Deferred Taxes After Austria’s 2027/2028 Budget Act: Why Foreign Companies Should Review Austrian Financial Statements Now

Aus­tri­a’s 2027/2028 Bud­get Accom­pa­ny­ing Act does more than intro­duce a future tiered cor­po­rate income tax rate. For finan­cial state­ments with report­ing dates after the Nation­al Coun­cil res­o­lu­tion of 8 July 2026, the change may already affect the mea­sure­ment of deferred tax­es. For­eign par­ent com­pa­nies with Aus­tri­an sub­sidiaries, per­ma­nent estab­lish­ments or tax group struc­tures should there­fore review tem­po­rary dif­fer­ences, expect­ed rever­sal peri­ods and the doc­u­men­ta­tion of the applic­a­ble tax rate at an ear­ly stage.

A financial reporting issue, not only a tax return issue

Aus­tri­a’s 2027/2028 Bud­get Accom­pa­ny­ing Act is often dis­cussed first as a cor­po­rate income tax top­ic. That is under­stand­able. Aus­tria keeps the gen­er­al cor­po­rate income tax rate of 23 per­cent, but intro­duces a high­er rate of 24 per­cent for income por­tions exceed­ing EUR 1 mil­lion for finan­cial years start­ing on or after 1 Jan­u­ary 2028. For inter­na­tion­al groups, this may ini­tial­ly sound like a tax plan­ning issue for 2028. The prac­ti­cal point is more imme­di­ate: tax law changes can affect finan­cial report­ing ear­li­er if they influ­ence the mea­sure­ment of deferred tax­es.

This mat­ters for for­eign com­pa­nies with Aus­tri­an sub­sidiaries, Aus­tri­an per­ma­nent estab­lish­ments or Aus­tri­an tax group struc­tures. The local Aus­tri­an finan­cial state­ments are not mere­ly an admin­is­tra­tive appen­dix to group report­ing. They can affect div­i­dend capac­i­ty, bank­ing covenants, local man­age­ment accounts, tax risk assess­ments and the report­ing pack­age sub­mit­ted to a for­eign par­ent com­pa­ny. A group that treats Aus­tria as a small local mar­ket may still face a very spe­cif­ic Aus­tri­an account­ing ques­tion when tem­po­rary dif­fer­ences have to be mea­sured using future tax rates.

What deferred taxes do under Austrian rules

Deferred tax­es reflect future tax charges or tax relief aris­ing from tem­po­rary dif­fer­ences between the car­ry­ing amounts in the statu­to­ry finan­cial state­ments and the cor­re­spond­ing tax val­ues. In prac­ti­cal terms, if an asset, pro­vi­sion, lia­bil­i­ty or accru­al is mea­sured dif­fer­ent­ly for Aus­tri­an account­ing and tax pur­pos­es, the dif­fer­ence may reverse in a lat­er peri­od and then affect tax­able income. Deferred tax account­ing is designed to show that future effect in the peri­od in which it eco­nom­i­cal­ly belongs.

Under Aus­tri­an GAAP, a deferred tax lia­bil­i­ty must gen­er­al­ly be recog­nised where tem­po­rary dif­fer­ences are expect­ed to result in a future tax bur­den. Where the over­all effect is a future tax ben­e­fit, medi­um-sized and large com­pa­nies gen­er­al­ly recog­nise deferred tax assets, while small com­pa­nies have a more lim­it­ed option linked to dis­clo­sure require­ments. Tax loss car­ry­for­wards may be con­sid­ered only where suf­fi­cient deferred tax lia­bil­i­ties exist or where con­vinc­ing sub­stan­tive evi­dence sup­ports the avail­abil­i­ty of future tax­able prof­its. These prin­ci­ples will look famil­iar to many inter­na­tion­al finance teams, but their Aus­tri­an appli­ca­tion needs local doc­u­men­ta­tion.

The tax rate used for mea­sure­ment is not a gener­ic group tax rate. It is the rate expect­ed to apply to the Aus­tri­an tax­pay­er when the tem­po­rary dif­fer­ence revers­es. In Aus­tri­an con­sol­i­dat­ed finan­cial state­ments, a uni­form group aver­age tax rate or the par­ent com­pa­ny’s tax rate is not the cor­rect start­ing point. The rel­e­vant rate is linked to the com­pa­ny in which the dif­fer­ence will reverse. This is exact­ly why the new Aus­tri­an tax tier can become oper­a­tional­ly rel­e­vant before the first 2028 tax return is filed.

Why 8 July 2026 matters for reporting dates

The Aus­tri­an Nation­al Coun­cil adopt­ed the 2027/2028 Bud­get Accom­pa­ny­ing Act on 8 July 2026. The pub­li­ca­tion in the Fed­er­al Law Gazette fol­lowed on 29 July 2026, with the Act large­ly enter­ing into force on 30 July 2026. For cur­rent cor­po­rate income tax pay­ments, the main appli­ca­tion date of the new tiered rate is 2028. For deferred tax account­ing, the key ques­tion is dif­fer­ent: from which report­ing date is the future law suf­fi­cient­ly cer­tain to be reflect­ed in the mea­sure­ment?

Aus­tri­an account­ing prac­tice and AFRAC guid­ance require com­pa­nies to con­sid­er tax rate changes once there is suf­fi­cient cer­tain­ty at the report­ing date. In Aus­tria, that point is com­mon­ly linked to the Nation­al Coun­cil res­o­lu­tion in the third read­ing. As a result, finan­cial state­ments with report­ing dates up to 30 June 2026 will gen­er­al­ly still be based on the pre­vi­ous uni­form 23 per­cent rate. For report­ing dates after the res­o­lu­tion, in prac­tice espe­cial­ly from 31 July 2026 onwards, the new tax rate struc­ture must be con­sid­ered when mea­sur­ing deferred tax­es.

This does not mean that every Aus­tri­an com­pa­ny will show a mate­r­i­al adjust­ment. Some com­pa­nies will remain below the thresh­old. Some tem­po­rary dif­fer­ences will reverse before 2028. Some bal­ances may be imma­te­r­i­al. Still, a doc­u­ment­ed assess­ment is required. The issue can become rel­e­vant in quar­ter­ly report­ing, inter­im pack­ages, IFRS rec­on­cil­i­a­tions, div­i­dend plan­ning and audit prepa­ra­tion much ear­li­er than a pure­ly tax-return-ori­ent­ed time­line would sug­gest.

The new practical question: 23 percent, 24 percent or an average rate?

Mea­sure­ment was rel­a­tive­ly straight­for­ward while Aus­tri­an cor­po­ra­tions were sub­ject to a sin­gle cor­po­rate income tax rate. The new tiered rate requires com­pa­nies to esti­mate when tem­po­rary dif­fer­ences are expect­ed to reverse and what tax­able income is expect­ed in those years. If the rel­e­vant income is expect­ed to remain below EUR 1 mil­lion, 23 per­cent may be the appro­pri­ate rate. If dif­fer­ences reverse in years in which income por­tions above the thresh­old are expect­ed, the 24 per­cent tier or a weight­ed approach may become rel­e­vant.

Under IFRS, where dif­fer­ent tax rates apply to dif­fer­ent lev­els of tax­able income, deferred tax­es are typ­i­cal­ly mea­sured using the aver­age rate expect­ed to apply to the tax­able prof­it of the peri­ods in which the tem­po­rary dif­fer­ences reverse. From an Aus­tri­an GAAP per­spec­tive as well, a com­pa­ny will usu­al­ly need a tax plan­ning view before decid­ing whether the high­er rate is rel­e­vant. The cor­rect answer is not to apply 24 per­cent mechan­i­cal­ly to all deferred tax bal­ances. It is also not robust to con­tin­ue using 23 per­cent auto­mat­i­cal­ly where tem­po­rary dif­fer­ences will reverse in prof­itable future peri­ods above the thresh­old.

For­eign groups should pay par­tic­u­lar atten­tion where Aus­tri­an com­pa­nies are includ­ed in an Aus­tri­an tax group. For the new rate struc­ture, the tax group rules look at the finan­cial year of the group par­ent and the over­all group income. At the same time, indi­vid­ual Aus­tri­an group mem­bers remain sep­a­rate account­ing units for pur­pos­es of deferred tax­es in their statu­to­ry accounts. The inter­ac­tion between local account­ing, tax group income and group report­ing should there­fore be resolved before the year-end clos­ing timetable becomes tight.

Why this is especially relevant for foreign parent companies

For­eign-owned Aus­tri­an enti­ties often oper­ate with­in stan­dard­ised glob­al report­ing process­es. Deferred tax cal­cu­la­tions, tax pack­ages and con­sol­i­da­tion inputs may be coor­di­nat­ed cen­tral­ly. That is effi­cient, but it can cre­ate risk if the local Aus­tri­an rule set is not built into the tem­plate. A for­eign group tax rate, a glob­al spread­sheet mod­el or a broad group assump­tion does not replace the Aus­tri­an com­pa­ny-by-com­pa­ny analy­sis.

The top­ic may be rel­e­vant for Aus­tri­an sub­sidiaries with dif­fer­ent depre­ci­a­tion meth­ods, pro­vi­sions, leas­ing or financ­ing posi­tions, tax loss car­ry­for­wards, reor­gan­i­sa­tions, par­tic­i­pa­tions or intra-group trans­ac­tions. It should also be con­sid­ered in acqui­si­tions, merg­ers and post-clos­ing inte­gra­tions. If a for­eign investor has recent­ly acquired an Aus­tri­an com­pa­ny or plans to expand into Aus­tria, deferred tax posi­tions should be reviewed as part of the due dili­gence and inte­gra­tion process, not only once the statu­to­ry accounts are near­ly final.

Div­i­dend plan­ning is anoth­er prac­ti­cal angle. Under Aus­tri­an law, recog­nised deferred tax assets can trig­ger a restric­tion on prof­it dis­tri­b­u­tions. A remea­sure­ment of deferred tax­es may there­fore affect not only a tech­ni­cal tax line but also the amount that can be dis­trib­uted to a for­eign par­ent com­pa­ny. For groups using Aus­tri­an enti­ties in cash-pool­ing, financ­ing or div­i­dend plan­ning, this is a con­crete busi­ness issue.

Practical steps companies should take now

The first step is to iden­ti­fy the exist­ing tem­po­rary dif­fer­ences in the Aus­tri­an finan­cial state­ments. Com­pa­nies should dis­tin­guish between dif­fer­ences expect­ed to reverse before 2028 and those like­ly to reverse in peri­ods in which the new tax tier may apply. The sec­ond step is to pre­pare a sup­port­able tax fore­cast for the expect­ed rever­sal years. The fore­cast does not need to pre­dict the future per­fect­ly, but it should explain the assump­tions on prof­itabil­i­ty, Aus­tri­an tax group treat­ment, loss car­ry­for­wards and excep­tion­al trans­ac­tions.

The third step is coor­di­na­tion between local account­ing, the tax func­tion, the statu­to­ry audi­tor and the for­eign group finance team. A shared approach is par­tic­u­lar­ly impor­tant where Aus­tri­an GAAP accounts, IFRS report­ing and inter­nal group poli­cies meet. If an Aus­tri­an sub­sidiary reports IFRS fig­ures into a for­eign con­sol­i­da­tion sys­tem, the local assess­ment may also influ­ence the inter­na­tion­al report­ing pack­age. Out­dat­ed spread­sheet log­ic, unchanged ERP para­me­ters or cen­tral tem­plates that still assume a flat Aus­tri­an tax rate are typ­i­cal sources of error.

Final­ly, doc­u­men­ta­tion should be audit-ready. It is not enough to enter a tax rate in the deferred tax cal­cu­la­tion. The file should show which tem­po­rary dif­fer­ences were iden­ti­fied, when they are expect­ed to reverse, how future tax­able income was assessed, how Aus­tri­an tax group treat­ment and loss car­ry­for­wards were con­sid­ered, and why any effect was treat­ed as imma­te­r­i­al. This doc­u­men­ta­tion is also use­ful for man­age­ment, because it makes vis­i­ble whether the issue is finan­cial­ly sig­nif­i­cant or main­ly a com­pli­ance and gov­er­nance point.

Conclusion: a small rate difference with a real process impact

At first glance, Aus­tri­a’s new cor­po­rate income tax tier looks mod­est: 23 per­cent con­tin­ues to apply up to EUR 1 mil­lion, while 24 per­cent applies to income por­tions above that lev­el. In finan­cial report­ing, how­ev­er, even a small rate dif­fer­ence can cre­ate a mean­ing­ful process and doc­u­men­ta­tion require­ment. Deferred tax­es are for­ward-look­ing, and the new rate struc­ture sits exact­ly in that future peri­od.

For for­eign com­pa­nies doing busi­ness in Aus­tria, the key is ear­ly local analy­sis. Heinz Kobled­er — Tax Advi­sors sup­ports inter­na­tion­al busi­ness­es in under­stand­ing Aus­tri­an tax and account­ing impli­ca­tions, align­ing local oblig­a­tions with group report­ing require­ments and prepar­ing doc­u­men­ta­tion that is prac­ti­cal, con­sis­tent and defen­si­ble. Com­pa­nies look­ing for a Tax Advis­er in Aus­tria should address this top­ic before the statu­to­ry audit or group report­ing dead­line arrives. Ear­ly review reduces sur­pris­es, improves coor­di­na­tion with the par­ent com­pa­ny and helps ensure that Aus­tri­an finan­cial state­ments are pre­pared on a reli­able basis.