Government Proposal for the Budget Consolidation Measures Act 2025 – PART II: Key Changes

Following the adoption of the Budget Consolidation Measures Act 2025 by the National Council on March 7, 2025, Part II of the Act was passed on May 22, 2025. The most important changes are summarized below:

Increase in the Maximum Amount for Social Security Reimbursement:

Due to the planned increase in health insurance contributions for retirees, the maximum amount for social security reimbursement will be raised to €710 starting in calendar year 2025.

Increase in Interim Tax for Private Foundations:

The interim tax for private foundations will be raised from the current 23% to 27.5% starting in 2026. This is intended to establish a separate taxation system for income subject to the interim tax, effectively “decoupling” it from the standard corporate tax rate. However, there will be no changes to the nature of the interim tax or the underlying principles of interim taxation.

The corporate income tax credit from 2026 onward will also be 27.5% of the respective tax base.

From 2026, advance corporate income tax payments by private foundations will be generally increased by 5%, although individual adjustments will still be possible.

These changes will come into effect on January 1, 2026, and apply to tax assessments for calendar years from 2026 onward.

Adjustment of the Foundation Entry Tax Equivalent in the Real Estate Transfer Tax Act:

In line with changes to the Foundation Entry Tax Act, the equivalent in the Real Estate Transfer Tax Act for acquisition transactions by private foundations will also be increased from 2.5% to 3.5% as of January 1, 2026.

Indexation of Federal Fees and Consular Fees:

The fee rates and flat rates under the Fees Act 1957 and the Consular Fees Act 1992 will be adjusted based on inflation since the last fee indexations (mainly in 2011 or 2018). These increases will generally apply from July 1, 2025.

Changes to the General Social Insurance Act:

As outlined in the 2025–2029 government program, the health insurance contribution for retirees will be increased from the current 5.1% to 6% as of June 1, 2025.

To mitigate the impact of this measure, the prescription fee will not be increased in 2026. Additionally, in the future, medications that cost less than the prescription fee will also be counted towards the prescription fee cap. This cap will gradually be reduced from the current 2% of annual net income to 1.5% between 2027 and 2030.

How these austerity measures will affect the budget, and whether or not additional savings measures will follow, remains to be seen.