Due to COVID-19, the Austrian tax authorities have granted very generous deferrals of payments for all types of taxation. The standard deferral of payment is until the end of September 2020. In addition, no late payment interest will be charged in this period.
As part of the current proposed legislation, the Austrian Economic Recovery Support Act 2020 (KonStG), it is planned that new measures will be introduced regarding the further approach to tax payments and refunds, as well as current tax deferrals. Accordingly, taxable entities will be able to choose between the following two options for tax amounts deferred since 15 March 2020:
Variant 1 – Deferral: Tax deferrals approved after 15 March 2020, with a deferred deadline of 30 September, will be automatically deferred to 15 January 2021, i.e. without any need to apply. The extension will apply to all taxes which were entered in the tax account by 25 September 2020 at the latest, as well as income tax and corporate income tax payments for Q4. The tax payments must be made by 15 January 2021 at the latest. If need be, it would then be possible to apply for deferral or payment in instalments under the standard rules.
Variant 2 – Instalment plan: As an alternative, it will be possible to submit an application for payment in instalments until 30 September 2020 at the latest (or by the end of the deferral period, if earlier), with the taxpayer being eligible to claim payment in instalments. The legislation envisages a standard repayment period of one year. The taxable entity is free to choose the rate of repayment, meaning that various, appropriate repayment rates are possible (e.g. progressive increase). To the extent that no payments are missed during the period, the final instalment can, on application, be paid in instalments over an additional six-month period if immediate payment would lead to significant hardship.
However, this also means that the standard rules on deferral and instalment plans will apply for taxes recognized in the tax account after 25 September 2020 (except advance payments for Q4) and these cannot be included in the above measures.
Furthermore, the legislative draft envisages that no late payment interest will be charged for the period 15 March 2020 to 15 January 2021. After 15 January 2021, starting with a late payment interest rate of 2% above the basic interest rate, there will be regular increases of the interest rate, meaning that as of 1 November 2021 the standard interest rate of 4.5% above the basic interest rate will apply.
The new legislation also envisages that deferred payments/instalment plans approved before 15 March 2020 will not be subject to late payment interest between 15 March 2020 and 15 January 2021, and no claim interest will be applied on tax returns for 2020. Furthermore, tax payments which are due between 15 March and 31 October 2020 will not be subject to surcharges for late payment.
These rules will not apply for taxes at federal state and municipality levels.
If you have additional questions regarding your cash management of tax payments, we are available to provide advice and support you with the relevant applications.
Author: Ines Hofbauer-Steffel
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