Budget Restructuring Measures Act 2025 – the most important changes

Immediately after the presentation of the new federal government, the first austerity measures for budget consolidation were adopted in the National Council on 07th March 2025. The so-called Budget Restructuring Measures Act 2025 implemented, among other things, a higher bank levy, the introduction of a motor-related insurance tax for electric vehicles and the end of the VAT exemption for small photovoltaic systems. The most important changes are presented below as an overview.

Abolition of the VAT exemption for photovoltaic modules:

The VAT rate of 0 % will no longer be applicable to the supplies, intra-Community acquisitions, imports, and installations of photovoltaic modules from 1st April 2025. If the relevant contracts were concluded before 7th March 2025, the VAT should remain unchanged at 0 % for constitutional reasons and due to the protection of legitimate expectations, provided that all the requirements for claiming the zero VAT rate are met.

Motor-related insurance tax for electric vehicles:

Until now, motor vehicles with a CO2 emission value of 0 g/km were exempt from the motor-related insurance tax. The exemption from motor-related insurance tax therefore mainly affected electric vehicles to provide tax incentives for purchase.

The motor-related insurance tax (as a form of collection of motor vehicle tax) links the tax liability to the registration of a motor vehicle for circulation in Austria. This is intended to tax the right to use a motor vehicle on roads with public transport in Austria within the framework of the existing regulations. Since there are now clear regulations at the level of the European Union for the emission values of motor vehicles (fleet emission targets, emission standards, etc.) and the increase in the share of electric vehicles will continue, the legislator believed it was no longer necessary to continue the previous incentive measures. For this reason, the exemption for electric vehicles from motor-related insurance tax will no longer apply from 1st April 2025.

In addition, the previous exemption provision has been adapted so that mopeds with electric drive up to an output of 4 kilowatts are exempt. This is intended to achieve equal treatment with the exemption for motorcycles (with combustion engines) whose engine capacity does not exceed 100 cubic centimetres. 

§ 6 (1) Number 2 regulates the tax calculation for motor vehicles of category M1 with a maximum permissible total weight of up to 3.5 tons (passenger cars), except for motorhomes. This will not change the situation for cars that have already been registered and will be registered in the future and are powered exclusively by a combustion engine. A separate tax rate has now been created for electrically powered cars. The tax level is based on that of passenger cars with combustion engines but is set below this level due to support for the achievement of the climate targets. On the one hand, as in cars with combustion engines, the engine power is considered and, in the absence of CO2 emissions, the dead weight of the car is taken into account. By focusing on engine power and designing it as a tiered tariff, smaller and less powerful electric vehicles are less burdened.

Furthermore, the tax rate for passenger cars with externally chargeable hybrid electric drive ("plug-in hybrid") will be adjusted. While retaining the previous calculation logic, the deduction amounts have been adjusted to achieve tax equality with purely electrically powered cars in the future. There are also special regulations for electrically powered motorhomes.

The new legal regulation will come into force for all motor vehicles from 1st April 2025. As a result, there will be no changes for insurance periods before 1st April 2025, but only for periods after the entry into force of the new legal regulation. Due to the short period between the adoption of the resolution and the entry into force of the amendments, the difference to the previous legal situation will be claimed retrospectively. To ensure that the necessary organisational and technical adjustments can be implemented by the insurance companies, the due date for this difference is set at 15th November 2025.

Since the motor-related insurance tax essentially functions as a form of collection of motor vehicle tax and all illegally used vehicles are covered by the motor vehicle tax, the changes to the motor-related insurance tax have also been implemented in the Motor Vehicle Tax Act.

Stability levy for banks:

To achieve an increase in the stability levy, the tax rate was increased. This is expected to increase the annual revenue to 200 million euros. In order not to place an undue burden on the banks through the stability levy, the reasonableness limit and the burden limit have also been adjusted accordingly.

In addition to the increase in the stability levy, a special payment is to be made for the calendar years 2025 and 2026 – as was already the case in the calendar years 2017 to 2020. While the tax rates of the special payment differ from those of the stability levy, the determination of the assessment basis and the provisions on the tax debtor are to be applied analogously to the special payment.

Since the first payments of the stability levy for the calendar year 2025 have already been made, the special payment for the year 2025 is to be paid in full on 31st October 2025. In contrast to the stability levy, the special payment is not limited by the reasonableness limit and the burden limit. According to the legislator's expectations, the special payments are to contribute about 300 million euros per year to the budget.

The changes will come into force retroactively from 1st January 2025. Since the first payments for 2025 have already been made, the differences caused by the increase are to be paid by 31st October. In addition, it was clarified that the special payment – just like the stability levy – is not deductible as a business expense.

Extension of the Energy Crisis Contribution for Electricity (EKB-S):

The Energy Crisis Contribution for Electricity and the Energy Crisis Contribution for Fossil Fuels were introduced at the end of 2022 in response to high energy prices. In order to avert an impending EU excessive deficit procedure, the Republic of Austria has committed itself to swiftly taking countermeasures. The tried-and-tested energy crisis contribution electricity has been extended by five years from 1st April 2025 to 31st March 2030. 

In addition, the upper limit for market revenues for plants commissioned before 1st April 2025 has been lowered to 90 euros per megawatt hour. For other electricity, the upper limit will be lowered to 100 euros per megawatt hour. On the other hand, the contribution rate has also been raised to 95 %.

Furthermore, favored investments to the extent of 75% of the actual acquisition and production costs can be taken into account as a deduction.

Extension of the Energy Crisis Contribution for Fossil Fuels (EKB-F):

The collection of the energy crisis contribution from fossil fuels has also been extended by five further survey periods until the calendar year 2029. The assessment basis will be determined as before. For the survey periods from April 2025 onwards, a deduction amount for preferential investments will continue to be entitled.

Tobacco tax:

To increase tobacco tax revenue, the tobacco tax on cigarettes was adjusted by suspending the reduction of the price element from 32 % to 31.5 % planned from 1st April 2025. The tax brackets planned for 2026 will also be abolished.

The absolute amount of the minimum excise duty on cigarettes has been raised to EUR 175 per 1,000 units, bringing it closer to the tobacco tax burden on cigarettes at the weighted average price applicable in 2025 and to the minimum excise duty to be calculated on that basis.

Tobacco for heating is typically consumed as a substitute for cigarettes. However, the tobacco tax burden on tobacco for heating was much lower than that on cigarettes. Due to the continuously increasing popularity of tobacco for heating, the tobacco tax burden (tobacco tax incidence) of tobacco for heating has been brought closer to that of cigarettes. If the tobacco tax liability arises after 31st March 2025, the tobacco tax amounts to EUR 339 per kilogram of tobacco (previously EUR 197 per kilogram).

The provisions will be applicable from 1st April 2025.

Betting fees:

The legal transaction fee pursuant to § 33 TP 17 (1) Number 1 of the Fees Act was previously 2 % of the betting stakes. This was therefore relatively low in relation to the gambling tax pursuant to § 57 (1) of the Gambling Act, which generally amounts to 16 % of the stake. Due to the similarity of betting and games of chance according to the Gambling Act, the tax burden is approximated. The fee has therefore been increased from 2 % to 5 %.

The increase therefore applies to bets for which the fee liability arises after 31st March 2025 in accordance with § 16 (5) of the Fees Act (payment of the stake).

Extension of the top tax rate in income tax:

In accordance with the government programme 2025-2029, the top income tax rate of 55 % for income components above one million euros has been extended by four years until 2029.

It remains to be seen how the agreed savings measures will affect the budget and whether or which further savings measures will follow.