As we move into the new year, there are also a number of tax changes that may be of interest to our clients. In the following, I would like to provide a brief overview of the expected changes in the areas of income tax, VAT and other variable values as well as the ORF contribution.

Income tax outlook 2024:

With the entry into force of the Progression Settlement Act 2024 from January 1, 2024, inflation-neutral income taxation will be newly regulated. This change includes not only the adjustment of the tariff levels and certain deductible amounts, but also other tax measures.

  1. Tariff levels and deductions:

    The entry level, also known as the “minimum subsistence level”, will be increased by 9.6% to €12,816. The threshold amounts for the various tariff levels are now set as follows:

    • Level 2 (20 %): € 20,818
    • Level 3 (30 %): € 34,513
    • Level 4 (40 %): € 66,612
    • Level 5 (48 %): € 99,266

    In addition, the dependent deductions, such as the transport deduction (€ 463), the supplement to the transport deduction (€ 752) and the pensioner deduction (€ 954), were increased.

    Profit allowance (GFB):

    The profit allowance for income taxpayers will be increased. The basic tax-free allowance increases to profits of up to €33,000, which means that €4,950 (15% of €33,000) is automatically deductible as a business expense. The maximum amount for the investment-related profit allowance in all stages increases to € 46,400.

    Incentive for overtime:

    In order to create incentives for overtime, the tax benefits for overtime bonuses will be extended. In 2024 and 2025, bonuses for 18 hours of overtime per month of up to € 200 can be paid tax-free. From 2026, this amount will be increased to €120 per month for 10 hours of overtime, compared to €86 previously.

    Increase in further tax concessions:

    The allowance for dirt, hardship and danger bonuses (SEG) and for bonuses for Sunday, public holiday and night work (SFN) will be increased to €400 per month. All regulations regarding working from home that applied from 2021 to 2023 will be continued indefinitely from 2024, including the home office allowance. Both the tax-free allowance for childcare will be increased to €2,000 per year and the age of the “beneficiary” child will be raised from 10 to 14 years. From 2024, subsequent reimbursement of costs by the employer directly to the employee will also be recognized, similar to the processing of public transport tickets.

    These changes also have an impact on other (marginal) amounts, including the large workplace allowance and the tax declaration obligation for income that does not include income subject to income tax and exceeds €12,816. In addition, medical expenses for low-income (spouses) can be deducted as extraordinary expenses if they would fall below the tax threshold of €12,816.

    Please note that the abolition of cold progression is aimed exclusively at the income tax rate and does not represent a general adjustment of all amounts in the Income Tax Act. Other deductions such as mileage allowance, luxury allowance or commuter allowance have different bases and are not linked to the tariff.

    Increase in the employer’s contribution for marginally employed persons:

    From January 1, 2024, the employer contribution will be increased to ensure that the employment of several marginally employed persons is not more favorable for employers than the employment of fully insured employees. This levy has so far included the employer’s health and pension insurance contributions and will be extended to include an unemployment insurance contribution of 3%. The employer’s contribution must be paid if the sum of the contribution bases from marginal part-time employees exceeds the monthly amount of € 777.66. For employment relationships subject to ASVG, the DG contribution is 20.5%, less the accident insurance contribution of 1.1% for employees over 60 years of age.

    The additional revenue will flow into the Unemployment Insurance Fund and the Insolvency Remuneration Fund, which will enable a slight reduction in the unemployment contribution of 0.1%. From January 1, 2024, this contribution will be 5.9% (6%), half of which will be paid by the employee and half by the employer.

    Value added tax:

    Another innovation concerns the VAT exemption for photovoltaic modules. The Budget Accompanying Act 2024 introduces a temporary VAT exemption for the supply, purchase, import and installation of photovoltaic modules from January 1, 2024 to December 31, 2025. A zero tax rate is applied without the loss of the input tax deduction.

    There are certain framework conditions to be observed, such as the limitation of the bottleneck capacity to 35 KWp and the use of the system on or near buildings that are used for residential purposes, buildings that are used by public corporations or buildings that are used by non-profit, charitable or ecclesiastical institutions.

    Other variable values:

    • The building society premium for the calendar year 2024 remains unchanged at 1.5 % of the building society contributions eligible for the premium, up to a maximum of € 18.

    • There are some changes for the 2024 vignette year, including the introduction of a 1-day vignette as a new digital product. These changes affect the validity period of the vignettes, in particular the 2-month vignette and the annual vignette.

    • The service fee for the e-Card in 2024 is €13.35 for persons who are in employment subject to compulsory health insurance on November 15.


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