Part II

Developments in the Member States

more than seven percentage points above the EU-27 average in 2010 (40.5 %, EU-27 33.4 %): slightly increasing
after the 2009 drop which was caused by the income tax reform.

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The share of taxes on capital in GDP (6.4 %) is slightly below the EU-27 average and below the euro area average
(EU-27 6.6 %, EA-17 7.2 %). This is partly due to the fact that the tax on capital stocks and wealth yield
considerably less than in the euro area (1.0 % of GDP, EA-17 1.9 % of GDP). Moreover, capital taxes raised on
income of corporations in relation to GDP are in general low (2.0 %, EU-27 2.7 %) because of the large number of
unincorporated businesses in Austria. Nevertheless the fluctuations in the ITR on capital basically reflect the
developments in the ITR on corporate income. The 2001 hike in the ITR of capital was caused by increased
corporate tax prepayments, in reaction to the introduction of interest payments on tax arrears for corporations. The
fall of the ITR on capital by 2.5 percentage points in 2005 is also driven by the fall in the ITR on corporations, in
line with the decrease in the corporate income tax rate from 34 % to 25 %. Since 2008, the ITR on capital has been
slightly above the Euro area average (EA-17: 23.7% in 2010).
Environmental taxes gradually increased until 2003 but have fallen back to their 2000 ratio since, also due to the
declining energy intensity of the economy. Their revenues in 2010 are below the EU-27 average (2.4 % of GDP,
EU-27 2.6 %). The contrasting increase in the implicit tax rate on energy reflects the rise in mineral oil taxes on
gasoline and diesel in July 2007 as well as the shift towards energy products that are used for transport purposes
and taxed at higher rates. Transport taxes are relatively important in Austria, contributing nearly one third to the
overall revenue from environmental taxes, compared to an EU-27 average share of only one fifth.
Current topics and prospects; policy orientation
After the advanced tax reform targeting an annual tax relief of about 3 billion (1.1 % of GDP) relief in the
income tax system ( 2.3 billion), relief of families ( 0.5 billion) in 2009 (Steuerreformgesetz 2009), no major
changes to the tax system were introduced in 2010. In 2011, capital gains of financial assets were made subject to a
final withholding tax of 25% and capital income tax rates were harmonised at 25 %. A solidarity bank levy based
on the balance sheet total and a solidarity levy on derivative positions in the trading book were introduced.
Environmental tax measures covered an introduction of a flight tax, an adjustment of the car registration tax to the
CO2 emission of the vehicles, and an increase in the mineral oil tax of diesel and petrol. Furthermore, excise duties
on tobacco were increased significantly in three steps, in January and June 2011 and in January 2012.
The 2012 budget law does not include any significant tax measures. However, the recently announced stability law
contains several revenue raising measures. Measures comprise a temporary progressive solidarity contribution for
high incomes (from approximately 186 000), and the reduction of the state premium for building saving and
(third pillar) pension saving. Social contribution rates for farmers and self-employed are increased and an
additional increase of the ceiling for the SSC base is planned. Moreover, unemployment contributions will be
levied on formerly exempt older workers (from 59 onwards) until they reach the legal minimum retirement age.
Employers terminating an employment contract will be subject to a process fee. Deductibility and reclaiming input
VAT will be restricted. Mineral oil tax reimbursement for agriculture and public transport is abolished. The loss
deductibility for losses made in foreign subsidiaries is restricted in the group taxation. Capital gains stemming
from rezoning of land property will be taxed and the holding period, after which realised gains from real estate
sales are tax exempt, is abolished (formerly 10 years). Additional tax revenues are expected from the introduction
of the financial transaction tax (if introduced on an EU/Euro area level), a bilateral tax agreement with Switzerland
on untaxed interest and dividends of Austrian citizens and in the context of a tax amnesty for self-reporting of
undeclared assets held in Switzerland. Furthermore, the introduction of an additional stability surcharge on banks
is foreseen, as well as an advance tax payment on certain company pensions.

Main features of the tax system

Personal income tax
Austria has a comprehensive and progressive personal income tax scheme. During the 2004/2005 tax reform a new
system with four brackets came into force in 2005 replacing the old five bracket system. From 2005 till 2008, the
four brackets had marginal rates of 0 %, 38.333 %, 43.596 % and 50 %. With the 2009 tax reform the marginal tax

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Taxation trends in the European Union