Dear Clients,
As in previous years we would like to remind you of the possibility of the profit allowance for 2023.
Profit Allowance
Self-employed persons can reduce their taxable profit with the automatically granted "basic profit allowance". The “basic profit allowance” applies for a taxable profit up to 30,000 EUR. Above this (= for profits of more than 30,000 EUR) additional income tax can be saved through the "investment-related profit allowance".
Up to a profit of 30,000 EUR the “basic profit allowance” will be considered automatically
Up to a profit of 30,000 EUR the “basic profit allowance” will be considered automatically and without any further requirements. The amount of the “basic tax-free allowance” is 15 % of the profit.
“Investment-related profit allowance” for a profit of more than 30,000 EUR
If the expected taxable profit in 2023 exceeds the amount of 30,000 EUR, investments must be made in certain assets in order to benefit from the investment-related profit allowance. The investments must be made before the end of 2023.
Schema of the profit allowance:
- 13 percent up to a profit of 145,000 EUR
- 7 percent for the profit share between 145,000 EUR and 320,000 EUR
- 4,5 percent for the profit share between 320,000 EUR and 550,000 EUR
What are possible investments for the profit allowance?
Investments can be done into fixed assets, e.g. a computer which will be used for at least 4 years in the company. Unfortunately cars cannot be considered for the investment-related profit allowance.
Furthermore, it is possible to invest in certain securities, e. g. federal bonds, bank bonds, corporate bonds, certain investment and real estate funds and guarantee certificates as well as “Wohnbankanleihen”. The securities must be held in the bank deposit for at least 4 years.
Please contact your bank in order to find an optimal solution for you.
Is the Profit Allowance applicable for me?
We are happy to help you answering all questions of whether and to what extent you should use the profit allowance. Please note that the investment e.g. securities must be acquired before the end of 2023!
Best regards
Manfred Gross
Vienna, November 2023
