Suggestions for measures before the end of the year and a preview of 2002

-- I. Tax law

In particular at the end of the year, it is important to ensure that planned projects are completed in a timely manner, in order to achieve the desired effect. Since the last week of December 2001 is unsuitable for this for date-related reasons, these measures should be taken as soon as possible.

I. Tax law

1. Payments before December 31, 2001

Donations are only tax-deductible up to 10% of the annual income for 2000 if they are paid to certain research and teaching institutions.

The so-called Special issues of Topf They only affect up to a income threshold of S 700,000,- - even that only marginally. The church contribution is up to S 1,000,-, the tax advisory costs, pensions and ongoing expenses are tax-deductible in unlimited amounts.

Exceptional strains They are usually reduced by the statutory deductible (e.g. medical costs, dental treatment, etc.). From a 25%% reduction in earning capacity, the costs of disability are deductible without a deductible, at most reduced by care-related benefits. Accommodation costs in a retirement home are already an extraordinary burden from the first care level.

Training and further education costs: Training costs are generally tax-deductible. Training costs only if they are related to the professional or related activity. Expenses for Computer courses (in particular the acquisition of the ECDL computer driver's license) are always deductible training costs (BMF 3 July 2001 Payroll Protocol) The tuition fees for a general University studies EUR 363.36 (approximately S 5,000) is not tax-deductible. The same applies to expenses for general education schools and for a second degree at a university, even if it constitutes a significant basis for vocational training (Rz 360 LStR1999). Working people who, as part of their profession, undertake a study, in particular a Higher vocational course or one University course If you complete the study program, you can claim the tuition fee and related expenses as a tax deduction. These include not only the course fees but also scripts, professional literature, travel costs, a proportion of PC costs, etc. Preparation courses for one Vocational maturity exam It is important to distinguish whether these are for a general education or vocational higher school. Only in the latter case are they deductible expenses. For children studying outside their place of residence, parents may claim "extraordinary expenses" if the relevant conditions are met. If the employer pays the employee's training and development costs, they are in any case business expenses and not taxable wages for the employee, provided that predominantly business-related interests are proven.

Social spending: As benefits in kind, the employer is exempt from tax and social security payments: up to S 4,000 for future-oriented benefits, up to S 2,550 for gifts (e.g. Christmas, birthday) and up to S 5,000 for company events. Gifts to employees also include merchandise vouchers that can be redeemed within the employer’s business operations. Gift vouchers must not constitute an individual reward, but must be available to all employees or groups of employees.

Other tax-favored measures for service providers

- The Interest savings For interest-subsidized or interest-free employer loans or salary advances, up to an amount of S 100,000 are tax- and social security-free. For amounts exceeding this, interest of 4.5% must be calculated and subject to income tax, DB, DZ, municipal tax and social security.

- Employee participation The free or discounted contribution to the employer’s company is exempt from income tax, social security, DB, DZ and local tax up to an amount of S 20,000 per year.

- Employee Participation Foundation: The donations from the donor (employer) are tax-deductible in unlimited amounts. The donations from the foundation to the employees are not subject to income tax up to an amount of S 20,000 per year; instead, they are taxed at 25% KSt. Amounts exceeding this amount are subject to taxation according to the tariff.

- Options up to an amount of S 500,000,- is subsidized for the discounted purchase of a stake in the employer's company.

- Pension fund contributions: Employer contributions are exempt from payroll tax, social security, DB, DZ, and municipal tax, provided that no adjustment of the benefit is made. The employee contribution was previously limited to the amount of the employer contribution. Through an intended change to the pension law, employees will be able to pay higher contributions starting in 2002, thereby being able to take advantage of the premium benefit of § 108a EStG (EUR 1,000).

- Pension benefits For payments made up to December 31, 2001, one-quarter of the assessment base remains tax-free. The rest up to S 125,000 is subject to the half-tax rate, and thereafter to the tariff. The one-quarter exempt from tax will no longer apply from 2002.

- Cleaning costs for professional clothing They are only deductible if they cause higher costs due to special contamination than for civil clothing. For example, the VwGH on April 5, 2001, 98/15/0046, declared the costs of cleaning uniform shirts (with sewn rank badges, police markings, etc.) tax-deductible as not deductible because cleaning them does not cost more than cleaning other shirts.

2. Exemptions

Research tax credit The general tax allowance is 25% of the research expenses. For increased research expenses, 35% can be claimed.

- Training allowance A total of S 60,000 can be claimed in partial amounts: S 20,000 at the start, S 20,000 at the end, and S 20,000 upon graduation.

- Education allowance

In addition to the training and further education benefits paid by the employer, a tax-free allowance of 9% can be deducted.

3. Return on equity growth

The fictitious interest rate of 6.2% for the 2001 equity increase can be end-taxed at 25% in the form of a tax credit. This results in a saving compared to the income tax progression or the 34% corporate tax.

4. Securities coverage Check-in preparation: As of December 31, 2001, Austrian fixed-income securities must be held in the nominal amount of at least 50% of the tax-free amount as of December 31, 2000. Otherwise, the profit must be increased by 60% of the shortfall.

Pension reserve: In principle, the same provisions apply as for the handling provision. However, the 50%-year coverage must be achieved evenly over 20 business years.

5. Investments/Depreciation

For purchases made up to June 30, 2001, the full amount of the AfA must be paid; as of July 1, 2001, only half of the AfA is applicable. As of 2001, the only remaining investment incentives are the transfer of silent reserves from sold assets to new investments, as well as the immediate disposal of low-value assets (S 5,000).

The tax-free allowance for buildings is as of 2001 per year:

- Up to 3% (for 2000 last 4%) in at least 80% buildings directly serving operational activities.

- Up to 2.5% for buildings serving directly banks and insurance companies. If the building serves at least 80% of customer traffic, up to 3% can be written off.

- Until 2% if the building serves other operational purposes.

- Up to 1.5% for buildings that are intended for rental or leasing. The tax-based AF for passenger cars is 12.5% p.a. The AF component in a leasing rate must be adjusted or separately deducted accordingly.

A company asset is tax-deductible for 15 years.

The maintenance costs for residential buildings should be spread over 10 years.

The production costs for residential buildings are eligible for depreciation over a period of 15 years.

The partial depreciation of investments is to be spread over 7 years.

6. Provisions

Provisions for uncertain debts and impending losses with a remaining maturity of more than 12 months (e.g., for legal costs) can only be recognized at 80% of the part value on December 31, 2001. The profit from the liquidation of pre-existing provisions can be spread over 5 years. Provisions are not recognized fiscally unless a liability is seriously expected to arise. For warranty obligations, a provision is only permissible if, at the balance sheet date, there is an obligation to meet future defects (VwGH 7 August 2001, 97/14/0066). Tax-unallowable are lump-sum provisions (e.g., Delkredere provision), provisions for costs of the euro changeover, for company anniversaries, and expense provisions.

Without restriction, provisions can be made for: handling costs, pension savings and anniversary payments. The recalculation for the business years ending after July 31, 2001 must be based on the new biometric data (death, disability, etc.). The EStR 2000 includes in Rz 3447-3532 a catalog of the provisions of Abis Z, which in the literature is however qualified as restrictive fiscalist. Example: A provision for the rent reserve (Rz 3491) is declared inadmissible on the grounds that it is merely an expense provision. However, it is properly a public-law obligation that justifies a provision for a liability (RdW2001/639).

The Divestment Obligations to severance and anniversary pay are governed by Rz 3369a and 3446a EStR 2000. According to the BMF’s decree of August 3, 2001, these provisions apply to all open cases.

7. Loss reports From 2001, deductible losses can only be calculated at the amount of 75% of the taxpayer's taxable income for the relevant year. Amounts not yet used from 1998 and 1999 can also be deducted after 2002 (BMF 22 February 2001). Losses are therefore not lost, but merely postponed to later periods. The loss calculation limit does not apply to: renovation gains, disposal and disposal gains, and liquidation gains.

8. Caution when investing in loss-making companies

Neither compensatory nor (as a special issue) reportable losses from investments that are publicly offered and for which the expected yield after taxes is more than twice the yield before taxes. This rule applies to corporations as of 2001.

This restriction also applies to losses from businesses with a business focus on intangible assets or the commercial rental of business assets. However, entities are generally exempt from this. In both of the above cases, losses are only to be offset with positive income from the same investment as soon as possible, as has already been the case with the waiting period losses (investment allowance).

With effect from October 31, 2000, the BMF also adopted restrictive measures for investment fund holdings to prevent negative yield-equivalent distributions (Rz 6240b and c as well as 6280a Income Tax Guidelines 2000).

9. Speculative income

A speculative transaction occurs when the period between purchase and sale is Properties no more than 10 years (15 years at a 15th-percent reduction in production costs) at Other economic goods, Specifically, securities, not more than 1 year The past is behind us. There are speculation gains without a time limit in: forward and difference trading, as well as in the realized gains of investment funds.

Exceptions apply to owner-occupied homes/apartment buildings that have served as the primary residence for two years and for the sale of self-constructed buildings.

There is a free limit of S 6,000 per year. Speculation losses are only compensable with speculation gains in the same year.

New since 2001 is the 5%-digit substance tax on investment funds and the 2.5%-digit safeguard tax for foreign investment funds.

10. Shareholder issuance

From 2001, a transfer of ownership is considered to have taken place if the shareholding has been at least 1% during the last 5 years (so far more than 10%). Transitional provision: If the acquisition of shares was less than 10% before 1 January 1998, the nominal value can be set at 1 January 2001 instead of the purchase price. The half tax rate applies. The shareholding is considered to be Substantial participation to understand (share in profits and voting rights are irrelevant; BMF, 30 August 2001).

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