Dear clients,

The year 2018 will come to its end soon and we wanted to remind you of the Austrian “Tax Free Allowance”. As a counterpart to the favoured taxation of the 13th and 14th monthly salary for employees, there is the “Tax Free Allowance” for entrepreneurs.

Tax Free Allowance – you can save up to Euro 22.680 in tax payment

Self employed persons can reduce their taxable profit with the automatically granted “basic tax free allowance”. The basic tax free allowance applies for a taxable profit up to Euro 30.000. Furthermore (= for profits of more than Euro 30.000) additional income tax can be saved by the “investment-related tax free allowance”.

Up to a profit of € 30.000 exists the “basic tax free allowance”

Up to a profit of Euro 30.000 the basic tax free allowance will be considered automatically and without any further condition. The amount of the basic tax free allowance is 13 % of the profit or Euro 3.900 maximum.

For a profit of more than Euro 30.000 exists the “investment-related tax free allowance”

If the anticipated taxable profit for 2018 exceeds the amount of EUR 30.000, investments must be made in certain assets in order to benefit from the investment-related tax free allowance.

Schema of the tax free allowance

• 13 percent up to a profit of Euro 175.000
• 7 percent for the profit share between Euro 175.000 and 350.000
• 4.5 percent for the profit share between Euro 350.000 and 580.000

Possible investments for the investment-related tax free allowance

Investments can be done into fixed assets, e.g. a computer which will be used for at least 4 years in the company. Unfortunately cars cannot be considered for the investment-related profit allowance.
Furthermore it is possible to invest in certain securities, e. g. federal bonds, bank bonds, corporate bonds, options and exchangeable bonds, certain investment and real estate funds and guarantee certificates as well as “Wohnbankanleihen”.

Please contact your bank in order to find an optimal solution for you.

Is the Tax Free Allowance applicable for me?

We are happy to help you answering all questions of whether and to what extent you should use the tax free allowance. Please note that the investment e.g. securities must be acquired before the end of 2018!

Best regards
Manfred Gross
Vienna, November 2018