Further assistance measures approved for businesses and individuals
Vital support and tax relief
The Austrian Parliament has approved further vital assistance measures drawn up by the federal government. The new package of legislation provides support and tax relief for businesses and individuals as well as greater transparency over how the federal government is using taxpayers' money to protect health, jobs and businesses.
Tax-based support extended
The reduced VAT rate of 5% in the hospitality, hotel and cultural sectors will be extended until the end of 2021. In addition, tax concessions for employees will be extended until the end of March 2021. Until such time, therefore, the commuting allowance and favourable tax rates for overtime, as well as allowances for dirty, difficult and hazardous work in the case of remote or short-time working will remain in place. In addition, the existing tax payment deferrals and suspended collection of interest on tax arrears will also be extended until the end of March 2021. So far, tax deferrals have been approved in the sum of EUR 6.5 billion.
Payment in instalments over a period of up to 36 months at low interest rates
According to the generally applicable provisions of the Federal Fiscal Code, tax arrears may be paid in instalments if their immediate payment would entail considerable hardship, as long as collection of the revenue is not thereby jeopardised. An instalment agreement on this basis can be concluded for a maximum period of 12 months. Where an instalment agreement is in place, from 15 March 2020 until 30 March 2021 no interest will be charged. With effect from 1 April 2021, outstanding amounts will incur interest at the current rate of 1.38% (2% above base rate).
From 4 March until 31 March 2021, as an alternative to the generally applicable terms applying to payment by instalments, an application may be made under the Covid-19 instalment payment scheme.
In phase 1 of the Covid-19 instalment payment scheme, tax arrears due to Covid-19 can be settled over a period of 15 months from the end of April 2021 until June 2022. If repayment of the full outstanding amount by June 2022 is not possible, but 40% or more has been paid, in phase 2 of the scheme, repayment may be made within a further period of 21 months, i.e. by March 2024 at the latest.
In addition, in both phase 1 and in phase 2, a one-off rescheduling of instalments will be permitted.
As a general rule, the scheme will only apply to 'arrears due to Covid-19', i.e. arrears which arose between 15 March 2020 and 31 March 2021. It also includes arrears from periods prior to 15 March 2020 if these total less than the sum of arrears from 15 March 2020 onwards.
The 2nd Covid-19 Tax Measures Act is currently being debated by Parliament. The legislation aims to postpone the deadline for applying for payment by instalments under the Covid-19 instalment payment scheme from 31 March to 30 June 2021. Following publication of the Act in the Federal Law Gazette, the relevant information will be updated. As a result of the upcoming change in the law, at present it is not possible to apply for payment under the Covid-19 instalment payment scheme.
Extension of liability cover for bridging guarantees
A further legislative decision amends the SME Subsidy Act and the Guarantee Act 1977. As a result of these changes, the liability cover for the vital Covid-19 bridging guarantees from Austria Wirtschaftsservice mbH (AWS) and Österreichische Hotel- und Tourismusbank GmbH (ÖHT) can now be extended until the end of June 2021.
Greater transparency over crisis assistance
The government is taking a further step towards a higher degree of transparency in connection with assistance payments; in future, in addition to the existing duty of the Finance Ministry to report on payments from the Covid-19 crisis fund to the budget committee, there will also be a reporting duty on the part of individual departments within the framework of the respective technical committees.
Part of this package also consists of publication of data relating to the 'Gemeindemilliarde' programme ('One Billion for Municipalities'). Due to statutory rules, previously the Finance Ministry has not been able to provide details of applicants to the scheme. In order to enable greater transparency in connection with this programme too, the National Council has passed the Covid-19 Transparency Act. The Transparency Act aims to expand current reporting duties relating to a whole range of Covid-19 support measures and thereby to further enhance transparency.
In future, reports under the Municipal Investment Act will also contain the following information:
• Names of municipalities and municipal associations that have applied for or received a targeted grant
• Names of municipalities and municipal associations that have had their application rejected or sent back with a request for improvement
• Investment projects according to type, investment volume and project commencement for which applications have been made or for which a targeted grant has been awarded.
As a result, with effect from 1 January 2021, all relevant information concerning a municipal package will be available in the public domain for inspection.
Subsidies only for businesses that comply with tax rules
In future, federal Covid-19 support measures are intended to benefit only those businesses which have a history of compliance with tax legislation.
If a business has not been compliant and has received a subsidy, this will have to be repaid with interest (4.5% above base rate per year – i.e. currently 3.88%). Subsidies from the federal government due to the Covid-19 pandemic means grants paid out on the basis of Section 2 (2) clause 7 of the Act establishing a State-Owned Holding Company for Wind-Down Purposes ('ABBAG-Gesetz').
Accordingly, the following businesses may not receive subsidies:
• Those businesses in respect of which an abuse has been committed within the meaning of Section 22 of the Federal Fiscal Code where the tax assessment basis has thereby been changed by EUR 100,000 or more;
• Businesses which have a registered office or branch establishment in a state included on the EU list of noncooperative jurisdictions for tax purposes and which predominantly receive passive income there;
• Businesses which have had imposed upon them a non-appealable financial penalty (excluding minor offences) or a corresponding association fine based on intentional action;
• Businesses which have not been affected by way of an amount over EUR 100,000 by the prohibition on deduction (under the Corporate Income Tax Act, Section 12) or the terms of Section 10 a of the Corporate Income Tax 1988 (CFC rules, change of method). If the amounts are indicated in the tax return, a threshold of 500,000 shall apply.
The Federal Ministry for Arts, Culture, the Civil Service and Sport and the Federal Ministry of Finance will be responsible for implementation. The Act applies to subsidies, the legal basis of which became operative after 31 December 2020.
Additional enacted decisions
On 1 July 2021, a further law will enter into force by which new terms will apply to the standardised consumption tax. In future, the standardised consumption tax will create tax incentives for the purpose of privileging CO2-free/low-emission vehicles over vehicles with high CO2 emissions.
For female sanitary products of all types (e.g. sanitary pads, tampons, menstrual cups), with effect from 1 January 2021 in addition a lower VAT rate of 10% will apply, in place of the previous 20%.