Income tax assessment

In principle, income tax is determined in arrears through a written assessment. Once the Income tax return has been submitted to the tax office, an assessment is made and income tax calculated according to the tariff of tax rates.

The prepayments you have made on the basis of expected income tax will be offset against the calculated income tax. If your income includes emoluments from employment as well as income as a trader, the salary tax already paid will be deducted from the income tax, because it simply represents a special form of income tax.

The capital yields tax (KESt) that domestic banks and corporations retain before distribution of capital yields (such as investment interest and securities income) and of capital gains (in particular from the sale of stocks or other shares) is likewise treated as a specially collected form of income tax. Since capital yields are generally fully taxed through the KESt deduction, such fully taxed capital yields do not need to be included in an income tax return. If, however, income including the capital yields is below the tax-free basic income of 12,816 Euro, for example, or if there is a need to balance losses from sales of shares at various custodian banks, such yields may be voluntarily assessed under the standard tariff or at a special tax rate (standard tax treatment option or loss relief option); in such cases, the KESt will be offset against income tax. Capital gains are taxed on realisation only where they are private assets. Capital losses in commercial activity are credited in the first instance against capital gains; 55 percent of remaining losses are balanced against residual gains percent and then against other positive income in the course of the assessment.

The ‘real estate yields tax’ (ImmoESt) assessed on sales of plots of land is again a special assessment form of income tax. In terms of private taxation, it is therefore similarly charged on realisation. Here, too you may voluntarily include income from land in your tax return (standard tax treatment option or loss relief option) if, for example, not all of the expenses have been accounted for in the ImmoESt calculation, or if – as with KESt – income including the real estate gains is below the tax-free basic income of 12,816 Euro. Another reason for doing so may be if losses have occurred, up to 60 percent of which (until 2015 up to one half of which) can be credited against surpluses from rentals and lettings, an immediate credit generally of 4 percent of the real estate loss in each of 15 years being allowed without the need to make a claim. Real estate losses in commercial activity are initially credited against real estate gains; 60 percent of remaining losses are balanced against residual gains and then against other positive income in the course of the assessment.

Deadlines

An assessed income tax liability must be paid within a month – calculated from notification of the assessment.

Legal redress

If you do not agree with the notified assessment, perhaps because the notification differs from your return or because you made a mistake on your tax return, you can seek recourse by submitting an appeal within one month from notification of the assessment.

Legal bases

• Assessment period: section 39 paragraph 1 of the Einkommensteuergesetz (EStG)
• Due date of levies: section 210 paragraph 1 of the Bundesabgabenordnung (BAO)
• Appeals: sections 243 to 292 of the BAO