Foreign tax credit (matching credit)
Generally, foreign WHT can be credited against Austrian CIT (see Foreign income in the Income determination section). In special cases (e.g. Brazil, China, Korea), the DTT provides for a matching credit, which allows the credit of a pre-defined amount that exceeds the actually paid foreign WHT.
Research and development (R&D) incentives
R&D costs are fully deductible at the time they accrue. An R&D premium of 14% (i.e. R&D expenses x 14% = R&D premium) may be claimed for R&D activities performed in Austria.
In order to receive the current R&D premium of 14%, an expert report (issued by the Austrian research promotion organisation [FFG]) is required that confirms the nature of the expenses in question as R&D expenses. The definition of privileged R&D expenses is taken from the Frascati Manual.
The R&D premium is also available in case of contract R&D; however, R&D incentives cannot be claimed by both principal and agent (the agent is just able to apply for the premium if the principal does not). In case of contract R&D, the privileged R&D costs are capped at EUR 1 million per year.
Austria has no ‘patent box regime’.
Incentives related to COVID-19
The Austrian Parliament passed several COVID-19 packages in connection with COVID-19 support measures. Additionally, the Austrian Ministry of Finance, the Austrian Social Security Institution for Self-Employed, and the Austrian Health Insurance Fund, as well as the Austrian federal states, municipalities, and professional organisations, have introduced facilitations for tax payments, e.g.:
- Reduction/non-assessment of pre-payments of PIT and CIT.
- Deferral of payments and payment plans.
- Reduction/non-assessment of surcharges for late payment and claim interest.
- Postponement of annual income tax return due dates, as well as the deadlines for the disclosure of annual financial statements.
- Special COVID-19 short-time work models.
- Guarantees and subsidies (e.g. subsidy for fixed costs, compensation for lost revenues).
- COVID-19 investment premium.
- Loss carryback (see below for further details).
For the first time, the Austrian authorities have enabled a tax loss carryback for losses from the assessment year 2020. However, this does not represent a change in general Austrian tax rules regarding the usage of losses, but a one-off possibility due to COVID-19. Consequently, tax losses from 2020 can be used to offset profits generated in 2019 and 2018. The tax loss carryback is limited to a maximum amount of EUR 5 million. In the event that this threshold cannot be fully utilised in the tax assessment for 2019, the remaining losses can be considered in the tax assessment for 2018, but only up to a maximum of EUR 2 million. Any remaining tax losses from 2020 can be carried forward.
For COVID-19 subsidies based on legislation that entered into force after 31 December 2020, the Federal Act Requiring Appropriate Tax Conduct for Federal Funding Due to the COVID-19 Pandemic (‘Bundesgesetz, mit dem Förderungen des Bundes aufgrund der COVID-19-Pandemie an das steuerliche Wohlverhalten geknüpft werden’) is applicable. This Federal Act links subsidies from the Austrian Federal Government due to the COVID-19 pandemic to appropriate conduct in relation to tax (e.g. no abuse that affected the assessment base to the extent of EUR 100,000 or more in the past three assessed years).