Significant Changes Regarding Corporate Income Tax

Extract

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Significant Changes Regarding Corporate Income Tax

1. General

Recently, the Austrian Parliament adopted the Tax Reform Act of 2005 (Steuerreformgesetz 2005), which will have a significant impact upon the taxation of corporations in Austria. The most important elements of the Act include:

a considerable reduction in the corporate income tax rate;

the introduction of new group taxation rules, which allow setting off the profits of group members with the losses of other group members for tax purposes;

the introduction (within the framework of the new group taxation rules) of the amortization of goodwill acquired in a share deal;

the statutory recognition of recent case law regarding the application of the losses of foreign permanent establishments against the income of their Austrian head offices; and

the introduction of the deductibility of interest on loans taken out in connection with the acquisition of shares.

2. Corporate Income Tax Rate

In the last few ye...

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