Dear Clients,
In the following newsletter, we would like to present the most important new features of the “Progression Compensation Act 2025” (Progressionsabgeltungsgesetzes 2025 or briefly PrAG 2025). The changes will come into force on January 1st, 2025.
Changes to the tax deductions
The PrAG 2025 will adjust all deductions and related amounts, such as the sole earner and single parent deduction (currently EUR 572 for one child, from 2025 EUR 601 p.a.), maintenance deduction (currently EUR 35 for one child, from 2025 EUR 37 p.m.), transport deduction and pensioner deduction, in line with the rate of inflation
Changes of the tax brackets
Income Tax Rate currently and from 2025
|
currently |
from 2025 |
Tax Rate |
|
up to EUR 12.816 |
up to EUR 13.308 |
0% |
|
over EUR 12.816 to EUR 20.818 |
over EUR 13.308 to EUR 21.617 |
20% |
|
over EUR 20.818 to EUR 34.513 |
over EUR 21.617 to EUR 35.836 |
30% |
|
over EUR 34.513 to EUR 66.612 |
over EUR 35.836 to EUR 69.166 |
40% |
|
over EUR 66.612 to EUR 99.266 |
over EUR 69.166 to EUR 103.072 |
48% |
|
over EUR 99.266 |
over EUR 103.072 |
50% |
Increase in daily allowances for domestic business trips
Daily allowances of up to EUR 26.40 per day for domestic business trips are currently recognised as tax-free amounts. Unless higher expenses are proven, up to EUR 15 can be recognised tax-free as an overnight allowance. These amounts will be increased to EUR 30 (tax-free daily allowance) and EUR 17 (tax-free overnight allowance) from 2025.
Increase in the small business flat rate
The maximum amount of annual turnover for the flat-rate calculation of operating expenses as part of the small business flat-rate scheme will be increased to EUR 55,000.
Increase in the small business limit in the VAT Act
The small business threshold for VAT exemption will be raised from EUR 42,000 to EUR 55,000. This limit also applies to income tax with regard to the small business flat rate, see above. The small business exemption for VAT purposes and the small business flat rate for income tax purposes can be claimed separately.
Increase in kilometre allowance
The kilometre allowance will be increased from EUR 0.42 to EUR 0.50 for each kilometre travelled by car on a business trip from 2025. The co-carriage of one person will be increased from EUR 0.05 to EUR 0.15 from 2025. The kilometre allowance for bicycles will also be increased to EUR 0.50 from 2025.
The Federal Ministry of Finance has issued its own ‘Kilometre Allowance Regulation’ for the flat-rate allowance of vehicle expenses, which regulates the details regarding the kilometre allowance and in particular the proof of journeys (e.g. logbook, other evidence).
Regulation on the reimbursement of travel expenses
The travel expense reimbursement regulation was issued by the BMF in October 2024 based on the PrAG 2025 and applies from January 1st, 2025. If the employee is not reimbursed by the employer for the actual expenses of a ticket purchased by the employee for a business trip for a means of mass transport, a non-taxable flat-rate consideration of these expenses is permitted by a) applying the transport allowance (= EUR 0.50 for the first 50 km, EUR 0.20 for the next 250 km and EUR 0.10 for each additional kilometre). Or b) by recognising the notional costs for the cheapest means of mass transport (e.g. ÖBB 2nd class ticket, but not “Sparschine tickets”).
Best regards
Manfred Gross
Vienna, December 2024
