Austria

Corporate - Taxes on corporate income

Last reviewed - 14 March 2024

Basis of corporate income tax (Körperschaftsteuer)

Corporations (i.e. limited liability corporation [GmbH], stock corporation [AG]) are subject to unlimited taxation in Austria of their entire (domestic and foreign) income if they have their legal seat or place of effective management in Austria. A non-Austrian corporate tax resident (with neither a legal seat nor a place of effective management in Austria) is subject to limited taxation on certain sources of income in Austria.

Rates of corporate income tax (Körperschaftsteuer)

Due to the qualification of corporations as independent tax subjects, a distinction must always be made between tax ramifications at the level of the company and those at the shareholder level. At the level of the company, profits are taxed at the standard corporate income tax (CIT) rate of 23% (24% in 2023 and 25% until 2022), regardless of whether profits are retained or distributed.

At the shareholder level, the profit distributions are usually subject to WHT of 23% for corporations (24% in 2023 and 25% until 2022) and 27.5% for other recipients.

There is also a minimum CIT, payable by companies in a tax-loss position. The minimum CIT can be carried forward without time limitation and can be credited against future CIT burdens of the company.

The minimum CIT amounts to EUR 875 for an AG for each full quarter of a year.

The minimum CIT for a GmbH is EUR 437.50 for each full quarter of a year. However, for GmbHs founded after 30 June 2013, the minimum CIT amounts to EUR 125 for each full quarter of the first five years and EUR 250 for the next five years.

Minimum tax (Pillar II)

The Minimum Tax Act transposes the complex framework of the EU’s Directive on a global minimum level of taxation into domestic law. In scope are large company groups reaching a minimum of EUR 750 million in net sales in at least two of the last four financial years, irrespective whether it is a solely domestic or a multinational company group.

The global minimum tax rate of 15% is ensured via the income inclusion rule (IIR) and, as of 2025, the undertaxed profits rule (UTPR). For domestic constituent entities subject to an effective tax rate lower than 15%, a domestic top-up tax is introduced (QDMTT) preceding IIR and UTPR. Thereby, an outflow of domestic tax base to a foreign ultimate parent entity’s jurisdiction is prevented. On the other hand, the domestic top-up tax results in Austrian constituent entities of foreign company groups being required to comply with corresponding Austrian compliance obligations as well.

In order to simplify administration, the following safe harbour rules are included in the Minimum Tax Act:

Safe harbour for qualified (foreign) domestic top-up taxes (e.g. relevant on the level of the Austrian ultimate parent company regarding foreign [low-taxed] business units).
Transitional country-by-country (CbC) report safe harbour (de minimis test, effective tax rate test, routine profits test).
Simplified calculation of CbC report safe harbour for non-material constituent entities.

When determining the requirements of a safe harbour, a country-based approach is to be taken. If a safe harbour is granted, the amount of the top-up tax is reduced to zero for the respective tax jurisdiction, and determining the effective tax rate according to the complex general framework is not required. However, this does not affect compliance obligations, such as the obligation to submit a Pillar II tax return.

The transitional CbC report safe harbours do only apply for the first three financial years (starting 2024). The significant simplification is that for these tests the CbC report and financial information (already available within the company) is used.

The new regulations entered into force on 1 January 2024.