Budget Accompanying Act 2025: Overview of Highlights

Overview

On May 2, 2025, the Federal Ministry of Finance (BMF) published the draft of the Budget Accompanying Act 2025 (“BBG 2025”) for review. Selected changes introduced by the BBG 2025 are presented below. 

Income Tax

Introduction of Rezoning Surcharge (“Umwidmungsabgabe”)

For business and non-business income from the sale of rezoned land, a 30 % rezoning surcharge will be introduced. This surcharge must be added to the calculated gain or positive income. If a loss results from the property sale, no surcharge is applied.

Only rezoned land is subject to this surcharge. Gains from buildings erected after rezoning are not affected. The surcharge applies regardless of whether the property is considered “old assets” (“Altvermögen”) or “new assets” (“Neuvermögen”), and the type of income calculation or applicable tax rate (special tax rate or progressive tax rate) does not influence its application.

The surcharge is based on the capital gain or surplus, not the selling price. It is capped at the amount of the sale proceeds. If the total of the capital gain and surcharge exceeds the sales proceeds from land disposal, the taxable income will be capped at the sales proceeds.

The surcharge refers to the concept of rezoning under § 30 para 4 of the Austrian Income Tax Act (EStG). Rezoning is considered effective when the relevant regulation takes effect, or the assessment notice becomes legally binding. The general rules on the timing of property sales apply.

Lump-sum deduction of business expenses (“Basispauschalierung”)

For the assessment years 2025 and 2026, the lump-sum deduction will be expanded. The annual revenue threshold will increase from EUR 220,000 to EUR 320,000 and the lump-sum business expenses from 12 % to 13.5 %. From 2026 onwards, the threshold will rise to EUR 420,000 and the lump-sum expense rate to 15 %.

Commuter allowance (“Pendlereuro” and Social Security Refund)

As partial compensation for the abolition of the Climate Bonus, the commuter allowance will be raised from EUR 2 to EUR 6 starting in 2026.

The maximum refund for employees entitled to the commuter allowance will be increased from EUR 608 (2025 value) to EUR 737, with another inflation adjustment for 2026.

No Indexation of Family Benefits and Partial Inflation Adjustment

As part of budget consolidation, the indexation of certain family benefits will be suspended for 2026 and 2027, including the child tax credit (“Kinderabsetzbetrag”).

Additionally, from 2026 to 2029, only two-thirds of the positive inflation rate will be automatically applied to adjust the income tax brackets. The remaining one-third, considered a “political” share, will be suspended.

Tax-Free Employee Bonus

In 2025 and 2026, employers may grant a tax-free employee bonus of up to EUR 1,000. Group-based criteria are not required; individual bonuses are permitted but must be operationally justified and objectively reasonable.

Bonuses must be additional payments not typically granted. Regular bonuses or extraordinary salary increases are excluded.

Bonuses from multiple employers or the combination of the EUR 1,000 tax-free bonus with a tax-free profit share of up to EUR 3,000 trigger mandatory tax assessments. A maximum of EUR 3,000 per year can be tax-free.

Foundation Entry Tax Act

Tax Rate Increase

From January 1, 2026, the tax rate for contributions to private foundations will rise from 2.5 % to 3.5 %.

Value-Added Tax Act

VAT Exemption for Contraceptives and Feminine Hygiene Products

Starting January 1, 2026, contraceptives and feminine hygiene products will be exempt from VAT with full input VAT deduction rights.

Lump-sum deduction of VAT (“VSt-Pauschalierung”)

The lump-sum input tax deduction remains at 1.8 % of total revenue under § 22 and § 23 EStG. Due to the increased income tax thresholds, the deductible input tax cap will be adjusted to EUR 5,760 for 2025 and EUR 7,560 from 2026.

Real Estate Transfer Tax Act

In the area of the Real Estate Transfer Tax Act, stricter regulations are planned for share deals, i.e. the transfer of shares in partnerships and corporations that own real estate. Specifically, the draft of the 2025 Annual Tax Act (BBG 2025) includes the following provisions:

Change of Shareholders – Lowering the Ownership Threshold

A shareholder change that triggers real estate transfer tax (RETT) will occur when at least 75% (instead of the previous 95%) of the shares in the partnership assets or in the company are transferred to new shareholders within seven years. For corporations traded on stock exchanges, such a shareholder change will be disregarded due to the lack of traceability of share transfers on the stock market.

Unification of shares – Indirect Share transfers

In the future, indirect share transfers will also be included. Specifically, transfers of shares in company assets or the company itself will be covered if, as a result of the transfer, at least 75% of all shares are directly or indirectly unified in the hands of a single person or group of persons. The 75% ownership threshold in the case of indirect ownership will be determined by multiplying the percentage shareholding at each level. 

The share unification provision will be subordinate to the shareholder change provision, ensuring that both cannot be triggered simultaneously.

When determining ownership thresholds, treasury shares (company’s own shares) will be disregarded, and shares held in trust will continue to be attributed to the trustor.

A person is understood to include partnerships, corporations, and individuals. A newly introduced term, group of persons, refers to cases where partnerships or corporations are united under joint control or a dominant influence by one person for economic purposes—this includes scenarios like syndicate or voting agreements. This terminology is intended to align broadly with the corporate law concept of a group. Additionally, individuals exerting unified control or dominant influence will also be included.

Each property will be assessed individually to determine whether a taxable event has occurred. It is also clarified that a property is deemed to be part of a company’s assets if the company acquired it through a legal transaction pursuant to §1 para. 1 or 2 of the RETT Act or constructed the property itself (e.g., a Superädifikat, i.e., a building on land owned by someone else).

In the case of multiple acquisitions under different taxable events, real estate transfer tax shall only be levied to the extent that the tax base of the subsequent acquisition exceeds that of the preceding acquisition.

Tax base and Tax Rate for Share Deals

The tax base for RETT in the case of shareholder changes, share unifications, and reorganizations will generally continue to be the tax property value. The applicable tax rate remains at 0.5% (standard rate).

However, for so-called "real estate companies," a deviation from the standard rate will apply in the case of shareholder changes, share unifications, and reorganizations. A company is considered a real estate company if: 

• its assets predominantly consist of real estate not used for its own business purposes whereas the sale, leasing, or management of real estate does not count as business use, or
  
  
• its income is primarily derived from the sale, leasing, or management of real estate.

The overall circumstances must be considered; in cases of mixed use of a property, a proportional allocation must be made.

If a real estate company is present, the fair market value of all affected real estate will form the tax base for RETT; the tax rate is 3.5%. If a family group under § 26a para. 1 no. 1 of the “Gerichtsgebührengesetz” applies, the tax property value and the standard tax rate of 0.5% will still be applicable.

Tax Debtor and Declaration

In the case of a change of shareholders, the company shall be the tax debtor; in the case of a share unification, the person in whose hands the shares are consolidated shall be the tax debtor.

Legal representatives who participate in the transfer of shares shall be obliged to report the transaction by submitting a tax declaration and shall be entitled to perform a self-assessment.

Effective Date and Transitional Rules

The changes are generally set to enter into force on July 1, 2025, and shall apply to acquisition transactions for which the tax liability arises or would arise after June 30, 2025. 

The taxable events of shareholder change and share unification shall also be considered to have occurred if there is a shift in shares, provided that the relevant participation thresholds are not undercut.

Federal Fiscal Code

Electronic Delivery by the Tax Office

If the recipient is registered with FinanzOnline and electronic delivery is technically feasible, the tax office must deliver documents electronically. This obligation only applies to those required to file VAT returns (§ 21 para 4 third sentence UStG), including small business owners who have opted out of the small business exemption.

This rule does not apply to provincial or municipal tax authorities or to Austrian customs offices.

It is set to take effect from September 1, 2025. Opting out of electronic delivery will no longer be possible, unless the obligation to file VAT returns lapses.

Gambling Act

Changes to Tax Rates

The concession fee under § 17 para 3 no. 7 GSpG will increase from 40 % to 45 %. The gambling tax under § 57 GSpG will rise from 16% to 17.5 % (para 1) and 40 % to 45 % (para 2). Additionally, the administrative cost contribution under § 16 paras 2 to 8 GSpG will be subject to a 7.5 % levy for the first time. These increases will take effect on July 1, 2025, for tax liabilities arising after June 30, 2025.

The tax under § 57 para 4 will increase from 10 % to 11 %, effective January 1, 2026 for tax liabilities arising after 31 December 2025.

Energy Crisis Contribution – Electricity

Reduction of Maximum Allowable Deduction

Under the Budget Consolidation Act 2025, the deduction cap for eligible investments was EUR 72 per MWh. The BBG 2025 proposes to reduce this cap to EUR 20.

Effective July 1, 2025, this proposed amendment applies to all reporting periods 3 and 4–7.

Energy Crisis Contribution – Fossil Fuels

Reduction of Maximum Allowable Deduction

Under the Budget Consolidation Act 2025, the previous deduction cap was 17.5 % for eligible investments and will be reduced to 5%.

This change takes effect on July 1, 2025, for the period April to December 2025 and calendar years 2026 to 2029.

Conclusion

The BBG 2025, in line with the government program for 2025-2029, includes not only taxpayer-friendly measures but also significant financial burdens, some effective already during 2025. 

In particular, significant changes and tightening of regulations are expected in the area of real estate transfer tax, which are outlined here only in summary and will be analyzed and communicated by us in detail at a later stage. 

Parliamentary approval of the BBG 2025 remains to be seen.