Significant Changes Regarding Corporate Income Tax

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