No more tax breaks for Golden Handshakes
No cuts planned to statutory redundancy arrangements
Press Release, 07 September 2011
"Austria is the world champion when it comes to early retirement. Nowhere in Europe do so many people retire so early as in Austria. Men in particular retire on average six years earlier than the statutory age," declares Finance Minister Dr Maria Fekter, adding that politicians therefore need to put all their efforts into bringing the actual pension age into line with the statutory age. "At the moment, our pension system is being completely thrown off balance by a whole number of exceptions which, at present, benefit the very few at the expense of everyone else," she continues. For this reason, Fekter is now getting to grips with her promised abolition of tax breaks for early retirement. In future, so-called "golden handshakes", which employees receive when taking their pension early, are no longer to be subject to preferential tax treatment either for employees or employers.
However, there will be no cuts to statutory redundancy arrangements. "Both the old and new arrangements will remain the same," stresses Fekter. Accordingly, only the existing tax breaks available for the following three other components by which companies construct their golden handshakes are to be affected: so-called voluntary redundancy extending beyond regular redundancy payments, formal settlement arrangements and compensation for unfair dismissal. According to Fekter, preferential tax treatment for redundancy-scheme payments will remain in place.
Fekter justifies cuts in the context of compensation for unfair dismissal on the basis that this serves as an instrument enabling early termination of employment contracts. Compensation for unfair dismissal basically comes into play if dismissal turns out retrospectively to have been unjustified. It is not disputed that such measures affect precisely those who have lost their job. "Those affected would also have had to pay tax in full on their salary if they had not been dismissed," declares Fekter, concluding: "We must do everything to ensure that future pensioners too can rely on the Austrian system."