What will be different in 2021? Overview of legal changes in 2021
Table of contents
The current structure of the Austrian Tax and Customs Administration has been in place for more than 15 years. During this time, the demands on the administration have changed. The digitalisation of society, the internationalisation of the economy, and an increasing complexity of legal systems are relevant drivers for this. In addition, the expectations of citizens with regard to the level of service and accessibility of the administration have changed considerably. From 1 January 2021 on, the newly created offices (Tax Office Austria, Customs Office Austria, Tax Office for Large Companies, Anti-Fraud Office, Central Services) will have a nationwide and functional orientation. The audit service for payroll taxes and contributions was already established in 2020.
Innovations in customer service
The tax administration will continue to expand its customer service in 2021. In particular, the call-back service for telephone calls is to be expanded. This means that callers can make a call-back request in case of longer waiting times and will then be called back. Appointments for personal customer contacts are also being expanded by making it possible to book an appointment online via the chatbot Fred in the future. In addition, there are going to be facilitated authentication options via FinanzOnline. This means that additional personal information can be provided. Access to FinanzOnline is also to be further expanded and facilitated.
Audit upon application
In order to increase planning security for companies and to establish more legal certainty in the case of transfer or termination of a business, companies should have a legal right to have a business audit carried out. For this reason, the external audit upon application is to be introduced. With this option, entrepreneurs should be able to obtain certainty about any existing fiscal risks. This represents a further step towards expanding the services of the tax administration. The final legal decision is still pending.
Reduction of the basic rate
For income portions above € 11,000 up to € 18,000, the wage and income tax rate was reduced from 25 % to 20 %. The income portions below this band are not taxed. This results in a relief effect of up to € 350 per year for taxpayers.
Entry into force: retroactively from 1 January 2020
Extension of the top tax rate
Portions of income above € 1 million euros are to be taxed at the top tax rate of 55 % even beyond 2020 (until 2025).
Entry into force: 1 January 2021
Increase in social insurance reimbursement
Since employees with an income of up to € 11,000 per year cannot benefit from the reduction of the basic rate, the supplement to the transportation deduction was raised from a maximum of € 300 to a maximum of € 400.
At the same time, the maximum social security bonus within the framework of the social security refund will also be increased from the previous € 300 to € 400. This results in a total relief of (up to) € 800 per year, or up to € 900 for commuters, respectively.
Applicable for the first time in the assessment for the calendar year 2020.
Recalculation obligation in favour of the employee (one-sixth of the year)
In addition to the already existing exemptions, further exemptions (including sickness benefits, nursing leave, care for the dying and care for terminally ill children) are included in connection with the preferential taxation of holiday and Christmas bonuses and exempted from the recalculation obligation. The employer’s recalculation obligation is also to be provided for cases that are positive for the employee if the one-sixth of the year has not been completely exhausted. This ensures that special payments (such as holiday and Christmas bonuses) are fully taxed at a preferential rate, even if salaries “fluctuate” during the year.
Entry into force: 1 January 2021
Introduction of a temporary loss carryback
With the possibility of a loss carryback for individuals as well as corporations, properly determined losses that are not offset in the 2020 assessment will be deducted by way of a separate application in the 2019 assessment up to an amount of € 5 million. If and insofar as deduction is not possible in the 2019 assessment, that part can be taken into account in the 2018 assessment. Within groups of companies, the loss carryback is to take place solely at the level of the group parent.
Applicable, inter alia, in case of assessment 2020
Declining depreciation for wear and tear and accelerated depreciation for buildings
As an alternative to straight-line depreciation for wear and tear (AfA), declining-balance depreciation is possible for certain assets with an unchangeable percentage of no more than 30 %. Accelerated depreciation for wear was provided for buildings.
Applicable for the first time for assets/buildings acquired or manufactured on or after 1 July 2020
VAT reduction for feminine hygiene products
In future, the privileged VAT rate of 10 % (instead of 20 %) will apply to all types of sanitary products (e.g. sanitary pads, tampons, menstrual cups).
Entry into force: 1 January 2021
VAT reduction for certain repair services
The VAT on certain repair services (bicycles, shoes and leather goods, clothing and household linen) will be reduced from 20 % to 10 %.
Entry into force: 1 January 2021
Higher deductibility of donations
If the total amount of income in the 2020 or 2021 assessments is lower than it was in 2019, the higher limit from 2019 applies, so that higher donation amounts can be deducted for tax purposes.
Applicable for assessments 2020 and 2021
Vouchers for employees
Employers can, under certain conditions, grant their employees tax-exempt vouchers up to a maximum of € 365. The vouchers must be issued in the period from November 2020 to January 2021. Ideally, the focus of issuing and redeeming the vouchers should be on regional companies.
Expansion of the job ticket
Supplementing the already existing regulation that route or network tickets for the journey between home and place of work can be provided tax-exempt by the employer, in future tax exemption of all public transport tickets paid for by the employer will be possible, irrespective of the ticket type (with the exception of single tickets and day tickets). The prerequisite is that the card is valid at least at the place of residence or work.
Entry into force: 01 July 2021
Clarification regarding preferential fiscal treatment for job cyclists
Journeys from the home to the place of work and back that are made with an employer-owned bicycle or e-bike do not lead to reduction of or exclusion from the lump sum for commuters.
Standardised consumption tax – new
The further development of the standardised consumption tax (NoVA) creates tax incentives to favour CO₂-free or low-emission vehicles compared to motor vehicles with high CO₂ emissions.
Entry into force: 01 July 2021
Preferential fiscal treatment of traction power
In order to make rail transport more attractive for passengers and goods, “green” traction power generated by railway companies themselves from renewable energy sources will be completely tax-exempt.
Entry into force: 01 July 2021
Extension/introduction of temporary COVID-19 fiscal support measures
- The tax deferrals limited to 15 January 2021 are extended until 31 March 2021.
- The measure not to charge deferral interest or impose late-payment surcharges is also extended until 31 March 2021.
- For the assessment year 2019, no arrears interest will be imposed regarding additional claims.
- The exemption from fees and federal administrative charges for documents, official acts and legal transactions that are carried out directly or indirectly as a result of the necessary measures in connection with the management of the COVID-19 crisis situation is extended until 31 March 2021.
- Events cancelled due to COVID-19 will be exempt from the lease contract fee retroactively from 1 March 2020.
- Flat-rate travel allowances to athletes, referees and sports coaches (e.g. trainers, masseurs) can continue to be paid tax-exempt until 31 March 2021 if days of service cannot take place due to COVID-19 (e.g. closed sports venues).
- The lump sum for commuters continues to be available to the same extent as before the COVID-19 crisis until 31 March 2021, despite COVID-19-related teleworking, quarantine or short-time work. In addition, allowances (for DDD work) and supplements (for overtime) paid with the current salary can continue to be treated tax-exempt until 31 March 2021 despite COVID-19-related teleworking, quarantine or short-time work.
- In the calendar year 2021, too, a flat-rate supplement of 15 % is to be considered for periods of short-time work when calculating the one-sixth of the year.
- The (privileged) one-half tax rate on the profit from the sale or cessation of the business (ordination) will continue to apply (calendar year 2021), despite return from retirement COVID-19 conditional.
- The special regulations for the performance of official acts such as hearings, taking of evidence and oral proceedings are extended until 31 March 2021.
- The reduced tax rate of 5 % in the catering, hotel, culture and books sectors will be extended for another year, i.e. until 31 December 2021.
COVID-19 instalment model
In addition to the planned extension of deferrals and the abolition of deferral interest and late-payment surcharges until 31 March 2021, a special regime (two-phase model) will be provided for the period of clearing arrears from 1 April 2021. The COVID-19 instalment scheme can cover up to 36 months and as a rule applies only to “COVID arrears”, although instalment approval may extend to arrears before 15 March 2020 in certain circumstances. In addition, a lower deferral interest rate of 2 % above the base rate is set for the period 1 April 2021 to 31 March 2024.
Increase food and grocery vouchers
As of 1 July 2020, the tax-exempt amounts for food and grocery vouchers were increased from € 1.10 to € 2, and from € 4.40 to € 8, respectively. In addition, the vouchers can now be redeemed cumulatively and regardless of the working day and the person.
Import turnover tax and e-commerce customs clearance
For parcels with a merchandise value of up to € 22, no presentation and no recording by customs are provided for. On 1 July 2021, the import turnover tax-exempt amount of € 22 will be abolished throughout the EU, and the IOSS system (Import One-Stop-Shop) will be introduced. This means that in future a customs declaration must also be made by the post office and express services for goods with a value of less than € 22. On the part of the customs administration, no more entries of customs declarations are required. Upon implementation, the results of the joint project with Post AG on IT implementation 2021 will be incorporated in order to optimally cover IT requirements as well as to design the workflow processes in connection with control actions so as to be efficient.
The European Investment Bank (EIB) becomes a climate bank
From 2021 on, the EIB will provide only financing that does not conflict with the objectives of the Paris Climate Agreement. In addition, the share of climate-relevant financing will be increased to 50 % by 2025.
Start of the conversion: 1 January 2021
The Vienna location of the World Bank (IBRD) and the International Finance Corporation (IFC) is further upgraded
The expansion of Vienna as a location for the World Bank Group will continue according to plan in 2021. The World Bank office, which currently has almost 300 employees, has gradually become one of the largest in Europe and is increasingly focusing on green reconstruction.
As a new element in the long-standing co-operation between the Ministry of Finance and the Vienna World Bank departments, a programme to support the Western Balkans in the climate sector was launched in 2020, the Western Balkans Green Recovery Support Window. Support focuses on projects to improve air quality
Strengthening fiscal policy instruments in the area of climate policy. The first projects will be implemented from early 2021 on.
The Disclosures Regulation specifies disclosure obligations on sustainability aspects for asset managers, institutional investors and for investment advisers, in particular on the inclusion of sustainability risks as well as the consideration of adverse sustainability impacts in their processes and in the provision of information on the sustainability of financial products. The Regulation essentially supplements existing reporting obligations with regard to environmentally relevant reporting.
The Regulation, which is directly applicable in the Member States, will apply from 10 March 2021. The accompanying legislation is carried out by amending numerous material laws (including the Austrian Investment Fund Act 2011, the Austrian Pension Fund Act, the Austrian Insurance Supervision Act 2016 and the Austrian Securities Supervision Act 2018) and will be introduced into the legislative process as soon as possible in 2021.
Entry into force: 10 March 2021
The Taxonomy Regulation sets out the criteria for an EU-wide mandatory classification system that defines economic activities in relation to six environmental objectives (climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, transition to circular economy, waste prevention and recycling, pollution prevention and control, protection of healthy ecosystems) in order to be able to determine the degree of environmental sustainability of an investment. The more detailed technical assessment criteria for determining whether a particular economic activity makes a significant contribution to one of the six environmental objectives or significantly affects one or more of these objectives are set out in Delegated Acts at Level 2. The necessary accompanying legislation only concerns amendments to the Disclosures Regulation and will be considered when amending the above material laws.
Entry into force: 1 January 2022 (for the environmental goals of climate protection and climate change adaptation)
Export promotion procedures and co-operation activities
a.) Third-country co-operation
In 2021, the Federal Ministry of Finance and its representative, Oesterreichische Kontrollbank, will continue to develop their instruments for export promotion, whereby on the liability side the focus will be on third-country co-operation through large domestic and foreign general contractors, national export credit agencies (especially in the so-called “DACH region”: Germany (D), Austria (A) and Switzerland (CH)) and through guaranteed purchasing credit lines to banks with good credit ratings.
b.) Financial co-operations
Financial co-operation in the field of export promotion is being further developed with selected partner countries, including the People’s Republic of China and Indonesia, by offering extended financing mechanisms under bilateral framework agreements. Austrian export companies should also benefit from these co-operation measures when implementing project plans in these countries, coming from the most diverse sectors of the Austrian economy.
Implementation: Q1 2021
Measures in the area of trade-related aid financing
The soft loan financing instruments previously offered to the export industry in order to support sustainable projects in developing and emerging countries will be supplemented by another development financing instrument with a broader sector orientation. Hand in hand with the extension of the project preparation programme due to take effect at the end of 2020, programme adjustments will also be made, among other things, with regard to the additional development financing instrument that will be offered in the future.
Implementation: Q1 2021
Continuation of COVID-19 support for exporters or developing countries, respectively
The measures taken in 2020 to mitigate the negative effects of COVID-19 will be continued if and insofar as they are justifiable in terms of risk and possible under state aid law. This concerns in particular the liquidity support in the special KRR of OeKB, as well as the fast line procedure for COVID-19-relevant projects of domestic exporters: In view of the COVID-19 pandemic and the challenging situation for domestic companies, on behalf of the Federal Ministry of Finance OeKB is providing Austrian exporters with a credit line totalling € 3 billion. This will continue to be done within the framework of the proven house bank system, through which applications by exporters are made via the respective house bank. A relatively open coverage policy of the federal government in export promotion policy will continue to contribute to stabilisation, if and insofar as it is justifiable in terms of risk.
The internationally agreed debt moratorium (Debt Service Suspension Initiative) launched in 2020 within the framework of the Paris Club/G 20 to ease the financial burden on developing countries will be continued in 2021 and possibly extended or supplemented by case-by-case debt restructuring. This also helps developing countries to overcome the effects of the COVID-19 pandemic, where not only the health system is burdened, but also relevant revenue, for example from tourism, is lost.
Custody Act: Creation of a digital collective certificate
As a significant contribution to the digitalisation and de-bureaucratisation of the financial services sector, a “digital collective certificate” for bonds and investment certificates is made possible in the Custody Act. This simplifies the process of securities issuance and makes Austria a more attractive location for Austrian and international market participants. With the introduction of the digital collective certificate, for example, the transport of collective certificates from the issuer to the central securities depository as well as the physical storage there can be waived in the future, which leads to more efficiency and sustainability, given the volume of around 8,000 collective certificates per year.
Implementation: Q1 2021
Strengthening measures to prevent money laundering and terrorist financing
Money laundering and terrorist financing are to be further reduced in Austria in 2021. Now that the Register of Beneficial Owners has been expanded into a central platform for storage of documents for the verification of beneficial owners, the digital connection of companies that fulfil due diligence obligations in order to prevent money laundering and terrorist financing is also to be accelerated. To this end, the web and change management service will be revised and improved.
The scope of the register of accounts will be extended to include safe deposit boxes and digital access to data on accounts by the Money Laundering Reporting Office and the Federal Agency for the Protection of the Constitution and Counter-Terrorism will be introduced. In addition, national co-operation and the exchange of information are to be improved, and the Money Laundering Reporting Office is to be enabled to send alerts to credit and financial institutions.
In the future, credit and financial institutions will be able to use modern artificial-intelligence-based technologies to better detect suspicious payment flows.
Further information on the register of beneficial owners is available here: https://www.bmf.gv.at/services/wiereg.html
Entry into force: 1 January 2021
National Risk Analysis II
The update of the National Risk Analysis (NRA) is to be completed in 2021. This is intended, among other things, to address the criticisms of the 2016 FATF Country Report as well as to consider the requirements of the 4th and 5th Money Laundering Directive. The NRA will consist of a summary of the results from the individual sectoral risk analyses prepared by the competent departments and authorities and will be published on the BMF website.
Audit of the European Commission on the implementation and effective application of the Money Laundering Directives
The European Commission is expanding its review process on the implementation of money laundering provisions in the Member States to include an effectiveness review, as the effective application of the ML Directive is essential, and many deficiencies in the administration and system of combating ML/TF were identified. Pursuant to Art. 65 of the 4th and 5th ML Directive, the EC must submit a report on the implementation of this Directive by 11 January 2022 and every three years thereafter. Austria supports this approach, since in the fight against money laundering and terrorist financing it is clear that not only the formal transfer of European regulations into national law is sufficient, but their effective application is paramount. Austria will be audited in the period May 2021 to July 2021 by the Council of Europe, which has been mandated by the EC for this purpose and which will also conduct on-site visits.
The process does not provide for ratings or publication of individual country reports; instead, there will be a comprehensive EC report to the European Parliament and the Council. From this report, new legislative proposals by the EC to improve the fight against money laundering and terrorist financing may be expected.
European Commission legislative proposals to improve the system for preventing and combating ML/TF
New techniques and new products on the financial markets naturally also necessitate further development of the European legal framework for combating money laundering. The EC therefore published its Action Plan to improve the prevention of ML/TF at the EU level on 7 May 2020. This is intended to address the weaknesses identified in the past. In addition to numerous measures covering 6 pillars of the Action Plan, further harmonisation of the EU legal framework and a ML/TF supervisory mechanism at EU level are central. In the process, parts of the ML Directive are to be transferred into a European regulation and specified. In addition, an adaptation to the current standards of the FATF is to take place, as well as better interaction with other legislation and the consideration of provisions in the member states that go beyond the current ML Directive. The Action Plan leaves open whether ML/TF supervision at the EU level should apply only to obligated parties in the financial sector. The Council Conclusions adopted in November 2020 prioritise the harmonisation of the EU legal framework and a European supervisor responsible for the risk-based supervision of a selected group of obligated parties in the financial sector and virtual currency providers.
National Financial Education Strategy for Austria
The Federal Ministry of Finance, together with the OECD and the European Commission, is developing a national financial education strategy for Austria. Increasing complexity of financial markets and financial products, rapidly advancing digitalisation, recurring fraudulent incidents in the (online) financial services sector and the need to increasingly deal with preparations for the future require a steadily increasing level of financial education and financial literacy. The goal of the national financial education strategy is to ensure that Austrians become more aware of the importance of financial education, that the necessary knowledge is better communicated across the board, and that targeted measures are taken to increase financial education.
Higher financial literacy enables people to make informed decisions about their personal available budget and consumption issues and to better assess the risks and opportunities of financial, pension and savings products. In addition, financial education should address how to deal with different forms of financing, promote an active approach to making provisions for the future, and highlight the effects of debt.
The national financial education strategy is to be presented in a strategy paper in the form of an action plan and implemented in co-operation with Austrian stakeholders from the financial education sector from autumn 2021 on. In the course of the national financial education strategy, the Federal Ministry of Finance is also expected to contribute a concrete measure for the implementation of the national financial education strategy.
Development: by 31 August 2021
Implementation: from 1 September 2021
Customs corridor Port of Trieste – Villach/Fürnitz
The Austrian customs administration, in co-operation with the Italian customs administration, is planning to establish a cross-border customs corridor between Trieste (Italy) and Villach/Fürnitz. This is intended to enable transport of goods imported into the EU via the port of Trieste without further customs formalities to Villach/Fürnitz in the so-called custody warehouse by rail. As customs clearance of the corridor goods takes place only in Villach/Fürnitz, this represents a considerable simplification for the economic operators.
Planned: until mid-2021
New regulation on market surveillance and conformity of products
On 16 July 2021, Regulation (EU) 2019/1020 will become applicable, creating a new framework for the enforcement of existing market surveillance and product safety rules. The central point is that Member States must take increased and effective enforcement measures to prevent non-compliant and unsafe products that pose a risk to citizens from entering the Union market. Customs will therefore carry out increased checks on product safety regulations whenever goods are to be imported from third countries.
Entry into force: 16 July 2021