Eco-social tax reform 2022 passed: overview of key measures for tax relief and greening

On 20 January 2022, further points of the ‘Eco-social tax reform 2022’, which has been the subject of much debate, were agreed by the Austrian Parliament. The reform contains relief measures in the area of taxes and social security, as well as measures that promote greening in Austria and thus make a significant contribution to achieving climate goals.

Tax relief measures

• Reduction of wage and income taxes

The rate for the second bracket will be reduced from 35% to 30% on 1 July 2022 and the rate for the third bracket will be reduced from 42% to 40% on 1 July 2023.

The reduction of the tax rate in the first bracket from 25% to 20% took place in 2020.

• (No) reduction of health insurance contributions – increase of deductible amount for transport

Instead of the original plan to grade health insurance contributions, the surcharge to the deductible amount for transportation tax credit for low-income earners will be increased from the current EUR 400 to EUR 650. This will apply for tax assessments from 2021.

• Tax-free employee participation in profits

The maximum amount of relief per employee will be EUR 3,000 per year.

Prerequisites to claim relief:

• Payments must continue to be offered to all employees or specific groups of employees.
• The payment is not made as a result of wage regulation provisions under Sec. 68 para 5 subparas 1 to 6 Austrian Income Tax Act (EStG) (in particular, dirt and heavy labour allowance).
• Must not be paid instead of previously paid wages or a standard wage increase.

The exemption will apply for all profit participations which are granted from 1 January 2022.
 

• Increase of Family Bonus Plus

From 1 July 2022, the current Family Bonus Plus will be increased from an annual amount per child of EUR 1,500 (EUR 125 per month) to EUR 2,000 (EUR 166.68 per month). For children over 18 years, for whom the Family Bonus Plus can still be claimed, the deduction will be increased from an annual amount of EUR 500 (EUR 41.68 per month) to EUR 650 (EUR 54.18 per month). The additional allowance for children (‘Kindermehrbetrag’) will be increased from EUR 250 to EUR 450.

• Increase of the threshold for low-value assets

From 1 January 2023, the threshold for immediate depreciation of low-value assets will be increased from EUR 800 to EUR 1,000.

• Home office allowance

The home office allowance is intended to cover general expenditure in connection with working from home. A maximum tax-free amount of EUR 300 may be granted per year, this means a maximum of EUR 3 per home office day for a maximum of 100 home office days per year.

>> Important note: It is not possible for the home office allowance and the commuter allowance to be granted for the same working day.

>> Practical tip: The home office allowance can be considered in ongoing payroll accounting and/or in the context of the employee tax assessment / income tax return.

• Workspace allowance for self-employed persons

A distinction is made between the ‘large’ and ‘small’ workspace allowance:

• An entitlement to a ‘large workspace allowance’ in the amount of EUR 1,200 per year exists if no additional income from an active gainful activity exists for which the taxpayer has access to a space or a workroom outside of the home, and/or if the income from the other activity does not exceed EUR 11,000 per year.
• An entitlement to a ‘small workspace allowance’ in the amount of EUR 300 per year exists if the taxpayer has access to another space outside of the home and the EUR 11,000 threshold is exceeded by other income of the taxpayer.

In addition, expenditure for ergonomic furniture is deductible to a maximum amount of EUR 300 for the tax years 2020 and 2021. The prerequisite is that the employee works from home for at least 26 days per calendar year.
 

• Tax-free amounts for meal vouchers continue to be valid for homeworking

The max. EUR 8 tax-free meal vouchers, which employers may grant to employees on a voluntary basis, will remain valid when working from home – as has been the case since the start of 2020.

The tax reform also contains other measures, such as:

• Reduction of corporate income tax
• Introduction of an investment allowance
• Increasing the basic allowance for the profit allowance

Details can be found in the following tax newsletters:

Ökosoziale Steuerreform 2022: Begutachtungsentwurf im Überblick

Eco-social tax reform 2022: Changes to the draft legislation

Greening measures

Carbon pricing (further information here)

• Regional climate bonus

From 2022, natural persons have an entitlement to the ‘regional climate bonus’ – graded at EUR 100, EUR 133, EUR 167 and EUR 200 – to mitigate the effects of carbon pricing. The amount depends on the municipality of residence.

• Insulation of buildings and replacement of heating systems

From 2022, if certain requirements are fulfilled, it will be possible to claim costs for insulating buildings and/or replacing fossil-fuel heating systems with environmentally friendly heating systems in the private domain.

If you have any questions about these points or require further information, please get in touch.