AUSTRIA Law and Practice Contributed by: Clemens Philipp Schindler and Mohamed Hemdan, Schindler Attorneys
Individuals The taxation of the income of individuals (who own a business or are partners in a transparent partner - ship carrying out business) ‒ generated by themselves or through the partnership ‒ generally depends upon their personal tax rate. The progressive tax rates for 2026 are as follows: • up to EUR13,539 – 0% tax rate; • EUR13,539 to EUR21,992 – 20% tax rate; • EUR21,992 to EUR36,458 – 30% tax rate; • EUR36,458 to EUR70,365 – 40% tax rate; • EUR70,365 to EUR104,859 – 48% tax rate; • EUR104,859 to EUR1 million – 50% tax rate; and • more than EUR1 million – 55% tax rate (until 2029). However, special tax rates apply for income from capital investments and income from the alienation of private real estate, as follows. • Income from capital investments (eg, dividends or capital gains from the sale of shares in a corpora - tion) are taxed at 27.5%. The application of this special tax rate has the disadvantage that income- related expenses or operating expenses that are directly connected with the income from capital investments may not be deducted. • Income from the alienation of private real estate is subject to a 30% real estate sales tax rate (with certain tax exemptions and reductions available). Corporations determine their income through the comparison of business assets and annual financial statements. Business profits and expenses are not calculated for the period in which they are actually received or paid, but rather are attributed to the spe - cific period in which goods are delivered or services rendered (“accrual method”). Corporations are legally obliged to keep books according to the accounting standards set in com - mercial law, and these standards are generally also binding for tax purposes ( Grundsatz der Maßgebli- chkeit ). However, there are some deviations between 2. Corporate Tax Regime 2.1 Taxable Profits
ed and implemented by the management. Resident corporations are subject to unlimited tax liability in Austria. Under the majority of Austria’s double tax treaties (DTTs), the place of effective management is deci - sive in the case of the dual residence of a corpora - tion (the “tie-breaker rule”). In practice, no substantive distinction is generally made between the domestic term “place of management” and “place of effective management” under treaty law, whereas a corpora - tion can only have one place of effective management under a DTT. The tests for determining tax residence in Austria are generally not applicable to transparent entities (eg, OGs), as tax residency is only determined for indi - viduals or legal persons with recognised legal identity from a tax law perspective. Accordingly, the income of a transparent entity is subject to taxation in Austria, depending on the tax residence of its individual or corporate partners. 1.4 Applicable Corporate and Individual Tax Rates Taxation of Corporations The income of a corporation is qualified as business income that is subject to corporate income tax at a rate of 23% (since 2024). If the remaining income is subsequently distributed to the shareholders (as distribution of profits/dividends), then those already taxed profits are taxed again at the level of the receiv - ing shareholders (principle of separation, or Trennung - sprinzip ). Taxation of Partnerships Partnerships such as OGs or KGs are transparent for income tax purposes (no taxation at the level of the partnership), so that profits and losses are directly taxed at the partners’ level and the applicable tax rate depends on whether the partner is a corporation (23% corporate income tax) or an individual (progressive tax rate up to 55%). The assets, liabilities and income of the partnership are generally allocated to the partners in proportion to their partnership interests.
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