Before 2005, the corporate tax rate of Austria was 34%. But in 2005 the government reduced the corporate tax rate by 9%, from 34% to 25%, which brought a significant increase in tax revenue despite the lower rate.
The favorable corporate tax rate (which is below the European Union average) combined with the benefits of cross-border group taxation have made Austria into a place with real location advantages. For these reasons numerous companies are attracted to Austria and more than 300 companies have their head office in Austria.
In a recent meeting of financial experts from Austria, Germany and Switzerland, Raiffeisen Bank consultant Ludwig Scharinger suggested further simplifying the Austrian tax laws so that high costs of both the tax administration and taxpayers could be reduced. He also suggested reducing the number of tax exemptions as the availability of such tax relief complicates the system and increases compliance costs.
Finance Minister Fekter emphasized the need to reduce the country’s personal income tax. She also suggested that both the top rate of income tax and the entry rate of income tax should be lowered. Personal income in Austria is currently taxed at progressive rates up to a top rate of 50%, which is high by international standards.
