Dear Clients,
At the beginning of May the Federal Ministry of Finance published the draft of the Budget Accompanying Act 2025 (Budgetbegleitgesetz 2025) for review.
Below we give you a brief overview of the most important planned changes in the tax area.
Rededication surcharge
Sales of properties in the private sector are subject to the so-called 'real estate income tax'. The amount of this tax varies depending on whether the property is “old or new”. For new properties, for example, it amounts to 30 % of the capital gain.
In addition to the property gains tax a 'rededication surcharge' is planned. This refers in particular to the conversion of grassland into building land. If grassland is reclassified as building land after December 31, 2024 a reclassification surcharge will be levied when the property is sold.
This surcharge will be levied on the sale of business and non-business (private) land by indiviuals. Alongside the 'normal' real estate income tax a 'reclassification surcharge' of 30 % will be added to the income from the sale of the property (=the capital gain).
Extended basic flat rate
In principle the basic lump sum may be used for tradespeople and self-employed persons with an annual turnover of up to EUR 220,000.
The flat-rate computed expenses of 6 % or 12 % (depending on the activity) then cover e.g. depreciation, rent or car costs.
These limits are to be increased:
2025: Turnover limit of EUR 320,000, flat-rate operating expenses of 13.5 %
2026: Turnover limit of EUR 420,000, business expense allowance 15 %.
Commuter tax
The commuter euro will increase from EUR 2 to EUR 6 from 2026.
Employee bonus
In 2025 employers should have the option of granting their employees a tax-free bonus of up to EUR 1,000 (this benefit will be reassessed in 2026). The tax exemption should not be dependent on a group characteristic of the employees. Bonuses may be granted to individual employees only if this can be justified for operational reasons.
The prerequisite for the bonus is that it is an additional payment not normally granted. Accordingly, payments based on performance agreements, regularly recurring bonus payments, or extraordinary salary increases should not be eligible.
No valorisation of family benefits
Suspension of the increase in the child tax credit and other family benefits for 2026 and 2027.
Real estate transfer tax - tightening for share deals
Until now the following property transactions were not subject to real estate transfer tax:
- Acquisition of shares in a property-owning corporation if none of the purchasers acquired more than 95 % (or more) of the shares and the purchasers were not members of the same corporate group pursuant to Section 9 corporation tax act and
- Indirect acquisitions of shares via an intermediary company
The participation threshold for changes in shareholders subject to real estate transfer tax is lowered to 75 % (instead of 95 %).
Indirect share transfers are also to be recognised.
In the case of property companies (Immobiliengesellschaften), the realistic sales value of the properties will be used - with a tax rate of 3.5 %. (instead of 0.5 % for regular companies).
The planned date of entry into force is July 1st, 2025, although transitional arrangements are planned.
Foundation income tax
The tax rate for donations to private foundations (Privatstiftungen) will be increased from 2.5 % to 3.5 % from January 1st, 2026.
Best regards
Manfred Gross
Vienna, May 2025
