Austria has seen a lot of change to its tax system in recent years. The Austrian government has raised the capital gains tax from 25% to 30% on real estate, while it has reduced income tax for the first bracket from 36.5% to 25%, and raised VAT from 10% to 13%.
The Austrian government has introduced new anti-fraud provisions and loosened banking secrecy laws. The latter has had a huge impact on the Austrian tax market and its historic links to Switzerland.
In addition, the Austrian government has taken steps towards implementing the OECD's BEPS recommendations and has signed up to the multilateral instrument (MLI), which prepares the ground for renegotiating double tax treaties and imposing two of the BEPS standards on treaty abuse and dispute resolution. At the same time, the country has to follow the European Union and the Anti-Tax Avoidance Directive (ATAD), which comes into effect in January 2019.
"Some of the measures of the directive are more or less already implemented in domestic law, e.g. exit taxation and a general anti-abuse rule," said Gerald Schachner, a partner at BPV Hügel Rechtsanwälte. "The implementation of a controlled foreign company rule will however change the Austrian tax landscape. The interest limitation rule will in particular strongly hit holdings and real estate companies."
This doesn't mean Austrian firms and their clients are guaranteed a quiet life any time soon. "The Austrian tax system has been undergoing multiple changes in the last few years, and the quality of the legislation has dropped significantly," said Niklas Schmidt, head of tax at Wolf Theiss.
The legislative elections in October might have significant implications for tax policy. After a decade in power, the Social Democratic Party (SPÖ) has implemented a progressive tax model and raised capital gains tax, as well as talked up the possibilities of restoring inheritance tax and a new transaction tax.
The SPÖ plan is to reintroduce inheritance tax and impose a wealth tax, while closing tax loopholes for multinational companies and using the new revenue to fund social care.
By contrast, the Austrian People's Party (ÖVP) wants to reduce the tax burden and bring the tax to spending ratio to below 40%.
Austria has a long history of grand coalitions, bringing together the Social Democrats and the ÖVP from 2006 to today. The Social Democrats have overcome opposition from their conservative partners in the past, but this doesn't mean their agenda is any less contentious. "The left-wing parties in Austria are saying they will reintroduce inheritance tax after the general election in autumn, which would be a real game changer," said Schmidt. "We've had no inheritance tax and no gift tax since 2008, following two decisions by the Austrian constitutional court."
The country may be about to face a political shift which could derail the party's tax reforms. Some polls suggest that the ÖVP may come out on top in the elections, though the race is too close to call at this point.
If the ÖVP returns to dominance, the SPÖ's tax agenda would be stalled and possibly be reversed by the new administration. The Social Democrats may retain a role as a junior partner, which would give them some influence over policy. But this is not guaranteed.
It's possible that the SPÖ could be overtaken by the Austrian Freedom Party (FPÖ) for the first time since 1999. It would be a major upset for the SPÖ to be excluded from government, but the shock wouldn't end there.
The FPÖ wants to introduce a special refugee tax, where newly settled refugees would pay a rate of 10% on the income they earn in the country. An ÖVP-FPÖ majority is a real possibility as the question of migration and refugees has become one of the leading issues.
Faced with this challenge, the Social Democrats are hoping to stay in power by consolidating a progressive majority with the Greens. As much as the status quo may be on shaky ground, the country is set on the same track with the BEPS project and ATAD regardless of the outcome.
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|Corporate Income Tax||25%||A|
|Capital Gains Tax||27.5%|
|Net Operating Losses (years)|
|Interest (from bank deposits and securities only)||0%||25%|
|Royalties from, for example, patents, know-how||20%||C|
A) This rate applies to distributed and undistributed profits.
B) In general, this withholding tax applies to dividends paid to residents and non-residents. An Austrian corporation is generally required to withhold tax at a rate of 27.5%. However, if the distributing company has evidence of the corporate status of the investor, it may withhold tax at a rate of 25%. Certain dividends paid to Austrian and European Union (EU) companies are exempt from tax. In addition, a reduction in or relief from dividend withholding tax may be possible under double tax treaties.
C) This withholding tax applies to non-residents.
D) The offset of loss carryforwards against taxable income is limited to 75% of taxable income in most cases.
Attorneys Hans-Jörgen Aigner and Herbert Buzanich founded the boutique law firm Aigner Buzanich in 2012. The tax practice specialises in Austrian and international tax law, although the firm offers services in all areas of tax including M&A, controversy and litigation.
Buzanich specialises in the tax aspects of corporate transactions, reorganisations and capital markets. He was previously the head of tax at Schönherr. Aigner was a principal associate of Freshfields Bruckhaus Deringer for eight years. The two partners combine the expertise of major international law firms with a pragmatic approach to tax matters.
Tax services at Arnold Rechtsanwälte are overseen by partner Nikolaus Arnold. He specialises in tax law, banking, capital markets, corporate law and real estate. Another important partner is Florian Arnold, who specialises in private equity, venture capital and commercial law. The firm offers a full service range, including controversy, dispute resolution, M&A, financial transactions and compliance. The firm's client base includes Austrian and multinational corporations, industrial groups, foundations, universities and other law firms.
Christoph Urtz is a key partner at the tax practice at Baker McKenzie. His focus areas cover a broad spectrum of corporate and international tax law, real estate taxation, tax proceedings and financial criminal law. This encompasses cross-border restructuring and real estate transactions.
Baker McKenzie advises multinational companies on all aspects of tax, such as planning, real estate, supply chain management, dispute resolution and indirect tax. The firm keeps up to date with international trends driving domestic shifts in tax policy. The team keeps clients informed on compliance issues and hosts workshops.
Partner Reinhard Rindler is the head of tax at BDO Auxilia Treuhand. He has more than 15 years of experience in the tax field. The firm offers a wide range of tax services, both domestic and international, such as corporate restructuring, cross-border transactions and tax planning. This is alongside the basic services of tax returns and examination of decisions during negotiations. The firm caters to private clients, particularly with regard to wealth planning, real estate and capital asset taxation.
Attorneys Andreas Hable and Christian Wimpissinger are two key partners at Binder Grösswang. Hable and Wimpissinger each have more than 16 years of experience in tax law. The firm offers a wide scope of services, such as domestic tax issues and cross-border transactions for national and international companies. Other key areas include accounting law advice, restructuring, financing, M&A, criminal tax law and capital markets.
Hanns Hügel and Gerald Schachner are the joint heads of the tax practice at bpv Hügel Rechtsanwälte. Hügel specialises in M&A transactions, capital markets, corporate law and arbitration; whereas Schachner focuses on international tax law. The team offers a full range of tax services, often advising clients on contentious tax issues.
Another prominent team member is Kornelia Wittmann, who is particularly focused on tax litigation. The firm is well known for its high-end national and international corporate work, and its expertise extends to high-net-worth individuals. The practice represents clients in high-stakes disputes. The clientele operates in a variety of sectors in the Austrian economy, particularly finance, energy, retail and professional services.
"BPV Hügel is the best for international tax affairs and organisational restructuring," said one client. "The team of Gerald Schachner and Kornelia Wittmann has in-depth knowledge, they give clear answers and have an international network – that is time saving for managers."
Partner Johannes Prinz heads the tax practice at CHSH Cerha Hempel Spiegelfeld Hlawati. He has 15 years of experience and specialises in areas such as international tax law and M&A. The firm's key practice areas include tax planning, auditing, structuring transactions, corporate reorganisations and dispute resolution.
CSHS advises clients on cross-border mergers, transactions and business relocations between Austria and Germany. The team serves clients from the financial services sector, in such areas as banking, insurance and capital markets. This range of clients includes a number of Brazilian companies who have used Austria's holding company regime.
The Austrian tax team at CMS Reich-Rohrwig Hainz offers a wide range of services, including domestic and international transactions, tax planning and litigation. The team has experience advising clients on foundations, private equity and venture capital.
With more than 20 years of experience, Sibylle Novak is a key partner at the tax practice. She works closely with Wolfgang Auf, who has expertise in tax issues relating to Croatia and Slovenia, and Daniel Kocab and Johannes Reich-Rohrwig, who specialise in corporate law and litigation. Novak has more than 20 years of experience in tax, particularly in optimising transactions, M&A and restructuring.
With more than 450 professionals and 36 partners, Deloitte has one of the biggest tax departments in Austria. Partner Herbert Kovar leads the tax advisory division at Deloitte Austria, working closely with Michael Weisman, the head of international tax and M&A.
Another important tax partner is Erwin Holzer, who focuses on international design consulting, tax planning and reorganisation. The team has worked on debt restructuring in the past, as well corporation tax, capital gains and stamp duty.
Deloitte offers a full scope of tax services, including specialist advice in transfer pricing and international tax matters. Many of the firm's clients are Austrian businesses active in sectors such as financial services, energy, media and telecommunications. This includes publicly-listed companies, medium to large corporations and trusts.
Partner Franz Althuber is the head of tax in DLA Piper Weiss-Tessbach. Althuber has a wealth of experience in international tax law, trust and estate planning. He advises large domestic and international clients, as well as high-net-worth individuals, on all areas of tax, such as corporate reorganisations, dispute resolution, compliance and cross-border mergers.
New recruits to the team include Lisa Löffler, who focuses on corporate tax law, and Stefan Holzer, who is a renowned expert in tax litigation, audits and criminal tax law. The firm prides itself on its strong combination of planning and transactional tax matters with criminal law and dispute resolution. The international network of DLA Piper has offices all over the world with more than 300 active tax specialists. This enables these firms to support and advise clients on complex tax issues.
Paul Doralt is the head of tax at Dorda Brugger Jordis. He has been with the firm for more than 10 years. His main focus is in tax matters including M&A, corporate restructuring, trusts and estates. Doralt works closely with fellow partner Tibor Varga, who specialises in corporate law, capital markets, banking and refinancing.
Other important team members include counsel Martina Znidaric, who is dually qualified as an accountant and a tax adviser, and Katharina Binder, who supports cases involving private clients. Multinational energy corporations from Brazil, Russia, Malaysia and Norway feature among the firm's clientele.
Dorda Brugger Jordis specialises in cross-border tax issues, particularly the development and implementation of tax structures. The practice advises clients from major economic sectors such as oil and gas, financial services, infrastructure projects and real estate.
Managing partner Andreas Stefaner oversees the EY tax team in Austria. The practice consists of accountants, lawyers and economists, offering clients a full range of integrated tax services. EY in Austria specialises in tax accounting, international tax, tax controversy, transactions, compliance and reporting. The team is known for its holistic approach, providing solutions to multinational corporations, high-net-worth individuals and medium-sized businesses.
Partner Michael Sedlaczek leads the tax team at Freshfields Bruckhaus Deringer. He works closely with tax consultant Claus Staringer, who specialises in corporate tax and litigation. Sedlaczek advises clients on key areas such as corporate tax planning, group reorganisations and structured finance.
Freshfields Bruckhaus Deringer advises financial institutions, family-owned businesses and private clients from sectors like gaming and finance. The team offers a full range of services on domestic and cross-border M&A transactions, restructuring and refinancing issues, tax issues under European law, VAT, transfer pricing, disputes and energy tax law.
Stefan Bendlinger oversees the tax practice at ICON. He has more than 12 years of in-house tax experience and specialises in international tax planning and project consultancy. The team itself consists of 59 professionals, including three partners, offering a comprehensive range of tax services in such areas as risk assessment, R&D and energy taxes.
Bendlinger works closely with fellow partners Karl Mitterlehner, who specialises in corporate tax and auditing, and Max Panholzer, who has expertise in M&A and reorganisations. The practice prides itself on having business experience. The firm's diverse client base includes large multinational groups and private clients. As part of WTS Global, ICON has access to the expertise of tax consultants, auditors and lawyers all over the world.
Thomas Walter is the head of the KPMG tax practice. The firm offers a wide range of tax services such as corporate tax, reorganisation, VAT and transfer pricing. Walter works closely with Sabine Bernegger, who specialises in transfer pricing and international tax. The firm's clients include financial institutions and banks.
Other distinguished partners include Hans Zöchling and Barbara Polster. Zöchling has more than 30 years of experience in corporate tax, international tax and M&A. Meanwhile, Polster is the head of the M&A tax practice with more than 10 years of experience. She has expertise in international and corporate tax, structuring, transfer pricing issues and litigation.
LeitnerLeitner is a tax consultancy firm in Central and Eastern Europe offering a wide range of tax services. This range includes restructuring, auditing, due diligence, transfer pricing and business modelling. Many of the firm's clients are small and medium-sized enterprises, start-ups, public bodies and corporate groups from sectors such as real estate and finance.
Two key partners are Reinhard Leitner and Roman Leitner. Before becoming tax advisers, both Reinhard and Roman Leitner were auditors. Reinhard focuses on international and corporate tax, estate planning and EU law; Roman has a great deal of expertise in criminal tax law, litigation and succession planning.
Hofmann Bernd is the head of the tax consultancy at PwC Austria. He has more than 20 years of experience in auditing and consulting. Bernd specialises in international tax, corporate tax planning and reorganisations. The Austrian tax practice offers a full range of services, including compliance, bookkeeping and payroll advice.
Another significant partner is Herbert Greinecker, who has more than 30 years of experience as a tax adviser and auditor specialising in transfer pricing and corporate tax advice. The firm structures M&A transactions for national and international companies, private equity and strategic investors.
Managing director Robert Schneider leads the tax practice at SchneideR'S. He has more than 18 years of experience and often advises clients on commercial, energy and customs law and related tax matters. Schneider was a partner at Wolf Theiss before going on to establish his own firm in 2003. He has worked extensively on the legal framework for liberalising the Austrian energy market.
The boutique firm offers an integrated range of tax services, covering areas such as customs and regulations. Key practice areas include the energy industry, telecommunications, consumer products and manufacturing.
With approximately 100 lawyers, Schönherr Attorneys at Law provides advice and support to clients on a wide range of tax matters, particularly corporate, M&A, banking and capital market groups. Two key partners are Peter Feyl and Roman Perner, who specialise in these practice areas. The firm offers clients innovative legal advice on complex cases.
The range of advice includes tailor-made solutions for structuring, planning, transactions and international tax. The practice represents clients in all forms of dispute resolution in Austrian and international tribunals. The firm's clientele ranges from domestic to international companies.
Thomas Jungreithmeir oversees tax advisory services at TJP. He has more than 25 years of experience in consulting and previously worked for KPMG in its restructuring and M&A divisions. Jungreithmeir focuses on major projects in such areas as financial restructuring, IPOs, M&A, private equity and venture capital.
Originally a spin-off from Wolf Theiss, Schönherr, KPMG and EY, TJP is a tax boutique firm with special expertise in cross-border transactions. The tax practice combines knowledge of the leading law firms and Big 4 accounting firms to provide clients with an interdisciplinary approach.
Niklas Schmidt and Benjamin Twardosz are the co-heads of the tax team at Wolf Theiss. The practice itself consists of eight professionals including two partners. The firm offers a comprehensive range of tax services including corporate tax advice, restructuring, planning and litigation. The team's expertise runs from M&A to fiscal criminal law.
Recent additions to the team are Matthias Fucik and Melanie Dimitrov. Each practitioner specialises in two or three key areas to ensure they are ambidextrous in tax affairs. The team provides advice and support for estate planning, setting up trusts and foundations, double tax treaties and asset protection. The tax practice advises financial institutions on debt and equity instruments, investment funds, stocks and bonds.
|Tier 1- Austria|
|Tier 2- Austria|
|BPV Hügel Rechtsanwälte|
|Dorda Brugger Jordis|
|Freshfields Bruckhaus Deringer|
|Tier 3- Austria|
|DLA Piper Weiss-Tessbach|
|Tier 4- Austria|
|Cerha Hempel Spiegelfeld Hlawati|
|CMS Reich-Rohrwig Hainz|
|Schönherr Attorneys at Law|