National Council with important legislative decisions for the turn of the year

In December 2023, the National Council passed several important laws that have an impact on taxation and economic life. These are summarised below.

Start-up Promotion Act

The "Start-up Package," launched by BMF and BMJ, includes, among other things, a new tax model for start-up employee share ownership, which is intended to specifically resolve the so-called "dry income" problem and promote employee retention within the company.See July 2023 postThe dry income problem has arisen when start-ups and young SMEs, lacking liquidity, have been unable to provide corresponding monetary compensation to highly qualified employees. If this was compensated by the transfer of capital shares, the immediate taxation led to an additional liquidity requirement for the recipient – hence the dry income problem.

In the course of the legislative process, the possibility to grant employees additional wages tax-free due to inflation has now been extended. Employee bonuses can therefore be paid out tax-free and free of social security contributions up to €3,000 per year (from January 2024), provided they are granted on the basis of a collective agreement or company agreement and are "additional payments".

Part of the adopted start-up package is the Flexible Capital Company (also called FlexCo), which is based on the legal form of a GmbH (limited liability company) but also contains some provisions taken from stock corporation law. Furthermore, the minimum share capital for GmbHs has been lowered from €35,000 to €10,000.

Non-profit Reform Act 2023

The Non-Profit Reform Act 2023 extends the deductibility of donations to further non-profit organisations – for example, in the areas of education or sport – and simplifies the procedure concerning donation benefits.See post from August 2023In future, all donation purposes that are to be considered charitable or benevolent will be eligible for tax-deductible donations. Furthermore, an important component of this law is the so-called volunteer allowance, which provides for tax exemption for income from voluntary work. A significant change occurred in the course of the legislative process. If an appeal is filed against the threatened withdrawal of donation eligibility, it can be applied for that the organisation remains on the list of eligible organisations until the end of the proceedings.

Energy price brake extended

With an amendment to the electricity cost subsidy law, the electricity cost subsidy (See the post from December 2022 for details.), the electricity cost supplement and the grid cost supplement are extended by 6 months until the end of 2024.

Rent cap

The so-called "rent cap" limits rent increases for category rents, guideline rents (See post from July or. August 2023) and rents for social housing – the rent cap, however, has no effect on private tenancy agreements. In future, changes to category rents will take place exclusively on 1 April, although there will be no rent adjustment in 2024. An adjustment to category rents is scheduled for 1 April 2025. For the years 2025 and 2026, it is envisaged that the effects of the inflation peak will be capped at 5 %.

In future, the indicative rents are to be adjusted annually, with the first adjustment taking place on 1 April 2025. For the adjustment on 1 April 2025, the change in the annual average CPI figure for 2024 compared with 2023 shall be the sole determining factor. As with category rents, the cap for indexation in 2025 and 2026 is set at 5 %.

For social housing, the increase is (also) capped at 5 %. From 1 April 2024, the amounts may not increase by more than 5 % compared with the date of the last change.

Company Law Digitalisation Act 2023

The Companies Law Digitalisation Act 2023 provides for a disqualification from serving (for 3 years) as a managing director and as a board member of public limited companies (AGs) or cooperatives if the relevant person has been sentenced to more than 6 months imprisonment for certain economic offences such as infidelity, organised undeclared work or fraud.

Increase in pension supplement

The pension supplement rewards those who continue to work beyond the standard retirement age and can be claimed for a maximum of three years. It has been increased from the previous rate of 4.2 % to 5.1 %. Pensioners who are in gainful employment alongside their pension will, over the next two years, only be required to pay pension contributions on that part of their additional earnings which exceeds twice the marginal earnings threshold (expected to be €1,036.88 for 2024). The federal government will cover the remainder. This is subject to the condition that the total pension does not exceed 94.28 % of the total assessment base; previously, the limit was 91.76 %.

Income-dependent child care allowance

From 1 January 2024, the earned income limit for income-dependent child-rearing allowance will increase from €7,800 to €8,100 per year. Furthermore, refugees from Ukraine's entitlement to child-rearing allowance or family allowance will be extended until 4 March 2025.

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