Corporate income tax liability

The following count as corporations:

• legal persons under private law (e.g. companies limited by shares, limited liability companies, co-operatives, associations, foundations)
• legal persons under public law (e.g. public authorities such as the Federal Government, provinces and municipalities, chambers, social security institutions, legally recognised religious communities etc.)

Corporations under public law (KöR) are only subject to limited corporate income tax, whereby their commercial operations (BgA) are subject to unlimited corporate income tax as separate coporate income tax entities, irrespective of whether or not this is for profit.

Corporations which have their management or registered office in Austria are subject to unlimited corporate income tax. One of these two conditions must be met therefor:

• Corporations, associations of persons and assets have their registered office at the place which is set down for example by law, contract, articles of association or a deed of foundation.
• The place of management is any location at which the company management is centred. It must not be confused with the corporation’s registered office.

Please note

The place of management is where the decisive decisions about the company management are made, and thus where the necessary and important measures for managing the company are determined.

Therefore, in order for a corporation to be subject to unlimited corporate income tax, it is sufficient that their registered office is in Austria or that they are managed from Austria – both conditions do not need to be met.

Unlimited tax liability covers a corporation´s total income – irrespective of whether this is obtained in Austria or abroad and of which revenue it consists.

Please note

Unlimited tax liability for revenues from foreign sources can be restricted by way of double taxation agreements with other countries or through measures at a national level in Austria.

Corporations which have neither their management nor their registered office in Austria are subject to limited corporate income tax ("limited tax liability of the first kind"). Limited tax liability covers only certain domestic revenues.

Also corporations under public law and corporations that are exempt from unlimited corporate income tax, e.g. non-profit corporations, are subject to limited corporate income tax. Irrespective of the existence of a commercial operation (which, as a rule, is subject to unlimited tax liability on its income), corporations under public law are subject to limited tax liability on certain capital income and profits from the sale of real estate ("limited tax liability of the second kind").

Exempt from unlimited corporate income tax liability are, among others:

• Under certain conditions, non-profit, charitable and ecclesiastical legal entities (→ BMF)^{German text}
• Non-profit property developers under the WGG, insofar as their activities are limited to exempt transactions and asset management
• Under certain conditions, social events organised by public corporations against payment, e.g. fire department festivals
• Certain credit institutions that do not seek to make a profit, as well as security and compensation institutions
• Under certain conditions, land reform communities and settlement institutions
• Pension funds: Partial exemption that relates to the investment and risk community(ies)
• Under certain conditions, support and employee pension funds
• Small insurance associations with premium income averaging up to 4,400 Euro per year over the last three business years
• Agricultural cooperatives and winegrowers' cooperatives under certain conditions
• Professional and interest associations within the scope of the statutory representation of interests
• Medium-sized financing companies for income attributable to the financing sector

Austrian capital companies with unlimited tax liability, and comparable foreign corporations with unlimited tax liability are charged a "minimum corporate income tax" – in the event of both profit and loss. If the actual corporate income tax for the current year is lower than the minimum level of taxation or is zero due to a low profit (or a loss), tax is nevertheless payable to the extent of that amount. However, this minimum corporate income tax is not lost, but will be charged as an advance payment in later years in which higher profits are achieved. However, minimum corporate income tax can only be charged to the extent that corporate income tax liability in the respective year exceeds the minimum level of taxation.

The minimum corporate income tax is linked to the statutory minimum level of share capital required to establish a corporation. The quarterly minimum tax to be paid per calendar year is 5 per cent of the statutory minimum share capital. If the legal form relevant to determining minimum tax changes during a calendar quarter, the legal form at the beginning of the calendar quarter is decisive in this regard.

The minimum share capital of a company limited by shares is 70,000 Euro. The minimum tax payable per quarter of five per cent is therefore 3,500 Euro.

The minimum share capital for limited liability companies is 10,000 Euro. The quarterly minimum tax to be paid per calendar year is 5 per cent of the statutory minimum share capital of 10,000 Euro, a total therefore of 500 Euro.