Eco-social tax reform 2022

The eco-social tax reform 2022 has been under review since the beginning of this week. The four-week deadline for submitting any comments ends on Dezember 6th 2021. We have summarised the most important changes relating to payroll accounting and HR for you. 

Reduction of wage and income tax 

After the reduction of the initial tax rate from 25% to 20% within the framework  of the Economic Stimulus Act 2020, the second and third tax brackets of the wage and income tax are now to be reduced as well. As of July 1st 2022, the second rate bracket is to be reduced from 35% to 30%, and as of July 1st 2023, the third rate bracket is to be reduced from 42% to 40%.

Since the income tax rate is based on a calendar year, the reduction in the tax rate during the year is to be taken into account by means of a resulting mixed tax rate. For the entire calendar year 2022, a calculated mixed tax rate of 32.5% will be applied for the second tax bracket, and a calculated mixed tax rate of 41% will be applied for the third tax bracket in calendar year 2023.

In order to ensure that employees benefit from the  reduction in the tax rate as soon as possible, the rate reduction for the months January to July 2022 should be taken into account as part of a recalculation to be carried out by the employer as soon as possible - by the end of September 2022 at the latest. Pensioners shall also benefit from the reduction in rates during the year in the context of the recalculation.

Increase in the Family Bonus Plus 

To support families, the Family Bonus Plus is to be increased from July 2022 as follows:

  • for children up to 18 years of age from EUR 125 to EUR 166.68 per month, thus from EUR 1,500 to approx. EUR 2,000 per year (or EUR 1,750.08 in 2022 due to the increase during the year).
  • for children aged 18 years and older from EUR 41.68 per month to EUR 54.18, thus from EUR 500 per year to approx. EUR 650 (or EUR 575.16 in 2022 due to the increase during the year)

Increase in the Supplementary Child Benefit 

To support families, the supplementary child benefit is also to be increased. The increase will take place in stages:

  • For the calendar year 2022 instead of up to EUR 250 up to EUR 350 per child
  • From the assessment for the calendar year 2023 up to EUR 450 per child

The amount is reduced (in stages) by the income tax calculated according to the tariff, so that from a tariff tax of EUR 450 (2022: EUR 350) no supplementary child benefit is due.

In addition, the group of beneficiaries is to be extended from currently only single parents/ sole earners to all low-income earners and paid out as a negative tax. In the future, the supplementary child benefit is also to be paid if there is a (married) partnership in which both persons earn income and the tax payable on this income is less than EUR 450 in each case. In this case, the supplementary child benefit is to be paid to the person entitled to family allowance.

However, it is to be a prerequisite that taxpayers earn taxable income (from agriculture and forestry, self-employment, business or employment) for at least 30 days per calendar year. In return, the previous exclusion criterion (receipt of unemployment benefit, emergency assistance, benefits from basic provision or minimum security, etc. for at least 330 days in the calendar year) is to be dropped. This means that in future, for example, persons who are employed in marginal employment but whose income is topped up with the minimum benefit will also be entitled to the supplementary  child benefit.

Tax-privileged employee profit participation 

Analogous to the existing tax privilegefor the participation of employees in the capital of a company, a tax privilege for employee profit participation is now to be introduced. The maximum amount of the benefit per employee is to be EUR 3,000 per year. In addition, all tax-free profit participations paid out in a calendar year may not exceed the previous year's taxable profit. If the maximum amount is exceeded the benefits are taxable and the employer is liable for the wage tax payable by the respective employee on the part of the benefit that was wrongfully left tax-free.

The tax privilege is to apply to profit participations granted on or after  January 1st 2022.

However, the draft law does not provide for an exemption from social security contributions and non-wage labour costs (communal income tax, employer’s contribution, surcharge to the employer’s contribution); a tax-privileged employee profit participation scheme thus remains (at least for the time being) subject to contributions and non-wage labour costs.


Increase in the limit for low-value assets 

The limit for low-value assets is to be raised from currently EUR 800 to EUR 1,000. In the future, the acquisition or production costs of depreciable assets are to be immediately deductible as operating expenses or as income-related expenses up to a maximum amount of EUR 1,000.  

  • This is to apply in the operating area  for the first time to financial years beginning after 31 December 2022.
  • This can be claimed in the non-business area  for the first time in the 2023 assessment.

This change is also important for the assessment under social insurance law, in particular for the differentiation between a free service contract similar to an employment contract within the meaning of Section 4 (4) ASVG and an entrepreneurial free service contract (new self-employed person within the meaning of Section 2 (1) 4 GSVG). The decisive criterion for the existence of an entrepreneurial free service contract under the GSVG is the use of substantial own operating resources. According to case law, operating resources are to be classified as substantial if they are not merely a low-value asset and an entrepreneurial structure has been created by their inclusion in the business assets.


Reduction in health insurance contributions 

With effect from July 1st 2022, the part of the health insurance contribution to be borne by the insured is to be reduced for low and medium incomes. The reduction is to be made in accordance with a legally defined scale depending on the amount of the monthly contribution base. These are fixed amounts that are not subject to annual revaluation.

The gradual reduction is to apply both to insured persons in gainful employment and to the group of pensioners, whereby the reductions are to be made from the contribution rate applicable to the respective group of insured persons.

For example, instead of 3.87%, the contribution component for fully insured employees should be

  • 2.17%, provided that the monthly remuneration does not exceed EUR 1,100;
  • 2.37% if the monthly remuneration exceeds EUR 1,100 up to EUR 1,800;
  • 2.47% if the monthly remuneration exceeds EUR 1,800 up to EUR 1,900;
  • 2.67% if the monthly remuneration exceeds EUR 1,900 up to EUR 2,000;
  • 2.87% if the monthly remuneration exceeds EUR 2,000 up to EUR 2,100;
  • 3.07% if the monthly remuneration exceeds EUR 2,100 up to EUR 2,200;
  • 3.27% if the monthly remuneration exceeds EUR 2,200 up to EUR 2,300;
  • 3.47% if the monthly remuneration exceeds EUR 2,300 up to EUR 2,400;
  • 3.67% if the monthly remuneration exceeds EUR 2,400 up to EUR 2,500,

of the general contribution base.

In order to ensure the expense neutrality of the health insurance, a corresponding differential payment by the state is to be provided for.

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