Investment-based profit allowance § 10 EStG
The profit allowance under Section 10 of the Austrian Income Tax Act (EStG) can be claimed by individuals generating business income. Its purpose is to encourage investments and relieve taxable income by reducing the tax base.
The profit allowance is divided into a base allowance and an investment-based profit allowance.
If a taxpayer opts for a flat-rate income tax calculation, only the base allowance is available, not the investment-based profit allowance.
The base allowance applies to annual profits up to EUR 33.000,- and amounts to 15% of the profit, resulting in a maximum base allowance of EUR 4.950,- (for 2024), which is automatically deducted from the tax base.
For profits exceeding EUR 33.000,- the allowance must be covered by certain qualifying investments.
The investment-based profit allowance is structured as follows:
| for profits between EUR 33.000,- and EUR 145.000,- | 13% |
| for the next EUR 175.000,- | 7% |
| for the next EUR 230.000,- | 4,5% |
A maximum profit allowance of EUR 46.400,- can be claimed per year.
Qualifying investments include:
- depreciable tangible fixed assets, and
- certain securities, such as:
- special bonds
- Austrian federal treasury coupons
- investment funds and real estate investment funds
It is essential that the assets have a useful life of at least four years and are qualified as domestic business assets for this period. If the assets are removed from the business assets before the end of this holding period, a subsequent taxation will be applied. In the case of qualifying securities, subsequent taxation within the holding period can, under certain circumstances, be avoided through replacement acquisition.
Certain assets are generally excluded from the profit allowance. These include:
- vehicles
- used assets
- depreciable assets with acquisition costs under EUR 1.000,- (low-value assets)
- assets for which an investment allowance has been claimed
Investment allowance § 11 EStG
The investment allowance under Section 11 of the Austrian Income Tax Act (EStG) can be claimed by individuals and legal entities that generate business income.
If a taxpayer opts for a flat-rate income tax calculation, the investment allowance is not available.
The investment allowance is calculated based on the investment amount and constitutes an additional business expense. It does not affect acquisition costs and, therefore, does not reduce depreciation of assets.
Eligible for the investment allowance are investments in depreciable fixed assets with a useful life of at least four years.
The investment allowance amounts to 10% of acquisition or production costs. For investments in the area of greening, the investment allowance increases to 15%.
The investment allowance can be claimed on acquisition or production costs of up to EUR 1.000.000,- per fiscal year. If the fiscal year is shorter than 12 months, this maximum amount must be pro-rated.
Unlike the investment-based profit allowance, the investment allowance can be claimed regardless of whether a profit or loss is generated in the current fiscal year. Another key difference is that the investment allowance can be claimed on the purchase of motor vehicles with a Co2 emission of 0 grams (e.g. electric vehicles).
The investment allowance cannot be claimed for certain assets, including:
- assets used for the investment-based profit allowance
- motor vehicles (except electric vehicles)
- used assets
- depreciable assets with acquisition costs under EUR 1,000 (low-value assets)
- intangible assets that are not related to digitalization, ecological improvements, or health/life sciences
If the assets are removed from the business assets before the end of the four year holding period, a subsequent taxation will be applied
If we can assist you with questions regarding the claim of the above-described allowances, please do not hesitate to contact us at office@vanas.at or +43 1 312 505.
We are looking forward to hearing from you!
