Government programme 2025-2029: Tax projects

At a press conference on 27 February 2025, the party leaders of the ÖVP, SPÖ and NEOS presented the joint government programme for 2025-2029 entitled “Doing the right thing now. For Austria.” were presented. In addition to a wide range of measures, the federal government has set itself the particular goal of boosting the economy and ensuring that Austria is fit for the future.

We would like to give you an initial overview of the intended tax incentives, simplifications and measures to increase efficiency (extract):

 

Simplification of tax law, in particular payroll accounting and employee tax assessment

• The Federal Government is committed to simplifying the Income Tax Act, payroll accounting and employee tax assessment.
• Work on the recodification of the Income Tax Act will be continued with the aim of enacting a new Income Tax Act.
• The aim is to introduce a comprehensive package of measures to simplify, reduce bureaucracy and digitalise payroll accounting and employee assessment.
• Employee tax assessment is to be simplified by, among other things, reviewing the amount of the tax-free allowance and the flat-rate allowance for income-related expenses and reforming extraordinary expenses.
• The possibility of integrating the negative tax into payroll accounting in an unbureaucratic manner is being examined in order to improve visibility with the aim of creating positive incentives to work.

 

More efficiency in the tax system

• In order to be able to fulfil the important tax control and service tasks in the future, the federal government is committed to providing sufficient resources (personnel, digitalisation, AI) and to making working and training conditions in the tax administration more attractive.

 

Income tax

• Extension of EStG tax rate 55% by 4 years.
• The federal government is committed to the performance principle. Both paid working hours and (unpaid) “care” hours contribute to prosperity in Austria. In order to increase the number of paid working hours and promote employment as well as strengthen private consumption and economic growth, tax incentives and reductions are to be implemented – where possible from a budgetary and economic perspective.
• Furthermore, the tax-free allowance for the taxation of other remuneration (13th and 14th monthly salary) should be increased and the amount of tax exemptions for employer benefits to employees, e.g. for company events and tax-free employee vouchers, should be evaluated (Section 3 EStG).

 

Flat rate

• From 2025, the basic flat-rate allowance including input tax allowance is to be increased initially to EUR 320,000 and 13.5% and from 2026 to EUR 420,000 and 15%

 

Special depreciation / research premium

• Evaluate depreciation periods overall and review adjustment to actual useful lives.
• Examine depreciation with the greatest possible avoidance of deadweight effects and focus on investments in equipment and construction investments with a focus on refurbishment with regard to budgetary possibilities.
• The research premium should be safeguarded as an important location factor in its current form.

 

Profit allowance

• From 1 January 2027, the basic tax-free allowance will be permanently increased from 15% to EUR 33,000 to 15% of EUR 50,000.

 

Luxury tangent

• The federal government is committed – subject to the budget – to an increase towards EUR 65,000.
• First step: increase to EUR 55,000 from 2027.

 

Other measures for entrepreneurs

• Exemption from NoVA N1/small lorries: Exemption of N1/small lorries from NoVA from 01/07/2025.
• “Home driver regulation”: Clarification of a practicable regulation for “home drivers” with small lorries.
• The federal government is examining the possibility of a revaluation option in the Austrian Commercial Code (UGB) for recognising land and property at fair value in the balance sheet (even above the acquisition costs), with corresponding provisions for creditor protection.
• Examination of improved practicability of the non-cash benefit regulation for employee housing and the non-cash benefit for childcare services offered by the employer as well as employee discounts.
• Tip regulations: Evaluation and practical design of the regulations for flat-rate tips including TRONC systems.
• While maintaining fraud protection and keeping all sales in the cash register (“linking”), the obligation to issue receipts up to EUR 35 will be abolished (“printout”) and a digital receipt will be introduced as an alternative. A printed receipt will be issued at the consumer’s request.
• Simplification of the cash register (15-goods rule, permanent right), simplification of the goods receipt book and the cold hand rule.
• Business transfers: In order to make it significantly easier to transfer businesses to the next generation, the tax-free disposal allowance will be increased from EUR 7,300 to EUR 45,000 from 1 January 2027. In addition, the occupational ban on the use of the “half tax rate” will no longer apply.
• In order to set clear performance incentives and increase the number of hours worked in Austria, the federal government is committed to providing better tax benefits for overtime and bonuses. Detailed regulations will be agreed with the federal government as part of the social partnership.

 

Tax-free employee bonus

• Introduction of an improved tax-free employee bonus (up to EUR 1,000; exempt, not taxed); EUR 125 million will be made available for both 2025 and 2026.
• An evaluation will be carried out for a possible extension.

 

Non-wage labour costs

• Depending on economic and budgetary developments, non-wage labour costs will be reduced in a first step by the middle of the government term. The aim is then to achieve a further gradual reduction exclusively within the framework of the FLAF (3.7%). This will be achieved while ensuring that the FLAF benefits are maintained within the budget.
• Strengthening competitiveness by reducing non-wage labour costs: The federal government is committed to Austria’s competitiveness and is working at European and national level to increase it – especially in international comparison. This is achieved by focusing on reducing energy costs, bureaucratic costs and unit labour costs, in particular non-wage labour costs.

 

Working in old age

A new model of additional earnings is to be developed by the federal government and the social partners for people in a genuine old-age pension (not an early retirement pension). The following key points:

• Exemption from social security contributions for employees.
• Employers pay half the contribution to the social security and health insurance; the remaining non-wage labour costs remain the same.
• No revaluation of the pension account.
• Employees’ additional income is taxed at 25% (withholding tax).
• The cap on favoured income is still to be clarified.
• Entry into force from 1 January 2026 and evaluation after two years.

 

Start-ups

• Start-up promotion through the introduction of a capitalisation option for internally generated intangible assets: The ban on capitalising internally generated intangible assets puts Austrian companies, especially start-ups, at a disadvantage when competing for international investors because internally generated assets are not visible on the balance sheet. The capitalisation ban should therefore be replaced by a capitalisation option for internally generated intangible assets in line with international developments, particularly in Germany. Creditor protection should be taken into account through a balance sheet distribution block or other adequate measures.
• The new “flexible corporation” will be evaluated and developed further if necessary.

 

Simplification of withholding tax refunds

• In order to simplify and accelerate withholding tax refunds for cross-border assessments, the Federal Government will transpose the European Union’s FASTER initiative into national law as quickly as possible. Improving the framework conditions for cross-border home offices.
• The Federal Government will lobby at international level (OECD, EU) for coordinated and legally secure framework conditions for cross-border home office/remote working.

 

Tax issues Capital market

• Making employee participation programmes even more attractive.
• Evaluation of opportunities for young people to save for retirement, including for securities (e.g. ETF savings plans).
• Prompt implementation of the social partner agreement to strengthen company pension schemes (in particular the general pension fund agreement).
• The annual allowance for contributions to private pension schemes (future security, expenditure by the DG for insurance or pension schemes such as premium payments for life insurance) will be increased within the scope of budgetary possibilities.

Of course, the respective legal implementation of the measures mentioned remains to be seen. We will be happy to keep you informed.