Austria announced draft tax changes for 2012

Austria’s Ministry of Finance published draft amendments to various tax laws on 27 September 2011 that will be considered for inclusion in the 2012 federal budget

One of the significant proposals considers changes of capital gains taxation.

The new capital gains tax regime applicable to individuals previously was set to apply from 1 October 2011 but was postponed to 1 April 2012 earlier this year.

Under the new regime, capital income (i.e. gains and income from certain capital assets) is subject to a flat 25% rate and may only be offset against certain losses in the course of the tax assessment procedure.

Consequently, banks currently are set to withhold tax under the regime without taking into account any losses. The draft changes would require banks to offset losses (through that bank) with capital income in calculating the applicable withholding tax.

Given that income and losses may not be concurrent, any excess tax withheld subsequently would be refunded by the bank.

The amendment would enter into full effect as from 1 January 2013, with banks having until 30 April 2013 to rectify the period covering 1 April 2012 to 31 December 2012.