Following the announcement of the key elements of the 2022 tax reform by the government on 3 October 2020, the legislative drafts entailing the detailed statutory provisions of the planned tax reform have recently been published. The following overview summarizes the main elements of the planned changes:
National CO2 emissions certificate trading system
With the aim of reducing CO2 emissions and establishing true costs, a national emissions certificate trading system is to be introduced supplementing the already existing European emissions certificate trading system. Starting on 1 July, 2022, emitting carbon dioxide in connection with fossil sources of energy (gasoline, gas oil, heating oil, natural gas, liquefied petroleum gas, coal and kerosene; definition can be expanded by decree) will only be permissible if the respective market participant has been duly registered himself with the competent authority, i.e. if emission certificates have been acquired. The emission certificates for the CO2 emissions of a calendar year must be submitted to the competent authority by a certain deadline in the following year (emission certificates for 2022 by 31 July, 2023; otherwise by 30 June of the following year). In addition, after the end of each calendar year, the emitting market participant has to report all carbon dioxides emitted in accordance with the approved emission monitoring plan electronically to the authority by 30 June (CO2 emissions report). Unused emission certificates may be returned to the authority with the certificate holder being able to request a refund of the price paid.
Until the transition to a market-based pricing system starting in 2026, the new law envisages a transitional phase in which the price for emission certificates, ie the price per ton of CO2 to be emitted, is fixed. From 1 July 2022, a fixed price of EUR 30 per ton of CO2 will apply, which will increase to EUR 35 in 2023. Thereafter, the price will increase by EUR 10 for each of the next 2 years (2024: EUR 45; 2025: EUR 55).
As a measure to maintain cross-border competitiveness, avoid carbon leakage (shifting of greenhouse gas emissions abroad) and mitigate special additional burdens, affected parties can apply for a (pro rata) relief from the additional costs caused by the newly established CO2 emissions certificate system.
Regional climate bonus
To compensate for the additional burden on households resulting from emissions certificate trading system, starting with 2022, the draft legislation provides for a so-called regional climate bonus. Every individual who has his primary residence in Austria for at least 183 days in a calendar year is entitled to a direct payment of EUR 100 per person. This amount is reduced to EUR 50 for children under the age of 18. In addition to this basic amount, residents of regions with a less well-established public transport system are eligible for a regionally graduated additional top-up compensation amount, which may vary between 0%, 33%, 66% and 100%. For 2022, a maximum of EUR 200 will therefore be paid.
For income tax purposes, the climate bonus is explicitly defined as tax-exempt.
Extension of the exemption from the electricity tax
As of 30 June 2022, the already existing exemptions from the electricity tax for self-produced and consumed electricity will be extended to all renewable energy sources. The currently applicable restriction to 25,000 kWh per year will thereby also be lifted.
Promotion of thermal renovation of buildings and replacement of fossil heating systems
As part of the plan to increase ecological sustainability through changes to the tax system, costs incurred through the replacement of a fossil heating system with a climate-friendly system (e.g. district heating) or through the thermal renovation of buildings will – if meeting the statutory conditions – be eligible for a (lump sum) deduction as a special expense. This rule is foreseen to become applicable as of 2022.
The tax reform foresees a new investment tax allowance in the form of an additional business expense claimable for purchased or manufactured depreciable assets in the year of purchase or manufacture if the normal useful life of the asset is at least four years and if it is attributable to a domestic business or a domestic permanent establishment. Certain assets are explicitly excluded from the investment allowance (e.g. used goods). The deductible amount is set at 10% of the acquisition or production costs and is even increased to 15% in the case of certain ecofriendly assets (to be defined by decree). The maximum acquisition/production cost for which the 10%/15% business expense may be claimed is EUR 1 mio per year. The general depreciation is not affected by the additional investment tax allowance, which will be become applicable as of 2023.
Increase of the tax-free profit allowance
For all fiscal years starting after 31 December 2021, a tax-free profit allowance of 15% instead of the previous 13% may be deducted from the tax base for the first EUR 30,000 (the further stages are: for the next EUR 145k: 13%; for the next EUR 175k: 7%; and for the next EUR 230k: 4.5%; maximum total EUR 45,950).
Value limit of low-value assets
The limit for immediately depreciable low-value assets will be raised from currently EUR 800 to EUR 1,000. This rule should become applicable from 2023.
Reduction in income and corporate income tax rates
For income and payroll tax purposes, the 2nd bracket (EUR 18,000- EUR 31,000) will be reduced from 35% to 30% as of 1 July, 2022, and the 3rd bracket (EUR 31,000- EUR 60,000) will be reduced from 42% to 40% as of 1 July, 2023.
The corporate income tax rate will also be gradually reduced from currently 25% to 24% in 2023 and then to 23% in 2024.
Reduction of mandatory health insurance contributions
As of 1 July 2022, mandatory health insurance contributions will be reduced for low income recipients (income below EUR 2,500) The reduction varies between 1.7 and 0.2 percent of the health insurance contributions, depending on the income amount.
Tax exemption for employee profit participation
In order to incentivize the participation in the employer’s profits by employees, a tax-free profit-participation for employees of up to EUR 3,000 per year is being introduced. However, the tax-free profit participation is capped at the employer’s previous year's taxable profit. In addition, the exemption only applies if the profit participation is granted to all employees or at least a specific group of employees and it is also not granted if the profit participation is paid in lieu of a regular salary.
Increase of the family bonus
The so-called family bonus, which in essence is a tax credit, of EUR 1,500 per year and child will be increased to EUR 2,000. In addition, the so called “Kindermehrbetrag” will also be increased from EUR 250 per child per year to EUR 450.
Input tax adjustment period for rent-to-own models
In the area of VAT, the tax reform provides for a reduction of the input tax adjustment period in connection with the purchase of rental apartments with an option to buy. The period will be reduced from 20 to 10 years and will be applicable to all property transfers after 31 December 2022.
(For details see here). Under current tax legislation, capital gains from the alienation of cryptocurrencies held as private assets are only taxable if the crypto assets have been held for less than one year. The changes foreseen by the tax reform 2022 aim at aligning the tax treatment of cryptocurrencies and the taxation of income from capital investments (shares, bonds, derivatives etc.). According to the new Section 27b Income Tax Act, both recurrent income (e.g. from mining) as well as capital gains stemming from cryptocurrencies will be taxable regardless of the holding period at a special tax rate of 27.5%. Only the exchange of one cryptocurrency for another shall not constitute a taxable event. The tax on income from cryptocurrencies is foreseen to be levied by means of a withholding tax deduction by either the domestic debtors of the income or domestic service providers handling the cryptocurrency transactions.
The legislative changes regarding the taxation of cryptocurrencies will enter into force on 1 March 2022, however being applicable to all cryptocurrencies acquired after 28 February 2021. The obligation of the domestic debtors or service providers to deduct withholding tax on cryptocurrency income will commence as of 1 January 2023.
Daniel Blum ist Manager im Bereich Tax bei Deloitte Wien sowie Universitätslektor an der Wirtschaftsuniversität Wien. Die Schwerpunkte seiner Tätigkeit liegen in den Bereichen Konzernsteuerrecht, Quellensteuern und internationales Steuerrecht. Daniel Blum ist zudem regelmäßig als Fachautor und Fachvortragender tätig.
Nikolaus Wabitsch ist seit 2021 als Assistant bei Deloitte Wien im Team Patrick Weninger tätig. Zu seinen Hauptaufgaben zählen allgemeine Compliance Tätigkeiten für nationale und internationale Unternehmen sowie die Unterstützung der Klienten in speziellen Steuerfragen.