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Austria reduced the minimum corporate income tax for limited liability companies (GmbH) from EUR 1,750 to EUR 500 annually (EUR 125 per quarter), effective January 1, 2024. Simultaneously, Austria implemented the EU Pillar Two global minimum tax framework for multinational groups with consolidated revenue of at least EUR 750 million, introducing a 15% global minimum tax rate through income inclusion rules (IIR, effective 2024), undertaxed profits rules (UTPR, effective 2025), and qualified domestic minimum top-up tax (QDMTT, effective 2024). The framework includes safe harbor provisions and requires Pillar II tax return filing even when top-up tax is zero. Austria adopted OECD administrative guidance on January 21, 2025, recognizing 30 jurisdictions with primary or national enforcement systems.
Austria Reduces GmbH Minimum Corporate Income Tax and Implements Pillar Two Rules
Effective January 1, 2024, Austria reduced the minimum corporate income tax for limited liability companies (GmbH) from EUR 1,750 to EUR 500 annually (EUR 125 per quarter). Simultaneously, Austria implemented the EU Pillar Two global minimum tax framework, introducing a 15% minimum tax rate for multinational groups with consolidated revenue of at least EUR 750 million.
Who is affected
The minimum CIT reduction applies to all Austrian GmbH entities, particularly benefiting companies in tax-loss positions that must pay minimum CIT regardless of profitability. Stock corporations (AG) remain subject to the higher minimum CIT of EUR 3,500 annually (EUR 875 per quarter).
The Pillar Two framework affects multinational groups that have reached EUR 750 million in consolidated revenue in at least two of the last four fiscal years. This includes both Austrian parent entities and Austrian subsidiaries of foreign groups meeting the threshold. Companies below this revenue threshold are not subject to Pillar Two rules.
What's changing
Minimum Corporate Income Tax (GmbH)
| Item | Before 2024-01-01 | From 2024-01-01 |
|---|---|---|
| Annual minimum CIT | EUR 1,750 | EUR 500 |
| Quarterly minimum CIT | EUR 437.50 | EUR 125 |
The standard corporate income tax rate remains 23% on all corporate profits.
Pillar Two Global Minimum Tax
Austria introduced three new mechanisms to ensure a 15% global minimum tax rate:
- Income inclusion rule (IIR): Effective January 1, 2024, allows parent entities to collect top-up tax on low-taxed foreign subsidiaries
- Qualified domestic minimum top-up tax (QDMTT): Effective January 1, 2024, ensures Austria can collect top-up tax on Austrian entities before other jurisdictions
- Undertaxed profits rule (UTPR): Effective January 1, 2025, acts as a backstop mechanism allocating top-up tax when IIR does not apply
Three safe harbor provisions simplify compliance: qualified domestic top-up tax safe harbor, transitional country-by-country reporting safe harbor (applicable only for fiscal years 2024–2026, covering de minimis test, effective tax rate test, and routine profits test), and simplified calculation for non-material constituent entities. When safe harbors apply, top-up tax is zero, but filing obligations remain.
On January 21, 2025, Austria adopted OECD Administrative Guidance recognizing 30 jurisdictions with primary enforcement system or national enforcement system regimes, including Austria, Hungary, and several EU and non-EU countries.
What NEO partners and clients should do
- GmbH entities: Adjust minimum CIT quarterly payments to EUR 125 (EUR 500 annually) starting Q1 2024. Verify that any overpayments from 2023 are properly credited.
- Groups at or near EUR 750 million revenue: Conduct threshold analysis for the last four fiscal years to determine Pillar Two applicability. Assess whether safe harbor provisions eliminate top-up tax liability for 2024.
- In-scope multinational groups: Prepare and file Pillar II tax returns for fiscal year 2024 even if safe harbors reduce top-up tax to zero. Implement systems to calculate effective tax rates by jurisdiction.
- Groups with cross-border operations: Review the OECD's recognized jurisdiction list (updated January 13, 2025) to determine whether foreign subsidiaries' QDMTT regimes are recognized, affecting Austrian IIR calculations. Prepare for UTPR compliance beginning January 1, 2025.
Sources
- PwC Tax Summaries: Austria — Corporate Taxes on Corporate Income (https://taxsummaries.pwc.com/austria/corporate/taxes-on-corporate-income)
- PwC Pillar Two Country Tracker (https://www.pwc.com/gx/en/services/tax/pillar-two-readiness/country-tracker.html?iso=AT)
