Austria provides the following tax incentives:
Austria allows for a full deduction of R&D expenses at the time they accrue. In addition, the country provides an R&D premium of 14% (effective from 1 January 2018) of certain qualifying R&D expenses as a tax refund. The premium applies to expenses paid to companies or permanent establishments located in the European Economic Area and is claimed at the end of the year. The R&D premium is also available to principals or agents in case of contract R&D for up to EUR 1 million per year. However, it cannot be claimed by both principal and agent (the agent can apply for the premium if the principal does not).
In order to claim the R&D premium, an expert report issued by the Austrian research promotion organization is required.
Austria provides a 20% education allowance for expenses for the education and training of employees. Generally, the allowance only applies for direct educational expenses paid to education and training institutions, although company internal education and training may be allowed as long as they do not exceed a cap of EUR 2,000 per day and there is a dedicated in-house training department.
As an alternative to the 20% allowance, a 6% premium may be claimed.
Austria may negotiate incentives such as government grants and subsidies for investment in certain regions on a case-by-case basis.
Effective 1 April 2022, new investment allowance provisions are introduced whereby the investment allowance available on purchase or production costs of depreciable assets can be claimed as an operating expense, subject to certain conditions. The following allowances may be claimed as operating expenses:
- Generally, the investment allowance is 10% of the acquisition or production costs; and
- The investment allowance is 15% for the assets whose acquisition or production can be assigned to the area of "greening", with qualifying assets to be specified by a Ministry ordinance.
However, the investment allowance can be claimed up to a maximum of EUR 1,000,000 in a fiscal year, with the amount reduced proportionally if the fiscal year does not cover 12 months.
Conditions for claiming the deduction of investment allowance:
- The deduction of depreciation for wear and tear does not affect the investment allowance;
- The investment allowance can only be claimed for assets that:
- have a useful life of at least four years; and
- are to be attributed to domestic businesses or domestic permanent establishments if the business or permanent establishment serves to generate income from agriculture or forestry, self-employed work, or business operations;
- The investment allowance cannot be claimed for the following assets:
- assets that are used to cover an investment-related profit allowance;
- assets for which a special form of depreciation for wear and tear is expressly provided for in the Act, with the exception of zero-emission motor vehicles;
- low-value assets that can be written off in the year of acquisition/production;
- intangible assets that cannot be assigned to the areas of digitization, greening, or health/life science, as well as any intangible assets that are intended for transfer against payment or acquired by a company belonging to the group or by a shareholder who exercises a controlling influence;
- used assets; and
- assets (plants) used for extracting, transporting, or storing fossil fuels, as well as assets that use fossil fuels directly.
- Recapture rules apply where the investment allowance is claimed for assets that are no longer part of the business assets before the end of a 4-year period or if they are exported abroad, with specific rules for assets transferred to an EU/EEA Member State.
The Austrian government introduced several tax relief measures in response to the COVID-19 pandemic, including:
- Exemption from taxes, fees, and duties for grants received by businesses for dealing with the COVID-19 pandemic;
- Tax exemption for allowances and bonus payments made to employees as a reward due to the aggravated circumstances in connection with the COVID-19 pandemic, up to an amount of EUR 3,000;
- Tax exemption on support payments from public funds effective 1 March 2020; and
- The introduction of the Investment Premium Act to provide a new investment premium by way of a grant equal to 7% of the cost of investments in tangible and intangible depreciable assets, subject to certain exclusions. Investments in climate-damaging assets, undeveloped land, financial assets, company takeovers, and capitalized own works are excluded from the grant. The investment premium is increased to 14% if the investment is related to digitization, greening, or health and life sciences. The investment premium can be applied for between 1 September 2020 and 31 May 2021 (extended from 28 February 2021) in relation to investments where the first step related to the investment is taken between 1 August 2020 and 31 May 2021 (extended from 28 February 2021).
Austria introduced various relief measures in the form of subsidy/ compensation/ bonus for companies registered in Austria or having a permanent establishment in Austria affected by the COVID-19 pandemic. The relief measures include:
- Lockdown Revenue Compensation: The businesses directly or indirectly affected by compulsory closure/ lockdown due to the COVID-19 pandemic can apply for the lockdown compensation. The lockdown compensation applies only for the period of compulsory closure/ lockdown viz., November 2020 and December 2020;
- Fixed Cost Subsidy II of EUR 800,000 (Fixed Cost Subsidy I is no longer effective): Fixed cost subsidy is calculated with reference to actual fixed costs incurred by the taxpayer. Further, an application can be made for either fixed cost subsidy or loss compensation subsidy, and it is possible to switch to loss compensation subsidy even after applying for the fixed cost subsidy, subject to certain requirements;
- Loss Compensation Subsidy: The loss compensation subsidy is calculated with reference to the loss for the period under consideration. Lockdown revenue compensation and loss compensation cannot be claimed for the same period, and the lockdown revenue compensation must always be applied for first;
- Turnover Shortfall Bonus: It consists of turnover shortfall bonus and an advance payment of fixed cost subsidy. The turnover shortfall bonus is calculated with reference to the shortfall in turnover for the period under consideration compared to the corresponding turnover during the reference period. Turnover shortfall bonus and lockdown revenue compensation cannot be applied for the same period; and
- Hardship Fund: The benefit is available only to micro-enterprises, self-employed, etc., subject to certain conditions.
Applications to claim the relief under any of the above measures are required to be filed via the electronic portal FinanzOnline and are subject to the approval of the COVID-19 Federal Finance Agency (COFAG - a special entity set up for the purpose). The application can be filed by a tax advisor/ an auditor or an accountant on behalf of the company depending on the specific requirements under each measure.
The details of the relief measures are as follows:
- Retail companies are categorized into different levels based on the gross profit of the respective sectors, catch-up effects, and the perishability and seasonality of goods.
- All grants that have already been paid or bindingly committed to the company cannot exceed the upper limit of EUR 1.8 million (increased from EUR 800,000) in accordance with the EU Commission's Temporary Aid Framework. These include, in particular:
- Lockdown revenue compensation;
- Turnover shortfall bonus;
- Fixed cost subsidy;
- Guarantees of 100% for loans to cope with the COVID-19 crisis, which are provided by Austria Wirtschaftsservice GmbH (aws) or the Österreichische Hotel- und Tourismus bank GmbH (ÖHT); and
- Donations from Federal states, municipalities, or regional economic and tourism funds based on Section 3.1 of the EU Commission's Temporary Aid Framework.