industry, the court qualified the transition from development to brokerage as a change of the economic structure. Furthermore, since in the case at hand the shareholder actually had the ability to influence the economic and organizational direction of the company, a “not insignificant” shareholder amounting to 55% was deemed as enough to be viewed as a significant change for the purposes of the loss trafficking rules. This is in contrast to the predominant opinion in Austrian tax practice that only shareholder changes amounting to at least 75% are viewed as relevant.

Therefore, the Austrian Administrative Supreme Court overturned that Austrian Federal Finance Court’s decision and ruled that the loss trafficking rules apply in the case at hand. 

M. Vaishor / A. Lunzer

Recently, the CJEU confirmed its previous jurisprudence on the VAT-treatment of factoring (C-232/24 Kosmiro).

S. Haslinger

In its judgment of October 1, 2025, C-794/23, Finanzamt Österreich, the CJEU dealt with the question whether incorrectly invoiced VAT amounts are owed if the services are not exclusively provided to non-taxable persons. In addition, the CJEU comments on the estimation made by the national court and the associated limitations.

E. Freitag / C. Bianco

In its ruling of May 8, 2025, Dyrektor Krajowej Informacji Skarbowej, C-615/23, the ECJ dealt with the question whether or not compensation payments made by a local authority to cover the losses of a company providing local public transport are part of the VAT base.

E. Freitag / C. Bianco

In its judgment of April 3, 2025, Grzera, C-213/24, the CJEU addressed the question of whether it qualifies as an "economic activity" when a "taxable person" sells a property that they have not previously used for economic purposes and hires another taxable person to undertake active marketing measures on their behalf for the sale. Additionally, the judgment deals with the question of whether spouses who jointly own a property should be considered separately or jointly as a taxable person when they sell a property together, for example, due to statutory marital community.

E. Freitag / C. Bianco

In a recent decision, the Austrian Federal Finance Court dealt with the question of whether import VAT is incurred in Austria, if a motor vehicle is brought into Austria irregularly but is used in Germany.

E. Freitag / A. Mühlberger

As part of the “Express Answer Service” (EAS), the Austrian Ministry of Finance has communicated its legal opinion on the application of the cross-border worker regulation in the case of employee secondment to another (group) company.  Clarification was needed whether the existing employment relationship and the employee secondment should be considered in isolation for the purposes of applying the cross-border worker regulation.

T. Hahn / J. Pimingstorfer

Due to constant technical and organizational changes in recent years, adapting the FinanzOnline Regulation to current circumstances is necessary.

The main planned changes in the FinanzOnline Regulation 2027 are as follows:

• The option to submit applications by fax is planned to be eliminated.
• Internet access is the criterion used to determine whether the obligation to submit applications electronically (as stipulated in the respective tax laws) must be fulfilled by uploading the applications to the FinanzOnline platform.
• According to the current FinanzOnline Regulation, applications that are not submitted via the correct function in FinanzOnline are irrelevant for tax purposes. This will change with the FinanzOnline Regulation 2027, as applications uploaded via the “general” function “Sonstige Anbringen und Anfragen” will no longer be considered irrelevant, even if a special function is available for this purpose. Instead, if applications are repeatedly submitted incorrectly via the general function, even though there is a special function for this type of application, a penalty for wilful misconduct may be imposed.

The procedural law experts of KPMG will keep you updated on the further developments of the regulatory process and their impact on daily practice.

S. Papst / R. Langeneder

In principle, capital gains from the sale of real estate derived by individuals are subject to a 30% capital gains tax. However, the law provides for several exemptions from taxation. Under Article 30 sec 2 subsec 1 of the Austrian Income Tax Act, the sale of a primary residence is exempt from capital gains tax up to the portion of land “usually required as a building plot.” Administrative practice applies an upper limit of 1,000 sqm, which the Austrian Supreme Administrative Court (VwGH) has upheld under a typifying approach. The question arose as to how to allocate this exemption where land is heterogeneously priced and zoned (in particular, building land vs. green land) and where multiple parcels fall under a single land register entry. The Austrian Federal Finance Court relying on the same typifying rationale, approves proportional allocation based on the ratio between building and green land.

M. Vaishor / B. Stangar

Capital gains from the sale of real estate derived by individuals are subject to a 30% capital gains tax.

The Austrian Federal Finance Court clarified that capital gains tax on a property sale remains payable even if a purchase agreement concluded under a resolutory condition is later rescinded. Unlike Real Estate Transfer Tax (RETT), capital gains tax is generally not refundable unless retroactive effect is expressly stipulated in the original agreement.

M. Vaishor / F. Popl

Due to recent changes to the Beneficial Owners Register Act extended reporting obligations for foundations and trusts will become effective as from Dec 1, 2025. 

C. Edelhauser / L. Franke