Wealth Tax In Austria: A Reality Or A Myth?

Austria has no wealth tax, but the reintroduction of a wealth tax is a hot topic in the country. While there is no tax on an individual's net wealth, assets and their transfer may already be subject to selective taxation. Property tax, land value levy, and agricultural and forestry taxes are annually recurring wealth taxes for domestic property ownership. Real estate transfer tax, the foundation entrance tax, and the Austrian stamp duty on assignments relate to the value of single-asset transactions.

Austria has no wealth tax

The absence of a wealth tax in Austria is particularly noteworthy when compared to other European countries. For example, Norway, Spain, and Switzerland are among the few countries in Europe that levy net wealth taxes. France and Italy also impose taxes on selected assets, although not on an individual's net wealth per se.

In addition to having no wealth tax, Austria also has no estate, inheritance, or gift taxes as of 2024. However, it is important to note that if you inherit or gift real estate, you will still need to pay property transfer tax.

While Austria does not have a wealth tax, it has implemented other measures to ensure that large corporations pay their fair share of taxes. For example, the country has introduced a Minimum Tax Act that stipulates that big companies with sales over €750 million in at least two of the last four years must pay a minimum global tax rate of 15%.

The discussion around wealth taxes in Austria is complex and ongoing. Although there is currently no wealth tax in place, it remains a topic of debate and consideration among policymakers and taxpayers.

Austrians favour a wealth tax

The reintroduction of wealth taxes is a hot topic in Austria, and it comes with major practical challenges for advisors, tax authorities, and the Austrian legislator. While property tax, land value levy, and agricultural and forestry taxes are annually recurring wealth taxes for domestic property ownership, several other taxes relate to the value of single-asset transactions. These include real estate transfer tax, foundation entrance tax, and Austrian stamp duty on assignments.

If a uniform and progressive tax rate were to be applied to all taxable assets, individual asset components would have to be valued consistently and based on reality. Several valuation approaches have been discussed, including basing the valuation of Austrian real estate on the "property value" defined in the Real Estate Transfer Tax Act. However, this value is generally considerably lower than the actual market value of the property and would require additional tax benefits to avoid the breakup of larger real estate assets.

Wealth tax is a hot topic in Austria

The reintroduction of wealth taxes in Austria comes with major practical challenges for advisors, tax authorities, and the Austrian legislator. Assets and their transfer may already be subject to selective taxation in Austria. While property tax, land value levy, and agricultural and forestry taxes are annually recurring wealth taxes for domestic property ownership, real estate transfer tax, the foundation entrance tax, and the Austrian stamp duty on assignments relate to the value of single-asset transactions.

The introduction of a wealth tax or the reintroduction of inheritance and gift tax may lead to double taxation. If a uniform and progressive tax rate were to apply to all taxable assets, individual asset components would have to be valued consistently and based on reality. Several valuation approaches have been discussed, but there is no consensus on which method to use.

The existence of assets without preceding transactions may be apparent from disclosed accounting records, the register of accounts, the land register, the Ultimate Beneficial Owners Register, reports under the Common Reporting Standard Act, and disclosed transfer pricing documentation within the Transfer Pricing Documentation Act.

The introduction of a recurring wealth tax or inheritance and gift tax will pose major practical difficulties for the legislator, the tax authorities, and the individual taxpayer. The practical issues of asset valuation, as well as the considerable administrative burden for the tax authorities and the taxpayer, will probably not be resolved to the satisfaction of all parties.

Austria's high personal income tax rate

Austria does not have a wealth tax or a personal wealth tax. However, Austrian residents are subject to income tax on their worldwide income, including income from trade or business, profession, employment, investments, and property. Non-residents are taxed on income from certain sources in Austria only.

The income tax rate in Austria is progressive, ranging from 0-55%. The level of income tax depends on the taxable income received in a calendar year. For parts of income above €1 million, the tax rate is 55% until 2025.

For income up to €11,693, the tax rate is 0%. A 20% tax rate is applied to income above this threshold up to €19,134. A 30% tax rate is charged on income above €19,134 up to €32,075. Income above €32,075 up to €62,080 is taxed at 41%, and income above €62,080 up to €93,120 is taxed at 48%. A 50% tax rate is applied to income above €93,120 up to €1 million.

Special payments, such as additional salaries at Christmas and before the summer holidays (13th and 14th salaries) and bonuses, are taxed at 6%. The first €620 of these payments is tax-free.

Various expenses can be offset against income tax, and lump sums, allowances, and special expenses are tax-deductible. For example, sole breadwinners, single parents, and children's allowances are applicable. Income-related expenses, such as business travel, and extraordinary burdens can also reduce the tax base and be claimed during the tax return.

Austria's progressive tax system

Austria has a progressive tax system, with rates ranging from 20% to 55% of earnings, based on income brackets. This means that the rate of taxation increases as income rises. Austria's tax system is progressive, with rates ranging from 20% to 55% of taxable income. The top rate of 55% applies to parts of income above €1 million, and it is expected to decrease to 50% in 2025.

The Austrian tax system includes a variety of taxes, such as income tax, corporate tax, and value-added tax (VAT). Income tax in Austria is progressive, with rates ranging from 20% to 55% of taxable income. Self-employed individuals, or freelancers, can expect to pay a tax rate of about 25% if their income exceeds the tax-free threshold of €12,465.

Austria's corporate tax rate was reduced to 24% in 2023 and is planned to be lowered further to 23% in 2024. This rate is comparable to many other EU member states, such as Spain and Belgium. The national corporate tax rate is separate from the municipal taxes (Kommunalsteuer) that companies pay to the municipality where they have a permanent business establishment.

Value-added tax (VAT) in Austria is typically levied at a standard rate of 20% on goods and services sold by companies and entrepreneurs. However, certain items, such as books, food, and tickets to sporting and cultural events, are taxed at a reduced rate of 10%.

While Austria has a progressive tax system, it does not have a wealth tax, estate tax, inheritance tax, or gift tax. However, the reintroduction of wealth taxes has been a topic of discussion in Austria, and there are already certain taxes related to wealth, such as property tax and real estate transfer tax.

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