Blümel: Robust assistance measures impact on tax administration balance sheet for 2020
Tax administration essential to tackling crisis
For 2020, the Austrian tax administration has published a clearly positive initial set of figures. In order to achieve this, it was essential that, at the beginning of the crisis, the tax administration swiftly developed solutions responding to the situation of closed tax offices, working from home and new IT processes. The 11 000 employees of the tax administration proved themselves to be robust partners to business and to all Austrian citizens during the crisis, working at high pressure on the assistance measures to be provided. One example of this is the work invested in direct turnover compensation for November and December; here, in 66 days, the tax administration received and processed over 250 000 applications. Of these, 212 000 were approved, with funds totalling just under EUR 3 billion paid out. By way of comparison, in Germany, up to the end of 2020, according to an analysis by the German Economic Institute, in relation to assistance for November and December, only 4 % had been paid out due to IT problems.
Tax relief granted by Finance Ministry totalling EUR 6.5 billion
Immediately following introduction of the first measures in the fight against the pandemic, it was already possible to foresee that many businesses had an increased need for liquidity. For this reason, the Austrian federal government swiftly decided to enable businesses to apply for deferral of their tax payments. By 31 December 2020, tax relief had been approved by the Finance Ministry in a total sum of EUR 6.5 billion.
According to Finance Minister Gernot Blümel, "Through these swift and unbureaucratic tax relief measures, we have been able to provide Austrian businesses with the liquidity vital to their survival, mostly within just 24 hours."
Of this sum, EUR 4 billion related to around 300 000 applications for reduction of payments on account in respect of income tax and corporate income tax. Almost 85 % of the affected businesses are small businesses with annual turnover of up to EUR 0.7 million. The remaining sum of approximately EUR 2.5 billion related to deferred payment terms in the form of payment extensions and instalment payments for around 317 000 applications. This relief is largely benefiting (by way of 69 % of applications) small businesses with annual turnover of up to EUR 0.7 million.
Of the total applications, numbering over 600 000, almost 99 % were processed on the day of application, meaning that the affected businesses received rapid assistance.
An attractive instalment plan enabling more effective budgeting
The Ministry of Finance has offered deferrals on tax payments due to Covid-19, which have been extended until 31 March 2021. This has been a key measure enabling liquidity to be secured during the pandemic.
Blümel: "So that businesses can now reduce these arrears as efficiently as possible, as an alternative to immediate repayment the tax administration is offering an attractive new system of payment by instalments. As a result, businesses will have greater flexibility, as well as fiscal and economic budgeting certainty."
With this new model, tax arrears may be repaid over an extended period at a far more favourable interest rate. Previously, the statutory instalment plan comprised a total maximum period of 12 months and an interest rate of 4.5 % above the base rate. The new concept comprises an extended maximum repayment period of 36 months instead of the previous 12, as well as a reduction in the interest rate from 4.5 % to just 2 % above base rate. In addition, deliberations are currently ongoing regarding a further extension to tax deferrals.
Digital future of the tax administration
On 1 January 2021, modernisation of the tax administration was completed and took effect. The old structure of the Austrian tax and customs administration had existed for over 15 years. During this period, the requirements of the administration and digital possibilities have changed. In the context of the modernisation, four guiding principles were at the forefront: regional, rapid, efficient and attractive. Furthermore, digital services such as FinanzOnline, which enjoy a very high level of acceptance, are being further expanded.
These further developments are creating concrete advantages for Austrian citizens: simple and automated digital services, shorter procedures in the context of open 'bulk processes' such as employee tax assessment and family allowances, assurance of high quality and service standards, and the retention of regional contact partners.
Businesses too are benefiting from the modernisation, through prompt monitoring with a high degree of legal certainty, efficient digital audits, a co-operative form of tax collection and powerful tools to combat fraud for the purpose of ensuring fair competition. For the employees of the tax administration, the reform above all secures regional jobs and ensures a fair distribution of workload. From the perspective of the state, the aspect of securing tax revenues over the long term is also essential.
Record figures
In 2020, around 5.5 million employee tax assessments were completed, covering the assessment years from 2019 going back to 2015. According to Director General Dr Angelika Schätz, "Around 90 % of the 5.5 million assessments led to a tax credit. Overall, in 2020 tax credits totalling EUR 2.9 billion were paid out. While, in 2019, the tax administration took on average 24 days for processing, the average for 2020 was just 21 calendar days." And as Gernot Blümel has stressed, "Our aim is to continue steadily reducing processing time for employee tax assessments. The fact that we have succeeded in this in 2020 despite the challenging framework conditions gives me particular cause for rejoicing. My colleagues at the tax administration have responded to the exceptional circumstances of the pandemic with the highest degree of professionalism, and I wish to express my sincere gratitude to them."
Percentage of payroll tax account settlements via FinanzOnline now 76%
Around 4.2 million of 5.5 million transactions have been submitted electronically via FinanzOnline. This represents a ratio now totalling 76 %, a significant increase on the level of 72 % recorded in the previous year. "As a result of the improvements which we have been able to implement in FinanzOnline over the past few years, the level of acceptance among Austrian citizens for digital settlement of their tax accounts has increased sharply. Our chatbot Fred, available 24 hours a day, has also contributed towards increasing demand for our online services," affirms Blümel.
According to Director General Dr Angelika Schatz, "The age range of FinanzOnline users extends from the age of 4 to 105. We are proud that, last year, already over 600 000 senior citizens used our online service provision, submitting their tax returns via FinanzOnline."
Automatic employee assessment rises by 13%
Around 1.6 million employee assessments were so-called automatic employee assessments. These are fully automated assessments, where taxpayers receive an automatic repayment of overpayments of payroll taxes made in the previous year. In 2020, this totalled around EUR 295 million for the 2019 tax year.