New developments in the valuation of benefits in kind: Interest savings – modifications of the valuation of benefits in kind as of 1 January 2024

The amendment to the Austrian Ordinance on the Valuation of Certain Benefits in Kind regarding interest savings includes new provisions on salary advances and employer loans bearing no or low interest.

Interest savings on salary advances and employer loans

As of 1 January 2024 new methods for calculating interest savings on salary advances and employer loans bearing no or low interest are applicable based on the amended Austrian Ordinance on the Valuation of Certain Benefits in Kind.

The allowance of EUR 7,300 remains unchanged. For salary advances and employer loans up to this amount no benefit in kind is to be recognised. If the allowance is exceeded, the benefit in kind is to be calculated only from the amount exceeding the allowance.

NEW: Based on the amendment to the Austrian Ordinance on the Valuation of Certain Benefits in Kind, when calculating the amount of the benefit in kind, a distinction between loans/advances bearing variable, fixed or no interest rate is to be made.

Variable debit interest rate

The applicable legal situation is still applied. Therefore, it is irrelevant whether the loan agreement between employer and employee was concluded prior to or after 1 January 2024. The interest rate benchmark relevant to the calculation of the benefit in kind is determined every year and is set by the Austrian Federal Minister of Finance every year latest on 30 November for the following year. The interest rate benchmark for the year 2024 is 4.50%.

The difference between the interest rate benchmark and the agreed variable debit interest rate is to be taken into account in the calculation of the benefit in kind.

Therefore, different amounts of the benefit in kind can be determined for individual calendar months since, on the one hand, the agreed debit interest rate is variable and, on the other hand, the interest rate benchmark is fixed.

Fixed debit interest rate

Employer loans and salary advances bearing a fixed interest rate are subject to the new legal situation as of 1 January 2024.

The interest rate benchmark is calculated once at the time the loan agreement is concluded. The interest rate benchmark is the “lending rate for new business to households for house purchases with initial rate fixation over 10 years” less a discount of 10% published by the Oesterreichische Nationalbank (Austrian National Bank) for the month in which the agreement is concluded. The interest rate for the benefit in kind, calculated as the difference between the interest rate benchmark and the agreed fixed debit interest rate, remains unchanged for the total repayment period.

HINT: Salary advances and employer loans agreed upon prior to 31 December 2023 are subject to the new legal situation as of 1 January 2024, unless the employee objects until 30 June 2024. In case of objection, the yearly changing variable interest rate benchmark is still applied.

No debit interest

The same provisions applying to fixed debit interest rates apply to salary advances and employer loans bearing no interest.

If your payroll accounting is affected by the new provisions, please do not hesitate to contact the People and Organisation team for any advice related to their interpretation or implementation.