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Finance Minister Löger: “Entlastung Österreich” means less tax At the conclusion of the government meeting in Mauerbach, Minister of Finance Hartwig Löger presented the key points of “Entlastung Österreich

With “Entlastung Österreich”, the Federal Government is implementing a comprehensive phased reduction in taxation which will be effective over a period of years.

  • 2020: tax relief for low earners, reduction in bureaucracy and “ecologisation” of the tax system
  • 2021/2022: tax relief for wage tax and income tax payers, making Austria more attractive as a business location in order to secure and increase jobs, and simplification of aspects of tax law

The continuation of the tax reduction programme is intended to achieve a reduction in the rate of taxation towards 40 per cent over three stages. In order to achieve this goal, a total volume of 4.5 billion Euros is being released.

2020: tax relief for low earners in a first stage

In the first stage of “Entlastung Österreich”, relief is to be provided for low earners in particular, through a reduction in health insurance contributions. From as early as 2020, low-income earners, pensioners, agricultural and forestry workers and the self-employed will benefit from a reduction in health insurance contributions amounting to around 700 million Euros.

In addition, in a first stage measures based on the Austrian Climate and Energy Strategy aimed at making the tax system “greener” are to be carried out. One of the aims of this is to create incentives in the area of mobility and to make vehicles with low exhaust emissions more favourable from the tax point of view. In addition taxation adjustments are planned in the areas of solar energy, biogas and hydrogen.

In addition – also on the basis of ecological considerations and in accordance with the principle of equality of treatment – books, newspapers and periodicals are in future to be subject to the reduced tax rate of 10 per cent, even if they are purchased in electronic form. Up to now, e-publications have been subject to 20 per cent VAT. The reduction to 10 per cent will ensure that e-publications are subject to the same tax treatment as physical publications.

In addition to an increase in the flat rate for income-related expenses, the so-called “small business limit” (i.e. the turnover limit above which VAT is charged) will also be increased. Furthermore, in future a flat-rate option is to be created in the context of taxation of income, which will guarantee that in future around 200,000 businesses will not have to submit up to 300,000 tax returns.

For these measures a tax relief volume of about 1 billion Euros is envisaged for 2020.

2021/2022: tax rate relief for 4.5 million tax payers

The aim of “Entlastung Österreich” is to provide a perceptible level of tax relief for wage and income tax payers, with around 4.5 million tax payers benefiting from the measures. The reduction in the rate of income tax in the first stages forms the central component. All income tax paying workers, pensioners, self-employed people and farmers and foresters will benefit from this tax rate relief through an increase in their purchasing power.

In addition “Entlastung Österreich” also focuses on making Austria more attractive as a business location, the aim being to secure existing jobs and to create new ones. This is in particular intended to benefit small and medium sized enterprises (SMEs) in our country. Structural simplification of tax law is also envisaged.

These measures will leave people with more money to spend as they wish and will leave companies with more funds for capital investment. “Entlastung Österreich” will open up more opportunities in competition and will mean more growth and more jobs.

“Entlastung Österreich” – a pact with future generations

With “Entlastung Österreich”, the Federal Government is making a pact with future generations, since genuine relief such as this programme does not create debts but sticks to the budget plan. New deficits and debts are the burdens of the future, which is why no additional new taxes are being introduced for the people and businesses of Austria. In spite of “Entlastung Österreich” 2018 will have been our last deficit year, because a reduction in the tax burden and a budget surplus go hand in hand.

The detailed structure of the tax relief measures will be set out over the coming weeks and months.

11 January 2019