Income Tax Optimization
- You are internationally active being tax resident in Austria?
- You want to concentrate on business matters or want to enjoy the fruits of your wealth without being bothered by administrative issues?
In times of increasing transparency, it becomes also more important that one can rely on a tax optimized set up. The tax optimized structuring of various sources of income is one of my specializations.
Different tax rates
Income is not taxed homogeneous in Austria.
Earned income derived from employment, self-employed activity or from a business is subject to a progressive income tax rate with a top rate of 55%. Income from the sale of real estate is subject to an income tax rate of 30%. Income from an investment is taxed at a rate of 27,5% and income from foundations is subject to income taxation at a rate of 25%.
The different tax rates make it possible to achieve tax profits by swapping one stream of income to another.
Different points of time of taxation
Private persons are taxed according to the cash in cash out principle. By managing their cash flow, they are thus able to shift income from one period to another. This might especially be useful in connection with the utilization of tax loss carryforwards as private persons are generally not able to carry forward losses. A diligent cash flow management can thus lead to a significant reduction in taxes.
By carrying out one’s business via a corporation, the tax burden could at least partially be shifted into future periods. Profits will be taxed on occurrence with 25% only while additional taxes of 27.5% would fall due only when profits are distributed.
Limitations to the usage of tax loss carryforwards
Not all losses can be set off against all kind of profits. To mitigate that losses cannot be utilized it might make sense to realize some hidden reserves from time to time.
Thus, it is decisive to structure each and every source of income right from the beginning.
Whatever your financial plans might be, I would be glad if I could support you to achieve them!