Insights
TAX & BUSINESS
Fraud Prevention Act 2025
The federal government aims to implement further reforms in the area of fraud prevention with the Fraud Prevention Act.
Income tax
In the construction sector the client liability in cases of temporary employment is expanded. If the provision of construction services is transferred from one company to another wholly or partially, the client‑ordering entrepreneur is currently liable for the wage‑related taxes to be collected by the tax office up to a maximum of 5% (or for social security contributions up to 20%) of the contract work price. From 1 January 2026 the liability for services provided in the form of temporary employment will be 8% for wage‑related taxes and 32% for social security contributions, thus increased to a total of 40%.
Where foreign foundations are comparable to an Austrian foundation, grants from such foundations, as well as those from Austrian private foundations, are already taxed as income from capital assets. To prevent related abusive arrangements, the scope of capital‑asset taxation will be expanded, so that only the comparability with a “private law foundation”, i.e. abstractly the existence of a foundation‑like entity, will be considered.
Value‑added tax
Currently the rental of land (real estate) for residential purposes is subject to a 10% VAT, which entitles the landlord to deduct input tax on related expenses. The rental of particularly prestigious properties (“luxury real estate”) for residential purposes will in the future be strictly non‑taxable (without the option to opt for tax liability), and the right to deduct input tax in connection with these properties will no longer apply.
Such a property is deemed to exist when the acquisition and/or production costs for the land for residential purposes, including ancillary buildings (e.g. garages, garden houses) and other structures (e.g. swimming pools), exceed EUR 2 million within a period of five years from acquisition or the start of production. For apartment buildings or properties that are typically intended for the rental of multiple residential units (e.g. a tenement house), the cost threshold is assessed on each individual rental unit. Services provided by condominium owners’ associations for the maintenance, administration or operation of such a property are also covered. The provision applies to properties acquired or produced after 31 December 2025.
Amendments to the Fiscal Penal Code
Changes are also planned to the Fiscal Penal Code. Among other things, the scope of the reduction surcharge will be expanded. In the future it can be applied to assessed additional tax demands of up to EUR 100,000 (maximum EUR 33,000 per assessment period). Where the sum of tax demands exceeds EUR 55,000, the reduction surcharge increases from 10% to 15%.
Furthermore, a new offence of tax evasion in the case of unjustified losses will be created. In the future it will be punishable – in addition to causing a tax reduction – for someone to intentionally declare losses without justification that could be claimed as income‑reducing in future assessment periods. In the case of unjustly declared losses, tax evasion is effected by the issuance of the notice or decision that records the unjustly declared loss.
In the construction sector the client liability in cases of temporary employment is expanded. If the provision of construction services is transferred from one company to another wholly or partially, the client‑ordering entrepreneur is currently liable for the wage‑related taxes to be collected by the tax office up to a maximum of 5% (or for social security contributions up to 20%) of the contract work price. From 1 January 2026 the liability for services provided in the form of temporary employment will be 8% for wage‑related taxes and 32% for social security contributions, thus increased to a total of 40%.
Where foreign foundations are comparable to an Austrian foundation, grants from such foundations, as well as those from Austrian private foundations, are already taxed as income from capital assets. To prevent related abusive arrangements, the scope of capital‑asset taxation will be expanded, so that only the comparability with a “private law foundation”, i.e. abstractly the existence of a foundation‑like entity, will be considered.
Value‑added tax
Currently the rental of land (real estate) for residential purposes is subject to a 10% VAT, which entitles the landlord to deduct input tax on related expenses. The rental of particularly prestigious properties (“luxury real estate”) for residential purposes will in the future be strictly non‑taxable (without the option to opt for tax liability), and the right to deduct input tax in connection with these properties will no longer apply.
Such a property is deemed to exist when the acquisition and/or production costs for the land for residential purposes, including ancillary buildings (e.g. garages, garden houses) and other structures (e.g. swimming pools), exceed EUR 2 million within a period of five years from acquisition or the start of production. For apartment buildings or properties that are typically intended for the rental of multiple residential units (e.g. a tenement house), the cost threshold is assessed on each individual rental unit. Services provided by condominium owners’ associations for the maintenance, administration or operation of such a property are also covered. The provision applies to properties acquired or produced after 31 December 2025.
Amendments to the Fiscal Penal Code
Changes are also planned to the Fiscal Penal Code. Among other things, the scope of the reduction surcharge will be expanded. In the future it can be applied to assessed additional tax demands of up to EUR 100,000 (maximum EUR 33,000 per assessment period). Where the sum of tax demands exceeds EUR 55,000, the reduction surcharge increases from 10% to 15%.
Furthermore, a new offence of tax evasion in the case of unjustified losses will be created. In the future it will be punishable – in addition to causing a tax reduction – for someone to intentionally declare losses without justification that could be claimed as income‑reducing in future assessment periods. In the case of unjustly declared losses, tax evasion is effected by the issuance of the notice or decision that records the unjustly declared loss.