Austrian Budget Accompanying Act 2027-2028: government draft published

Along with the long-awaited budget speech on Wednesday, the government draft for the Austrian Budget Accompanying Act 2027-2028 (BBG 2027-2028) was also published. The resolution in the Austrian National Council is targeted to take place before the summer recess.

The government draft includes, among other things, the following key changes:

Corporate Income Tax Act (KStG)

Increase of the Corporate Income Tax Rate

• Effective from 2028, a progressive tax rate is to be introduced. The new regulation will apply to financial years beginning after 31 December 2027. No pro-rata adjustment of the tax rate is planned for differing financial years.
• The new system is intended to stipulate that (i) the basic tax rate remains at 23%, and (ii) a tax rate of 24% is applied to income portions exceeding EUR 1 million.
• The new progressive tax rate will apply to corporations with unlimited tax liability as well as to corporations with limited tax liability of the first type.
• For corporations with limited tax liability of the second and third types, the tax rate will remain at 23%.
• Additionally, the progression clause will apply to corporations with unlimited tax liability. This means that foreign income exempted under a double taxation agreement (DTA) will be taken into account when determining the tax rate applicable to domestic income.
• Corporate tax prepayments will be adjusted accordingly from 2028 and increased by 4.5%.
• For groups of companies according to section 9 KStG, the following logic will apply:
  • The progressive tax rate will be applied at the level of the group parent to the entire assessed group income.
  • Thus, the lower tax rate of 23% is available to the entire group of companies only for a combined group income of EUR 1 million, regardless of the number of (domestic) group members.
  • The tax rate adjustment will apply to the financial year of the group parent beginning after 31 December 2027, and therefore also to all income of group members attributed to the group parent as of that date.

Deemed distribution for shareholder current accounts with natural persons

• Effective for financial years ending in the calendar year 2027, a deemed distribution rule shall apply to shareholder current accounts concerning natural persons who hold direct or indirect interests.
• The reported balance of the shareholder current account (the company’s receivable from the shareholder) shall be considered as an open distribution as of the day following the balance sheet date, unless it is either (i) settled by the balance sheet date or (ii) converted into an arm’s length loan receivable.
• The arm’s length loan receivable must be structured in accordance with case law relating to transactions with related parties and must be documented in writing.
• The deemed open distribution is subject to capital gains tax.
• For shareholders holding at least a 10% interest, a de minimis threshold of EUR 50,000 shall apply.

Austian Income Tax Act (EStG)

• Declining balance method
  • The (maximum) rate for the declining balance method for electricity companies is to be temporarily reduced from 30% to 10% for the financial years 2027 to 2029.
  • This reduction will apply to all investments made by electricity companies from the introduction of the declining balance method up to 31 December 2025.
  • Acquisitions made in the financial year 2026 will not be affected by this restriction.
• The telework allowance and workplace allowance are to be abolished starting from the calendar/financial year 2027. Only the tax deductibility of ergonomically suitable furniture will remain.
• Investment-related profit allowance
  • The scope of eligible investments will be restricted to real investments for the financial years 2027 to 2029.
  • From financial years beginning after 31 December 2029, investments in eligible securities will be permitted again.
  • During the transitional period, however, the option for replacement acquisitions or replacement acquisitions of securities will remain available.
• Real estate income tax
  • The lump-sum deductible acquisition costs for properties classified as old assets shall be reduced as follows: (i) from 40% to 30% for properties subject to rezoning, and (ii) from 86% to 80% for other properties.
• Adjustments concerning the option to split the payout of the Family Bonus Plus (“Familienbonus plus”) (section 33 para. 3a EStG) between (married) partners are planned starting from the calendar year 2027.

Austrian Value Added Tax Act

• A new provision is to be added to section 26: From 1 January 2027, entrepreneurs may be excluded from the new procedure for the import sales tax (assessment of the import sales tax on the tax account) for up to 2 years if there is a suspicion of a financial offense. 

Stability fee

• The current tax rate shall be maintained for calendar years up to and including 2029.
• Beginning with the calendar year 2030, the tax rate will be reverted to the level prior to the Austrian Budget Stabilisation Measures Act 2025 (BSMG 2025) Part I.
•  The special payment introduced by the BSMG 2025 Part I shall be maintained until and including calendar year 2028, reduced by slightly more than two-thirds in calendar year 2029, and discontinued as of calendar year 2030.

New non-monetary remuneration for electric cars

In addition to the BBG 2027-2028, a planned amendment to the Austrian Ordinance on Non-monetary Remuneration Values has been published, which eliminates the previous de facto “exemption” from the non-monetary remuneration for electric cars.

• From the calendar year 2027, a non-monetary remuneration of 0.375% of the actual acquisition costs (maximum EUR 180) shall be applied to vehicles with CO₂ emissions of 0 grams per kilometer.
• From the calendar year 2028, this rate increases to 0.625% (maximum EUR 300).

This regulation also applies to shareholder-managing directors, as the relevant ordinance refers to the provisions of the Austrian Ordinance on Non-monetary Remuneration Values.