Austrian corporate taxation

Austrian corporate income tax:
what the 23% rate actually means.

Austria taxes corporate profit at a flat rate of 23 per cent. Understanding the real result requires a second question: what is taxable profit, and what happens when the remaining money leaves the company?

The Austrian corporate-income-tax calculation appears simple. Determine the company’s taxable income and apply a flat rate of 23 per cent. The rate is not progressive and does not change because the company earns more profit.

The difficulty is rarely the multiplication. It lies in deciding what belongs in taxable income, which costs are deductible, how prior losses can be used, whether foreign income is included and what additional tax arises when profit is distributed to a shareholder.

The 23% rate taxes the company’s profit.
It does not necessarily describe the shareholder’s final result.

A profitable Austrian company may retain its after-tax earnings, invest them, repay financing, acquire another business or distribute them. Each route creates a different legal and tax outcome.

Corporate taxation should therefore be analysed together with the ownership, financing, management location and intended use of profit.

The central rule

Austria taxes accounting profit only after it has been converted into taxable income.

The annual financial statements are the starting point rather than the final tax calculation. Tax adjustments may add back non-deductible expenditure, recognise different depreciation, restrict losses or exempt certain participation income. The result is the tax base to which the 23 per cent rate applies.

Infographic 01

From €100 profit to the shareholder.

This simplified example assumes a direct distribution to an individual shareholder subject to the standard Austrian 27.5 per cent capital-income withholding rate. Treaty relief, foreign taxation and corporate-shareholder exemptions may change the result.

Company profit €100.00

Simplified taxable corporate income before Austrian corporate income tax.

Starting tax base

→

After 23% corporate tax €77.00

The company pays €23 corporate income tax and retains €77 of after-tax profit.

Retained company earnings

→

After 27.5% distribution tax €55.83

A further €21.18 is withheld from the €77 distribution in this simplified individual-shareholder example.

Combined arithmetic burden · 44.18%

The example does not determine the position of a particular shareholder. A double-tax treaty, EU directive, corporate participation exemption, refund procedure or foreign tax may alter the result.

Which companies pay Austrian corporate income tax?

Austrian corporations such as a GmbH, FlexCo or AG are generally subject to corporate income tax. A corporation can be subject to unlimited Austrian taxation where its registered office or place of management is in Austria.

Unlimited tax liability generally extends to worldwide income, subject to Austria’s domestic rules, applicable double-tax treaties and relief mechanisms for foreign income.

Registered office and place of management are different tests

The registered office is the formal location established through the articles, law or registration. The place of management is the location where decisive management decisions are actually made.

This distinction matters for international founders. An Austrian registration does not mean that management conduct in another country becomes irrelevant. The other country may claim tax residence, permanent-establishment exposure or taxation of management activity.

A company can have an Austrian address while important tax questions arise elsewhere.

Board practice, director location, decision-making authority, contracts, personnel and operational substance should be consistent with the company’s intended tax position.

The 23 per cent rate

Austrian corporate income tax is charged at a flat rate of 23 per cent of taxable income. Unlike personal income tax, the rate does not increase through progressive tax bands.

The rate was reduced from 25 per cent to 24 per cent for 2023 and to 23 per cent from 2024.

23% Standard Austrian corporate-income-tax rate applied to taxable corporate income.

75% General maximum proportion of current positive income that may be offset by carried-forward corporate losses.

4 dates Corporate tax prepayments are generally due quarterly during the year.

Taxable income is not the same as cash in the bank

Corporate income tax is not calculated by taking the year-end bank balance or simply subtracting every outgoing payment from revenue.

The calculation begins with the company’s accounting result and applies the relevant Austrian tax rules. A cash payment may be capital expenditure rather than an immediately deductible cost. A provision may be recognised differently for tax. A shareholder payment may be a distribution rather than a business expense.

Infographic 02

The bridge from accounting profit to taxable income.

The exact adjustments depend on the business, accounting treatment, asset base, financing, related parties and international transactions. This is a conceptual map rather than a tax return.

Accounting result Annual profit or loss in the financial statements

Revenue, payroll, services, depreciation, financing costs and other recognised accounting items.

Tax add-backs Items recognised in accounts but not fully deductible

Potentially non-deductible expenditure, private or shareholder benefits, restricted expenses and unsupported related-party costs.

Timing and valuation adjustments Accounting and tax treatment may differ

Depreciation, provisions, accruals, asset valuations and tax-specific recognition periods.

−

Exempt or relieved income Only where statutory conditions are met

Certain participation income, treaty relief or other statutory exemptions may be relevant.

−

Permitted loss utilisation Current and carried-forward tax losses

Corporate loss carryforwards generally remain subject to the 75 per cent limitation in profitable years.

Taxable corporate income Base to which the 23% rate is applied

The tax assessment reconciles the accounting result with the applicable Austrian tax rules.

What expenses can reduce taxable profit?

Genuine business expenditure can generally reduce taxable income where it is economically connected with the company’s activity, properly documented and not restricted by a specific tax rule.

Typical categories may include payroll, rent, professional services, business travel, software, marketing, financing expenses and depreciation of business assets.

Documentation is part of deductibility

An invoice alone may not resolve every question. The company should be able to explain what was purchased, why it served the business, whether the price was commercially reasonable and which entity actually received the benefit.

This becomes particularly important for management fees, consulting, intellectual-property charges, shareholder expenses and payments to related foreign companies.

The shareholder and the company are separate taxpayers

Personal expenditure does not become a corporate deduction merely because it was paid from the company’s bank account.

Payments to an owner or related person may need to be classified as salary, director remuneration, loan repayment, expense reimbursement, dividend or a hidden distribution. The tax result depends on the legal and economic character of the payment.

“Paid by the company” is not the same as “deductible by the company.”

Shareholder transactions should have a clear legal basis, commercial purpose, supporting documents and consistent accounting treatment.

Minimum corporate income tax

Austrian companies with share capital may owe minimum corporate income tax even where they make a loss or have little taxable profit.

The official formula is based on five per cent of one quarter of the statutory minimum nominal or share capital for each full calendar quarter.

For a conventional GmbH or FlexCo with statutory minimum capital of €10,000, that formula corresponds to €125 per full quarter, or €500 for a full calendar year. The precise result can depend on formation date, legal form and relevant transitional circumstances.

Retaining profit versus distributing profit

After the company pays 23 per cent corporate tax, the remaining earnings belong to the company. They are not automatically taxed again merely because they remain on the balance sheet.

A second level of taxation may arise when the company distributes profit to its shareholder. For an individual subject to the standard Austrian capital-income withholding regime, the rate is generally 27.5 per cent of the distributed amount.

A foreign shareholder’s final position may be affected by an Austrian withholding-tax exemption, a reduced treaty rate, a refund procedure and taxation in the country of residence.

Corporate shareholders require a different analysis

Dividends received by an Austrian or foreign corporate shareholder may qualify for participation relief where the statutory conditions are satisfied.

The result depends on matters such as the entities involved, ownership percentage, holding period, jurisdiction, legal form and anti-abuse rules. A holding-company analysis should therefore not use the individual-shareholder example as its tax model.

Losses and profitable years

A tax loss can survive—but it may not eliminate the next year’s entire profit.

Austria generally permits corporate loss carryforwards, but the 75 per cent limitation means that part of a profitable year may remain taxable even where larger historic losses still exist.

Illustrative example

€400,000 current profit and €500,000 carried losses

The existence of €500,000 of historic losses does not necessarily reduce the current €400,000 profit to zero.

Current positive income: €400,000
Maximum ordinary offset at 75%: €300,000
Remaining taxable amount: €100,000
Unused losses remain available subject to applicable rules

Planning implications

Losses must be preserved, documented and monitored

Historic losses should not be treated as an unrestricted tax asset. Structural and ownership changes can require additional analysis.

Reconcile tax losses with filed assessments
Separate accounting losses from tax losses
Review reorganisations and ownership changes
Model minimum tax and the 75% limitation

Foreign income and double taxation

An Austrian-resident corporation may be taxable on income earned outside Austria. That does not necessarily mean the same income remains fully taxed twice.

Austria maintains a broad network of double-tax treaties. Depending on the relevant treaty and income type, double taxation may be addressed through exemption, foreign-tax credit, reduced withholding or refund mechanisms.

The treaty does not replace domestic analysis

A treaty allocates or limits taxing rights between states. The company must still determine domestic tax residence, permanent establishments, income classification, beneficial ownership and the documentation required to claim relief.

Foreign withholding tax can affect cash flow

A foreign customer, subsidiary or investment may withhold tax before paying the Austrian company. Relief at source may require residence certificates and advance formalities. A later refund can take time and should not be treated as immediate liquidity.

Austrian group taxation

Austria provides a corporate group-taxation regime under which eligible companies may combine specified tax results within a recognised tax group.

This is not automatic consolidation. The group requires qualifying financial integration, an application, appropriate agreements and ongoing compliance. Foreign-group-member losses and later recapture can be subject to additional restrictions.

Group taxation becomes relevant where an Austrian parent owns operating subsidiaries and the group wants to coordinate the treatment of profits and losses. It is not normally the first planning tool for a single Austrian operating company.

Corporate tax is separate from VAT, payroll and municipal tax

The 23 per cent corporate-income-tax rate should not be presented as the company’s total Austrian tax burden.

A company with employees may have wage-tax, social-security, employer-contribution and municipal-tax obligations. A company making taxable supplies may have VAT filings and payments. Real estate, vehicles, financing or regulated activities can create further taxes and charges.

Corporate income tax follows profit. Other taxes may arise even when profit is low.

Cash-flow planning should separate corporate-tax prepayments, VAT, payroll taxes, municipal tax and withholding obligations rather than using one general “tax reserve.”

Infographic 03

The standard corporate-tax calendar.

Corporate-income-tax prepayments are generally made quarterly. The final annual liability is determined through the tax return and assessment. Individual deadlines may be extended or affected by tax representation.

First quarter 15.02

First prepayment

Corporate-income-tax prepayment based on the applicable assessment and forecast.

Second quarter 15.05

Second prepayment

Review whether the company’s expected annual profit still supports the assessed prepayment level.

Third quarter 15.08

Third prepayment

Mid-year accounts can identify an expected tax balance before the end of the financial year.

Fourth quarter 15.11

Fourth prepayment

The final quarterly payment precedes year-end closing and the later annual assessment.

The standard annual return deadline is generally 30 April of the following year for paper filing or 30 June for electronic filing via FinanzOnline. Represented taxpayers may receive longer filing periods.

Year-end tax review

Questions to resolve before the annual tax return.

A clean corporate-tax position begins with the bookkeeping, contracts and shareholder transactions recorded throughout the year.

Where was the company actually managed?

Review director activity, board decisions and potential foreign tax-residence exposure.

Are all material expenses supported?

Match invoices with contracts, business purpose, receipt of service and payment evidence.

Were shareholder payments classified correctly?

Separate salary, director fees, loans, reimbursements and distributions.

Are related-party prices defensible?

Review management services, financing, royalties and intercompany allocations.

Does the asset register match tax depreciation?

Capitalised expenditure and depreciation periods should be reconciled.

Are carried-forward losses confirmed?

Use tax assessments rather than relying only on the accounting balance sheet.

Was foreign tax withheld?

Identify treaty relief, credit or refund procedures before documentation expires.

Will profit be retained or distributed?

Model company tax separately from shareholder-level tax and foreign reporting.

Do prepayments match the current forecast?

Excessively low prepayments can create a substantial later assessment.

Are the annual accounts and tax return aligned?

Document the bridge from accounting profit to taxable income.

Final view

Austria’s 23 per cent rate is clear. The tax base and the movement of profit require the real work.

An Austrian company should not be evaluated through the corporate-tax rate alone. The final structure depends on deductible costs, losses, financing, foreign income, management location, related-party transactions and whether earnings remain in the company or are distributed. Good tax administration begins before year-end: with properly structured contracts, documented expenses and a clear separation between the company and its shareholders.

Official and professional sources

Model the tax flow before choosing how the Austrian company earns and distributes profit.

Send the ownership structure, expected revenue, operating costs, financing, countries, management location and intended use of earnings. We will identify the Austrian formation and structuring workstreams and coordinate tax-specific questions with the relevant licensed adviser.

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