MAJOR DEVELOPMENTS
q The investment allowance is raised from 9% to 12% for unused
assets that are acquired or manufactured during the period May 1, 1996, to December 31, 1997, and that have a useful life of at least eight years.
q The tax assessment for the years 1996 and 1997 disregards losses carried forward from past years. On the other hand, losses do not expire and can be deducted in 1998 and later years without limit.
q Austrian corporate entities are subject to an annual minimum
corporation income tax from ATS 15,000 to ATS 75,000, which is regarded as a prepayment and will be credited to future corporate tax liabilities.
INCOME TAXES ON CORPORATIONS
1. Rates
As of 1994, the corporate tax rate is set uniformly at 34% of taxable income or, in the case of limited liability to tax, at 34% of taxable income earned in Austria.
Example:
Profit before corporate tax ATS 1,000
34% corporation tax 340
Net income (to be retained or distributed) ATS 660
2. Local Income Taxes None.
3. Capital Gains Taxes
Capital gains generally are included in taxable income and taxed at the corporation income tax rate. However, capital gains on sales of shares in foreign companies (sales of more than 25% of the foreign country) are exempt from Austrian corporation income tax provided the shares have been held continuously for at least 12 months on the last balance sheet date preceding the sale and were not valued at the lower of cost and market value. Losses that arise from the disposal of such investment properties have to be spread for tax purposes over seven years.
4. Branch Profits Taxes
Branches of a foreign corporation are subject to Austrian corporation tax on their income earned in Austria except for dividends of a nonresident corporation branch that is situated in a member country of the European Union. Losses may be carried forward indefinitely. In respect to the years 1996 and 1997, see item 29.
5. Foreign Tax Reliefs
In general, taxation of foreign income is based on regulations for avoiding double taxation. A special tax relief is called
Schachtelbeguenstigung (international participation exemption). If a corporation holds at least 25% of a foreign corporation shares for more than two years, dividends from the foreign corporation distributed to the company and capital gains are not subject to tax in Austria. To prevent the abuse of the exemption, the Austrian Ministry of Finance has issued related regulations.
At present, unilateral tax credits do not exist in Austria. In exceptional cases, however, the Ministry of Finance allows such tax credits.
INCOME TAXES ON INDIVIDUALS
9.Rates
As of January 1, 1989, the income tax rates for an individual (married or unmarried) without children are:
Taxable Income
Tax on Percentage
Over Not Over Lower Amount on Excess
ATS 0 ATS 50,000 ATS 0 10%
50,000 150,000 5,000 22
150,000 300,000 27,000 32
300,000 700,000 75,000 42
700,000 243,000 50
There is a general tax credit of up to ATS 8,840 for smaller, yearly income up to ATS 500,000.
Example:
Income for the year ATS 700,000 100%
Income tax (see table above) 243,000 35
Income after tax ATS 457,000 65%
An individual tax liability is reduced by the following tax credits per year (which do not apply to nonresidents):
Effective 1994
Married couple if only one spouse has
earned income ATS 5,000
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