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Further Amendments in the Austrian COVID-19 Tax Measures Act

27/11/20

On Friday, 20 November 2020, the legislative motion for the Austrian COVID-19 Tax Measures Act was introduced in the Austrian National Council. In addition to the interest limitation rule, amendments in wage taxes, environmentally related tax measures, and a prolongation of the reduced 5% VAT rate, the Act contains the following tax measures:

Income taxes:

  • Assets which are acquired or produced after 30 June 2020 are from now on also alternatively eligible for deduction using the declining balance method (for further details please see our previous newsletter). So far, there has been no consensus on whether and to what extent the ‘authoritative principle’ under company law extends to the determination of tax-deductible depreciation. The observance of such ‘authoritative principle’ would considerably restrict the scope of the declining balance method. From now on, it will be defined by law that for all assets acquired or produced before 1 January 2022 (at least), the authoritative principle will not apply and, hence, an enterprise may freely choose the tax depreciation method.
  • In Austria, donations to organisations with charitable status are, in principle, tax deductible but the maximum deductible amount is capped at 10% of the profit or 10% of the total amount of income. This means that in loss-making years, donations cannot be deducted for tax purposes and therefore donations cannot be used to increase a tax loss carry-forward. To avoid unnecessarily restricting the readiness to make donations, for the purpose of maintaining the deductibility of donations, it will be also be possible, as an alternative, to apply a higher threshold from 2019 in both the assessment years 2020 and 2021.

Stamp duties:

The following amendments are proposed in order to mitigate consequences arising from COVID-19 with respect to the levy of stamp duties:

  • As a tax relief measure the levy of stamp duties for legal transactions, documents or official acts arising due to COVID-19 has been suspended until 31 December 2020. This exemption is planned to be extended to 31 March 2021.
  • Rental agreements in connection with events, which were planned to take place between 1 March 2020 and 31 March 2021 and which did not take place in any form, are planned to be exempted from stamp duties. This applies, for example, to concert or trade fair organisers. On application, the exemption should also apply retrospectively to previously imposed or self-calculated fees.

Tax deferrals:

So far, tax payments that were booked on the tax account until the end of September, are generally deferred until 15 January 2021. Due to the ongoing economic disruption and the expected inability to balance the tax liability by that date, the rules are amended as follows:

  • The tax deferrals granted until 15 January 2021 should – without submission of a new application – be extended until 31 March 2021. The date 31 March 2021 will also be a payment deadline for ongoing taxes that are due between 26 September 2020 and 28 February 2021.
  • If no application for deferral has been submitted since the beginning of the pandemic, but a liquidity shortfall has now arisen, an application for deferral until 31 March 2021 with simplified requirements should be approved by the tax authorities.
  • All approvals of deferrals shall be revoked on the opening of insolvency proceedings (condition subsequent).
  • If a payment plan for due taxes was agreed in September, no changes shall ensue.
  • The requirement to pay deferral interest and penalty surcharges for late payment will be suspended until 31 March 2021.
  • In addition to 2020, the requirement to pay claim interest for 2019 will also be waived.

Author: Ines Hofbauer-Steffel

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Copyright and Publisher: PwC Österreich GmbH Wirtschaftsprüfungsgesellschaft, Donau-City-Straße 7, 1220 Vienna, Austria

Editor: Eva Ebner, eva.ebner@pwc.com

The above information is intended to provide general guidance only. It should not be used as a substitute for professional advice or as the basis for decisions or actions without prior consultation with your advisors. While every care has been taken in the preparation of the publication, no liability is accepted for any statement, option, error or omission.

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