ECOVIS Austria is assessing the measures and the probability of the implementation
The recently presented government program includes numerous positive measures for start-ups and investors. At least it seems that the urgent need for action, to improve Austria as a business location, has finally been recognised.
Part 1 – what to expect as a Start-up
Farewell to Austrian’s bureaucracy?!
Simplification and digitalization measures shall make the impossible possible: Founding a company digitally and without bureaucracy. New company types (based on other European company types) and the flexibilization of existing laws are planned to be made the foundation process itself and the allocation of shares to investors and employees easier. Also: minimum paid-in capital should (once again) be reduced to EUR 10,000.
ECOVIS Assessment: sounds good; but the problem concerning the allocation of shares to investors and employees lies primarily in the restrictive tax law – thus, without changing the tax law (by giving substantial allowances) there will be no real improvement!
Early practice makes perfect – or at least entrepreneurs
Entrepreneurial thinking should be anchored in the education system, e.g. by a voluntary “Entrepreneur Week” in schools, to get an idea about business enterprises and to push entrepreneurial thinking at an early stage. „Entrepreneurship-Programs“ shall also be implemented at universities and research institutions to expand start-up and founding cultures.
ECOVIS Assessment: much too late, but sounds great => sidenote: please discuss this issue and how to realise with Austrian teachers (who are in 99% no entrepreneurs).
Thinking out of the box – but stay in the sandbox
„Regulatory sandboxes“ shall allow the „legal proof of concept“ of innovative ideas at an early stage, that aren’t covered by the existing commercial code. This will involve close cooperation with the competent authority to test and adapt their business concept.
ECOVIS Assessment: good suggestion, probability of implementation: high!
But what about taxes?
A reduction of the corporate income tax rate from 25% to 21% is planned plus the abolition of the minimum corporate tax rate is under review.
ECOVIS Assessment: Start-ups (normally) do not pay corporate taxes because of losses – thus, no real gain for the start-up world! Probability of implementation: high
Last but not least, the progressive income tax rates will be reduced to 20%, 30% and 40% (from 25%, 35% and 42%).
ECOVIS Assessment: Probability of implementation: high
Question ECOVIS (concerning the planned corporate tax and income tax reduction): Who will pay the bill?
Nevertheless the probably most important tax burden of companies remains kind of „unmentioned“: payroll related costs, which are far too high, are currently only under review for „reduction potential“.
ECOVIS Assessment: We have been hearing the will to reduce the payroll related costs for the last 25 years, no real improvements have been made up to now = probability of implementation: low (but this measure would be one of the most important ones, because this topic is a real Austrian competitive handicap and also effects start-ups even in early stages.)
To be continued…
By now, the actual implementation and handling of the planned measures is still pending – nevertheless – the direction seems to be right.
Sneak Peek of the next Jodler: „Part 2 – What to expect as an investor”.
Autoren:
David Gloser, Partner, Chartered Accountant and Tax Advisor
and
Barbara Hölzl, Tax Advisor from ECOVIS Austria