A Guide to Corporate Taxes in Austria

Introduction to Corporate Tax in Austria

Austria’s corporate tax system is designed to promote business growth with various tax incentives for specific sectors and small businesses. It provides opportunities for tax deductions, credits, and preferential treatments that encourage investment, innovation, and economic development.

Understanding corporate tax is vital for businesses operating in Austria, as it influences profitability, compliance, and strategic planning. If you’re wondering what is corporate tax rate in Austria, the general corporate income tax rate is set at 23% for most companies.

In Austria, companies must manage the complexities of corporate tax filing in Austria, which includes timely submissions, accurate financial reporting, and adherence to local regulations. With Commenda’s support, businesses can streamline their tax compliance processes, ensuring they meet Austria’s tax requirements efficiently while optimizing their tax position.

What Is the Corporate Tax Rate in Austria?

Austria operates a progressive corporate tax system with various tax incentives and reductions available based on the nature, size, and structure of a business. In addition to the standard corporate tax rate of 25% in Austria, the tax system also provides several preferential rates and schemes. These schemes are designed for small businesses, startups, cooperatives, and others.

Different rates apply based on company type or size. This table summarizes the corporate income tax rate in Austria for various entity types:

Breakdown of Corporate Income Tax Components

Corporate taxation in Austria is a multifaceted system that encompasses federal, local, and municipal taxes, along with various surcharges and special tax regimes. Companies operating in Austria are subject to a general corporate income tax (CIT) at a standard rate, with several reductions available for specific types of businesses.

The corporation tax in Austria is designed to encourage growth in specific sectors and foster innovation, while ensuring that larger companies pay their fair share. The following is a breakdown of the Income Tax components in Austria:

Federal Corporate Income Tax (Körperschaftsteuer)

The corporate tax rate in Austria imposes a federal corporate income tax on companies, applying to their worldwide income if they are considered tax residents:

• Standard CIT Rate: The general corporate income tax rate is 23% for most companies (24% in 2023, 25% in 2022).
• Taxable Income: Companies with their legal seat or effective management in Austria are taxed on worldwide income, while non-residents are taxed only on Austrian-sourced income.

Corporate Taxation on Profit Distributions

Companies in Austria face withholding taxes on dividends distributed to shareholders or other recipients:

• Withholding Tax (WHT): A 23% WHT applies to corporate profit distributions (24% in 2023, 25% in 2022).
• For Other Recipients: Dividends paid to other recipients (e.g., individuals) are subject to a 27.5% WHT.

Minimum Corporate Income Tax

Austria applies a minimum tax for companies in a tax-loss position, which can be carried forward:

• For AG (Stock Corporations): The minimum tax is €875 per quarter.
• For GmbH (Limited Liability Companies):
  • Standard GmbH: €437.50 per quarter.
  • For GmbHs founded after June 30, 2013: Reduced minimum tax for the first five years (€125 per quarter), increasing after the next five years (€250 per quarter).
• Carryforward: Minimum tax can be carried forward indefinitely to offset future tax burdens.

Pillar II Minimum Tax (Global Minimum Tax)

Austria enforces a global minimum tax for large multinational groups, ensuring they pay at least 15% tax. The following are the details:

• Applicability: This tax applies to companies with a turnover of €750 million in at least two of the last four financial years.
• Top-Up Tax: If the effective tax rate is lower than 15%, a top-up tax is applied.
• Rules: Includes Income Inclusion Rule (IIR) and Undertaxed Profits Rule (UTPR) to ensure fair taxation.
• Compliance: Companies affected must comply with Austrian tax obligations, including submitting Pillar II tax returns.
• Safe Harbours: Includes transitional and simplified compliance rules for the first three years, starting in 2024.

Local Taxes

Austria does not impose any local or additional state income taxes on corporations, simplifying the tax system for businesses.

Corporate Tax Filing Requirements in Austria

To comply with the corporate tax system in Austria, businesses must follow specific procedures, deadlines, and payment methods. Below is a guide outlining key steps for filing corporate taxes in Austria.

Filing Deadlines

It is essential to file corporate income tax returns on time to avoid penalties with respect to the corporate tax rate in Austria. Companies in Austria have set deadlines for submitting their tax returns. The following are the details of the filing deadlines:

• Standard Deadline: Corporate income tax returns must be filed electronically by 30 June of the year following the end of the fiscal year.
• Extended Deadline with Tax Advisor: If represented by a certified Austrian tax advisor, the filing deadline is extended to 31 March of the second following year, subject to the “quota system” agreement.
• Paper Filings: If electronic submission isn’t feasible, paper filings are due by 30 April of the following year. 

Required Documents

To file corporate income tax returns correctly, you must gather the necessary documentation to support your tax filings. The following are the tax forms that are required:

• Form K: The official corporate income tax return form.
• Financial Statements: Balance sheet and profit-and-loss account.
• Supporting Documents: Invoices, contracts, and evidence to substantiate deductions, exemptions, or credits claimed.

Payment Methods

There are several methods available for paying corporate tax in Austria, making it easier for companies to comply with their tax obligations.

• Advance Payments: Corporate income tax is prepaid in four quarterly installments: 15 February, 15 May, 15 August, and 15 November. These prepayments are generally based on the most recently assessed tax year’s tax burden.
• Final Payment: The balance due is payable one month after the final assessment.
• Late Payment Interest: Interest at a rate of 4.53% is applied to underpayments from 1 October of the year following the tax year until the assessment is made.

Digital Platforms

FinanzOnline is the main platform for filing corporate tax returns and managing tax accounts online. You’ll need a registered account and secure login via ID Austria for access. Business Service Portal (USP) offers a central hub for submitting tax returns and handling other business-related administrative tasks. It integrates with FinanzOnline for a seamless experience.

Tax Year and Payment Deadlines in Austria

In Austria, the company tax filing Austria generally follows the calendar year (January 1st to December 31st). Corporate Income Tax (CIT) returns are due by June 30th of the following year. The following are the main points:

• Final CIT Return: The annual corporate income tax return must be filed electronically by June 30 of the year following the tax year. If represented by a certified tax advisor, the deadline extends to March 31 of the second following year, subject to a quota system agreement.
• Advance Payments: Companies are required to make quarterly advance payments of corporate income tax on the following dates:
  • February 15
  • May 15
  • August 15
  • November 15

Withholding Taxes and Corporate Taxation in Austria

Austria imposes various taxes on businesses, including withholding taxes on payments to non-residents and corporate income taxes for local and international entities. Understanding these tax obligations is crucial for businesses operating in or with Austria, as they can significantly impact the overall cost of doing business. 

Below is an overview of the key taxes applicable to businesses in Austria:

• Dividends: Generally taxed at 27.5% for non-resident individuals.
• Interest: Subject to 27.5% withholding tax for non-resident individuals. 
• Royalties: Withheld at 20% for non-residents; reduced rates may apply under tax treaties or EU directives.
• Service Fees: Typically subject to a 20% withholding tax for non-residents, with potential reductions under tax treaties.

Corporate Tax Incentives, Deductions, and Exemptions

Austria offers several corporate tax incentives, deductions, and exemptions aimed at encouraging investment, innovation, and regional development. These benefits include tax credits for R&D activities, industry-specific exemptions, and regional tax advantages for businesses operating in certain territories.

Some of the key incentives available are focused on corporate tax incentives Austria, which help stimulate growth and competitiveness in the country’s business environment. Here are some of the main incentives available:

• R&D Premium: Austria offers a 14% refundable R&D premium for qualifying research activities performed within the country. The incentive requires certification from the Austrian Research Promotion Agency (FFG).
• R&D Expense Deduction: All R&D-related costs are fully deductible in the year they are incurred, following the guidelines of the OECD Frascati Manual.
• Subcontracted R&D: Subcontracted R&D is eligible for the 14% premium, capped at €1 million annually. However, only the principal or the agent, not both, may claim the benefit.
• Foreign Tax Credit: Withholding taxes paid abroad can be credited against Austrian corporate income tax. For certain countries like Brazil, China, and Korea, Austria allows a “matching credit,” which may exceed the actual tax paid abroad.
• No Patent Box Regime: Austria does not provide a patent box regime or special tax treatment for income derived from intellectual property.

International Tax Treaties and Double Taxation Avoidance

Austria has signed various Double Taxation Avoidance Agreements (DTAAs) with countries worldwide to prevent businesses and individuals from being taxed twice on the same income. These treaties are designed to promote cross-border trade and investment by allocating taxing rights between contracting states and providing mechanisms to eliminate or reduce double taxation.

Key Features of Austria’s DTAAs

The Key Features of Austria’s Double Taxation Avoidance Agreements (DTAA) refer to the provisions included in these treaties that help businesses and individuals avoid being taxed twice on the same income.

These agreements are essential tools for international businesses, particularly when supported by professional corporate tax compliance services Austria offers to ensure proper application and adherence. The following are the main points:

• DTA Network: Austria has signed numerous bilateral Double Taxation Agreements (DTAs) to prevent double taxation and promote cross-border trade. These treaties define which country has the right to tax specific income types (e.g., dividends, interest, royalties).
• Tax Relief Methods: Austria applies either the credit method (foreign tax credited against Austrian tax) or the exemption method (foreign income exempt from Austrian tax but considered for tax rate calculation).
• Certificate of Residence: To claim treaty benefits, Austrian residents must present a Certificate of Residence (Form ZS-A) to foreign authorities.
• Permanent Establishment (PE): Taxation in the foreign country typically requires a PE, such as offices, factories, or construction sites lasting over 12 months. Some treaties also recognize agency or service PEs.
• Artists & Sportspersons: Even without a PE, income from performances abroad may be taxed in the country where the activity occurs.
• Withholding Tax on Dividends & Royalties: Many DTAs limit source-country withholding tax (often 5% for inter-company dividends, 15% for others). A certificate of residence is needed to claim reductions or refunds.
• Mutual Agreement Procedure (MAP): If both Austria and another country claim taxing rights despite a DTA, businesses can request a MAP to resolve the conflict through competent authorities.

How Commenda Supports Corporate Tax Compliance in Austria

Corporate tax compliance in Austria can be complicated and time-consuming, especially for businesses unfamiliar with the local tax laws and regulations. Commenda offers comprehensive services to help businesses manage their corporate tax rate in Austria, including registration, filing, advisory, compliance monitoring, and incentive optimization. Here’s how Commenda can help:

• Tax Registration: We handle all required registrations, including obtaining an Austrian tax identification number and ensuring proper registration with tax authorities.
• Tax Filing: We manage the filing of corporate income tax, VAT, and other necessary returns, ensuring timely and accurate submissions.
• Advisory Services: Our experts provide tailored tax planning and structuring advice, helping businesses reduce their tax liabilities and maximize available incentives like R&D credits.
• Compliance Monitoring: We ensure ongoing compliance by tracking deadlines and monitoring changes in Austrian tax laws to avoid penalties.
• Incentive Optimization: We help businesses identify and optimize tax credits and incentives, such as R&D credits and regional tax benefits, to reduce tax exposure.

Know about corporate tax compliance services in Austria now! Book a free demo to see how Commenda helps with managing the taxes in Austria for you!

Common FAQs About Corporate Tax in Austria

Q. What is the current corporate tax rate in Austria?

The standard corporate income tax (Körperschaftsteuer) rate is 23% for calendar years from 2024 onward (it was 24% in 2023 and 25% in 2022).

Q. How is corporate income tax calculated in Austria?

CIT is calculated based on the net taxable profits of the company after deducting allowable expenses, depreciation, provisions, and losses.

Q. Are there different corporate tax rates for small businesses in Austria?

No, Austria applies a flat 23% corporate tax rate to all businesses, regardless of size. However, there are tax incentives available, such as for R&D activities and certain investments.

Q. When are corporate tax returns due in Austria?

For companies following the calendar year, corporate tax returns must be filed by 30 June of the following year. However, companies represented by an Austrian tax advisor may have extended deadlines up to 31 March of the following year.

Q. What are the penalties for late corporate tax filing in Austria?

Late filing can result in penalties starting at a percentage of the tax due. Additional penalties may apply for deliberate non-compliance or fraudulent activity.

Q. What incentives or deductions are available for companies in Austria?

Austria offers several generous incentives, including:

• R&D Tax Credit: 12% credit on eligible R&D expenses.
• Investment Allowance: 10%-15% deduction for ecological investments, up to €1 million annually.
• Patent Box Regime: Reduced tax rate on income from qualifying intellectual property.
  Charitable Donations: Deductions for qualifying contributions.

Q. Is there a minimum corporate tax in Austria?

Yes, there is a minimum corporate tax for companies with tax losses. The minimum CIT is €875 per full quarter for an AG (Aktiengesellschaft).

Q. Are foreign companies taxed differently in Austria?

Foreign companies are taxed only on income sourced within Austria, such as profits from permanent establishments, real estate, or Austrian intellectual property. Austrian subsidiaries of foreign companies are taxed on their worldwide income.

Q. What services does Commenda provide for corporate tax compliance in Austria?

Commenda supports companies with:

• Tax and VAT registration with the Austrian authorities.
• Preparation and electronic filing of CIT, VAT, and withholding tax returns.
• Advisory on tax-efficient structures, treaty benefits, and transfer pricing.
• Assistance in applying for and maximising tax incentives like R&D and innovation credits.
• Ongoing compliance monitoring to ensure deadlines, instalments, and filings are never missed.