Amendments to Austrian Corporate Income Tax Act 1988, Austrian Tax Amendment Act 2025 as well as Austrian Anti-Fraud Act 2025 passed

On 23 December 2025, the Austrian Tax Amendment Act 2025 (AbgÄG 2025) (Federal Law Gazette I No. 97/2025) as well as the Tax Part of the Austrian Anti-Fraud Act 2025 (BBKG 2025) (Federal Law Gazette I No. 98/2025) were published. Furthermore, on 29 December 2025, an amendment to the Austrian Corporate Income Tax Act 1988 (KStG) (Federal Law Gazette I No. 99/2025) was published. The passed amendments mainly entered into force on 1 January 2026.

KStG 1988 – Tightening of the threshold for low taxation

The KStG contains several provisions addressing low taxation abroad. Previously, these provisions assumed different thresholds for the existence of low taxation. As part of the passed amendment to the KStG, the definitions of low taxation in section 10a para. 3 KStG (passive income of low-taxed corporations) and section 12 para. 1 subsec. 10 KStG (non-deductibility of expenses for interest and royalties) were harmonised, creating a uniform threshold for the existence of low taxation. Low taxation of a foreign corporation therefore applies if its effective tax rate abroad is less than 15%. This adjustment represents a significant tightening of the provision. No further amendments were made content-wise.

If a foreign corporation earns passive income that is subject to an effective tax rate of less than 15% abroad (previously: “no more than 12.5%”), this passive income is to be added to the controlling corporation’s income (CFC rules). Furthermore, income from international participations as well as qualified portfolio investments are no longer exempt from corporate income tax at shareholder-level if they are taxed abroad at less than 15% (previously: “no more than 12.5%”), but are subject to tax in Austria with credit for foreign tax paid (switch-over rules). The change in the threshold is to be applied to financial years beginning after 31 December 2025 for the first time. No specific transitional rule is provided for the switch-over rules, meaning the underlying profits must already be taxed at at least 15%, regardless of whether they arose before or after 31 December 2025.

Expenses for interest or royalties according to the Austrian Income Tax Act (EStG) are non-deductible if the recipient is a corporation within the meaning of section 1 para. 2 subsec. 1 KStG or a comparable foreign corporation that is directly or indirectly group-affiliated or directly or indirectly under the controlling influence of the same shareholder, and the interest or royalties are subject to a tax burden of less than 15% (previously: “less than 10%”) at the recipient corporation. This threshold change is to be applied to expenses incurred after 31 December 2025 for the first time. The increase from 10% to 15% constitutes a significant tightening of the provision – making it advisable to reassess intra-group interest and royalty payments.

AbgÄG 2025

Income tax

• Inflation-adjusted amounts according to the Austrian Inflation Adjustment Ordinance 2026 have been incorporated into the EStG.
• Taxpayers subject to limited tax liability are now required to file a tax return if unlawfully granted deduction amounts were applied in payroll accounting.
• For the calculation of income to determine eligibility for the child allowance, tax-exempt income under intergovernmental or international law agreements must be treated as taxable income.

Fees and charges

• Various lump-sum amounts have been adjusted.
• An electronic procedure is now stipulated for the collection of fees and transfer taxes.

Austrian Federal Fiscal Code

• The AbgÄG 2025 allows proof of authorisation by submitting a power of attorney signed with the grantor’s qualified electronic signature via a dedicated function in FinanzOnline.
• Submission or presentation of a manually signed original remains possible. Unless the tax authority explicitly requests the original, submission or presentation of a copy is sufficient. The copy of a power of attorney may be submitted personally, by mail, or, via FinanzOnline exclusively via the dedicated FinanzOnline function.

Other amendments

• The tobacco tax and the Austrian Tobacco Monopoly Act (TabMG) have been expanded to include novel alternative products – so-called “tobacco-related products” (e.g., liquids for electronic cigarettes, nicotine pouches).

BBKG 2025

The most significant amendments introduced by the BBKG 2025 were already presented in our newsletter dated 28 November 2025, based on the government draft.