Measures before the end of 2024 - For Entrepreneurs

In decidedly turbulent times, the approaching turn of the year should once again be an occasion for a tax check. Because opportunities are regularly found to legally save taxes through targeted measures or to create the conditions for doing so.

Apply for group taxation

In the case of companies, the formation of a group of companies can create the possibility of offsetting the profits and losses of the companies within the group. The prerequisites are a financial link (a shareholding of more than 50 % and a majority of voting rights) from the start of the financial year, as well as a group application submitted to the tax office and duly signed (the official forms must be submitted in original, signed form – however, signing by means of an electronic signature and submission via FinanzOnline is possible). For all limited companies whose financial year corresponds to the calendar year (i.e. balance sheet date 31 December), the group application must be submitted by 31 December 2024 at the latest. The same applies to joining an existing tax group (e.g. because a new shareholding was acquired on 1 January 2024).

Research funding - research premium

The research premium under 14 % is designed as a tax credit and therefore applies in both profitable and loss-making years. Furthermore, research expenditure is tax-deductible regardless of whether the research premium is claimed. Research expenditure relevant to the premium may include personnel and material costs for R&D activities, overheads, financing costs and investments directly serving research and development (including the purchase of land). There is no cap on the amount of the research premium for in-house research (which must be carried out in Austria). To claim the research premium, a positive assessment from the FFG (to be requested via FinanzOnline) must be submitted. By contrast, the assessment basis for contract research – provided, again, that the contractor is based in Austria – is capped at €1,000,000 for the client. Submission of an FFG expert opinion is not required for contract research. Within the scope of the tax base for in-house research, a notional director’s salary may also be applied. This amounts to €50 (previously €45) per hour of work carried out on research and development, up to a maximum of €86,000 per person.

Tax-free allowance

The profit allowance is available to all natural persons, regardless of the method used to determine their profits, and amounts to up to 15 % of the profit. Up to a profit of €33,000, every taxpayer is entitled to a basic allowance of 15 % without having to provide evidence; to claim a higher allowance, corresponding investments are required. Eligible investments generally include depreciable tangible assets, housing bonds and other securities such as government bonds, bank and industrial debentures, or certain investment and property funds (provided they are also suitable for covering pension provisions). The useful life or holding period is four years in each case. If securities dedicated to the business are disposed of before the end of the four-year period, a replacement may be made through real investments; in the event of early redemption, a replacement purchase of securities is possible within two months. Where a flat-rate business expenses allowance is claimed, only the basic allowance is applicable (this also applies to the flat-rate scheme for small businesses). The profit allowance also reduces the GSVG assessment base and thus lowers not only the tax burden but also the social security burden. The profit allowance is reduced to 13 % for profits ranging from €33,000 to €178,000 and amounts to between €178,000 and €353,000 € to 7 %, between 353,000 € and 583,000 € to just 4.5 %, and for profits exceeding this amount, the allowance is completely waived. The tax-free allowance therefore amounts to a maximum of €46,400.

Advance payments (half-year depreciation) and timing of payment/receipt for income and expenditure calculation software

For investments made after 30 June 2024, half the annual depreciation allowance may be claimed in the second half of the year, regardless of the date of acquisition. Bringing forward investments to December 2024 at the latest may therefore offer tax advantages. Low-value assets (up to a maximum of €1,000 since 2023) can be written off in full immediately. Tax planners can, in principle, achieve a temporary deferral of tax liability by utilising the cash flow principle. For investments made since 1 July 2020, a declining-balance depreciation rate of 30 % may be claimed as an alternative to straight-line depreciation. This percentage is to be applied to the respective book value (remaining book value). However, investments in buildings, motor vehicles (but not investments in electric vehicles), goodwill or intangible assets that do not fall within the areas of digitalisation, environmental sustainability or health/life sciences are excluded from this generally accelerated depreciation. In any case, investments in intangible assets intended for hire or acquired from group companies or controlling shareholders are excluded from declining-balance depreciation. Accelerated depreciation cannot be claimed for second-hand assets, nor for plant used for the extraction, transport or storage of fossil fuels, or for plant that directly utilises fossil fuels.

However, for expenses listed in § 19(3) of the EStG (e.g., consulting, rental, sales, administrative, and interest costs etc.), only a one-year advance payment is tax-deductible! Regularly recurring income or expenses that are due at the end of the year are to be attributed to the calendar year to which they economically belong if they are paid within 15 days before or after 31 December. So-called "outstanding receivables" which are paid later only at the creditor's request are, however, considered to have already been received (in the old year).

Utilise the investment allowance

Since 2023, an investment allowance of 10 %, or as much as 15 % for environmental investments. The basis for the investment allowance is capped at €1 million per year, meaning that tax planning opportunities arise through the strategic bringing forward or deferral of investments. No investment allowance is available for assets for which a profit allowance is claimed.

Environmental surcharge for residential buildings

The eco-surcharge of 15 %, which applies for a limited period in 2024 and 2025, may be claimed as an additional business expense for thermal energy-efficiency refurbishment measures carried out on buildings let for residential purposes. Eligible measures include, amongst others, building insulation, the replacement of windows, green roofs and green façades, and the replacement of a fossil-fuel heating system with a climate-friendly heating system.

Accelerated depreciation on buildings

An accelerated depreciation rate applies to buildings acquired or constructed after 30 June 2020. In the first year, the depreciation on the acquisition or construction costs is three times the percentage rate that would "normally" apply (7.5 % for business use and 4.5 % for non-business use), and in the following year, it is twice that rate (5 % and 3 % respectively). From the second year onwards, the depreciation rate is 2.5 % for business use and 1.5 % for letting and leasing.

For residential buildings held as business or private assets, an even more attractive depreciation rate is available, provided that the new build is completed between 1 January 2024 and 31 December 2026 and meets certain environmental standards ("Klimaaktiv Bronze Standard"). In such cases, three times the standard depreciation amount may be claimed in the first three years following completion – for income from letting and leasing, this amounts to 4.5 % for each of the three years (no half-yearly depreciation).

Replacement acquisitions on capital gains from assets

Natural persons can defer immediate taxation of capital gains on business assets held in fixed assets for at least seven years by (partially) transferring them to the acquisition or production costs of new investments (tax deferral effect).

Compliance with the turnover threshold for small businesses

This VAT exemption (without input tax deduction) is only possible for an annual net turnover of up to €35,000. Since 1 January 2017, certain tax-exempt turnovers (e.g. from medical services or as a supervisory board member) no longer need to be taken into account for the small business threshold. The decisive factor for the small business exemption is that the company is operated domestically. Entrepreneurs who are at risk of exceeding this threshold in 2024 should, if possible, postpone the completion of service provision to 2025. Merely postponing the receipt of payment is not sufficient to comply with the small business threshold. From 2025, the turnover threshold will be €55,000 (gross threshold). The small business scheme will then generally also apply to entrepreneurs from other EU member states. Entrepreneurs can also make use of the small business scheme in another EU member state. This requires registration via a special portal, and the annual turnover must not exceed the EU-wide threshold of €100,000. If registering in another EU country, entrepreneurs must also provide a small business identification number and comply with country-specific legal requirements.

GSVG exemption

Small business owners (annual turnover under €35,000, income under €6,221.28) can apply for a GSVG exemption for 2024 until 31 December 2024. Eligible are new entrepreneurs (max. 12 months GSVG liability in the last 5 years), individuals aged 60 and over (statutory pension age), or individuals over 57 if the stated limits have not been exceeded in the last 5 years. The exemption can also be applied for while receiving childcare allowance or if there is partial insurance coverage during childcare. In this regard, a monthly limit of €518.44 or monthly turnover of €2,916.67 (each on average) applies.

Prepayment of GSVG contributions

In income and expenditure calculators, a prepayment of GSVG contributions is recognised if its amount corresponds to the estimated back payment for the relevant year. If you expect a back payment, you can reduce or smooth your profit by making a voluntary prepayment, thereby potentially avoiding disadvantageous progression leaps.

Network cards for the self-employed

Since 2022, self-employed people have been able to claim a flat-rate deduction of 50 % of the cost of public transport travel cards (which are non-transferable) as business expenses, provided that these are also used for business travel.

Retention obligations

The 7-year retention period for business records from 2017 generally ends on 31.12.24. Records that are relevant for pending tax or other official/judicial proceedings must still be retained. Records relating to properties for input tax reversals must be retained for 12 years. If properties are not used exclusively for business purposes and input tax deduction was claimed for the non-business part, the retention period is extended to 22 years under certain conditions. The retention period for records relating to properties is also 22 years if with the rental for residential purposes or business use commenced from 01.04.2012. Under no circumstances should records be destroyed which serve as evidence, for example, in product liability, property, inventory, and employment contract law.

Deductibility of donations

Donations from business assets to specific research institutions and educational establishments providing adult education, as well as universities, may be treated as business expenses up to a maximum of 10 % of the profit. In addition, and without any limit on the amount, cash and in-kind donations relating to disaster relief may also be claimed, provided they serve promotional purposes. Donations to charitable causes, animal welfare organisations and voluntary fire brigades are also deductible as business expenses. It is important to note that the organisation receiving the donation or the charity collecting the donations must appear on the Federal Ministry of Finance (BMF) list and that the donation was made in 2024. Since 2024, donations to schools, nurseries, cultural institutions or sports clubs may also be claimed as tax-deductible under certain conditions (charitable status). It is not possible to claim a specific donation twice – once as a business expense and once as a special expense. It should also be noted that business and private donations combined must not exceed a maximum of 10 % of the total amount of income. Since 2024, donations of food to eligible charitable organisations have also been tax-neutral for income tax purposes.

Securities cover for pension provisions

To avoid tax penalties, securities with a nominal value of at least 50 % of the tax pension provision amount reported at the end of the previous financial year must be held within the business assets at the end of the financial year. It is therefore advisable to check that sufficient cover is in place before the end of the year.

Energy levy refund

The application for the calendar year 2019 must be submitted by 31.12.2024 at the latest.

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