AUSTRIA Trends and Developments Contributed by: Raphael Holzinger, Matthias Jancura and Claudia Synek, Grant Thornton Austria
Grant Thornton Austria Gertrude-Froehlich-Sandner-Straße 1/Top 13 1100 Vienna Austria Tel: +43 1 505 4313
Email: marketing@at.gt.com Web: www.grantthornton.at
Current Economic, Political and Legislative Influences on the Austrian Tax Regime Owing to Austria’s current budgetary situation, the government faces the task of consolidating the budget. By the end of 2025, inflation had risen again to 3.8%, with an average of 3.53% for the year. The forecast for inflation in 2026 is around 2.4%, and it is expected that Austria’s inflation rate will align with the European Central Bank’s target value. Nevertheless, the current economic situation remains challenging. In 2025, the budget deficit was estimated at around 4.4% of GDP. In mid-2025, the European Union (EU) initiated an excessive deficit procedure against Austria. In response, the government has implemented fiscal and tax policy adjustments, which affect not only individuals with unlimited income tax liability in Austria but also international businesses and private individuals. Economic growth of 0.9% is projected for 2026. As of December 2025, the Uni - Credit Bank Austria Purchasing Manager Index stood at 49.3 points. Compared to the previous year, there was more economic activity. Energy prices and wage structures will continue to play a decisive role in economic development for 2026 and the following years. The labour market remains resilient, but unemployment was predicted to rise slightly in 2025 before improving as economic growth likely picks up from 2026 onwards. Despite efforts at fiscal consolidation, the budget deficit will likely remain above the Maastricht threshold until at least 2027, and risks such as US tariffs and counter- tariffs could further affect growth and inflation. The US administration’s protectionist policies have raised the average weighted US import tariff rate from
2.5% last year to 12.3%, causing concern for Austria due to its significant trade relationship with the USA. A 10% US import tariff could reduce Austria’s GDP by around 0.3%, though adjustments in trade and exchange rates may lessen this impact. Model simu - lations by IHS ( Institut für Höhere Studien ) estimate that current US tariffs will reduce Austria’s economic output by 0.2% this year and 0.1% next year. In con - trast, the USA faces larger GDP losses of 0.5% in 2025 and 0.7% in 2026 due to these tariffs. Navigating Austria’s Latest Tax Law Changes Austria is introducing significant updates to its tax laws, especially affecting real estate transactions, private foundations and business taxation. These changes have taken effect mainly in 2025 and 2026, with the goal of increasing tax fairness and clos - ing loopholes. Additionally, the Tax Amendment Act 2025 ( Abgabenänderungsgesetz 2025 ) introduces numerous updates aimed at modernising tax laws and administration, enhancing legal certainty and tax fairness, and simplifying tax practices. Notably, the act also supports sustainable modernisation, such as expanding electronic procedures. To address Austria’s budgetary challenges, the government has introduced a comprehensive package of 113 measures aimed at reducing bureaucracy and digitalising public admin - istration, which is expected to cut annual compliance costs of approximately EUR15 billion (3.8% of GDP). These initiatives – ranging from simplified tax proce - dures and digitalised company registers to stream - lined approval and reporting processes – are designed to strengthen Austria’s economic position and support fiscal consolidation efforts in future.
24 CHAMBERS.COM
Powered by FlippingBook