AUSTRIA Law and Practice Contributed by: Clemens Philipp Schindler and Mohamed Hemdan, Schindler Attorneys
commercial law rules and tax law rules, especially in terms of the main principles of asset valuation and the depreciation of assets. 2.2 Technology Investments In Austria, an R&D tax credit ( Forschungsprämie ) of 14% is available for eligible in-house and contract R&D expenses (ie, commissioned research carried out by external R&D providers). For contract R&D expenses, the tax base is capped at EUR1 million per year (resulting in a maximum tax credit of EUR140,000 per year). In contrast, there is no upper limit on the tax base for in-house R&D, the eligibility of which is assessed by the Austrian Research Promotion Agen - cy ( Forschungsförderungsgesellschaft , or FFG) in an expert opinion. This tax credit is acknowledged as a high incentive to undertake R&D activities by Austrian companies, given that this grant is treated as an immediate cash credit on a company’s tax account. 2.3 Special Incentives Austria provides an investment allowance ( Investi- tionsfreibetrag ) for depreciable fixed assets acquired after 31 December 2022. Pursuant to this rule, 10% of the acquisition or production costs of such assets can be deducted as a tax allowance. If the asset qualifies as being related to greening or environmental meas - ures, the investment allowance is 15%. For assets acquired or produced between 1 Novem - ber 2025 and 31 December 2026, the investment allowance is increased to 20% (instead of 10%), or 22% (instead of 15%) for qualifying greening or envi - ronmental investments. A maximum of EUR1 million in acquisition or produc - tion costs per year can be used as the basis for this allowance. 2.4 Loss Relief The utilisation of losses as special expenses is pos - sible for corporations (and for individuals earning busi - ness income, including partners in partnerships). First, the positive and negative income of one year is netted. Second, corporations may choose to carry forward the losses indefinitely. However, only 75% of the total
amount of income of the taxable year is tax deduct - ible, and the remaining losses can be carried forward to the following years. A special restriction for corporations using carried- forward losses exists in the event of buying unprofit - able “shell companies”. The utilisation of losses will be denied where significant changes are made to the following within a short period of time: • the shareholder structure of a corporation (eg, more than 75% of the shares in the corporation are sold); • the organisational structure of a corporation (eg, new managing board); and • the economic structure of a corporation (eg, new business model). In the event of a reorganisation, loss carry-forwards may also expire if the business unit that originally incurred the losses no longer exists, or if it has been reduced to such an extent that it can no longer be considered comparable. 2.5 Deduction of Interest In principle, arm’s length interest expenses are deductible for Austrian corporate income tax pur - poses. A number of interest deduction limitation rules must be observed to determine if interest expenses are deductible in the case at hand, with the following rules being the most important. • Interest arising from the leveraged financing of the acquisition of participations is tax deductible, as long as the participation is part of a corporation’s business assets. Interest is not deductible if the participation is acquired by a corporation in the same consolidated tax group. • Interest deduction is not allowed where the corpo - ration receiving the interest payment is a member of the same group of companies or is significantly influenced by the same shareholder ‒ for example, where the corporation is paying the interest, and the interest income is not subject to taxation at all at the level of the receiving corporation, or is only subject to a tax rate of less than 15%. • Austria implemented the EU Anti-Tax Avoidance Directive with effect from 1 January 2021, and
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