Eco-social tax reform good for climate, households and businesses

This reform, adopted in February 2022, aims at strengthening social inclusion and combating climate change, thus contributing to expected annual greenhouse gas emission savings of 2.6 million tons by 2030 compared to the amount of 2019. To reach such objectives, the reform introduces a national CO2 price on fossil fuels (starting at €30 and to be gradually lifted to €55 in 2025), and a tax relief worth of €18 billion by 2025 for people and businesses, comprising i.a. lower income tax rate, a higher “Family Bonus Plus”. A regional Climate Bonus serves to mitigate the impact of carbon pricing on individuals. Businesses benefit from a reduced corporate income tax rate (from 25% to 23%), a higher tax-free profit allowance (Gewinnfreibetrag) and an increased limit for immediate depreciation of low-value assets. According to the Austrian Finance Ministry, the reform will boost Austria’s GDP by 1 p.p., generating an estimated additional 30,000 jobs. The national CO2 price became effective on 1 October 2022.

Detailed information on national emissions trading in Austria is available here.

More information can be found here and press releases can be found at the following links:

• https://www.parlament.gv.at/PAKT/PR/JAHR_2022/PK0056/index.shtml
• https://www.bmf.gv.at/presse/pressemeldungen/2022/februar/steuerreform-beschlossen.html