Tax issues from the government program
With the government program 2025–2029, the new government presented the key points of measures for budget restructuring as well as initiatives to promote growth and employment. Some of the planned measures are summarized below:
- Recodification of the Income Tax Act with the aim of enacting a new Income Tax Act. The goal is to introduce a comprehensive package of measures to simplify processes, reduce bureaucracy, and digitalize payroll accounting and employee assessment.
- To significantly facilitate business transfers, the tax-free disposal allowance will be increased from €7,300 to €45,000 starting 1 January 2027. In addition, the occupational ban on using the income tax “half tax rate” in connection with business closures or disposals after the age of 60 will no longer apply.
- Increase in the assessment basis for the basic tax-free allowance (profit allowance) to €50,000 from 2027 (subject to budget) instead of the previous €33,000.
- Increase in the basic flat rate including input tax allowance from 2025 initially to €320,000 and 13.5%, and from 2026 to €420,000 and 15%.
- Introduction of an attractive “working in retirement” model, under which employees’ additional income is taxed at 25%, and employees are exempt from social security contributions. Employers will pay half of the contributions to pension and health insurance, while the remaining non-wage labor costs will remain unchanged.
- Introduction of an improved tax-free employee bonus for 2025 and 2026.
- Increase in the (tax) luxury threshold for motor vehicles to €55,000 from 2027, with a further increase towards €65,000 (subject to budgetary possibilities).
- Closing the gap in real estate transfer tax from 1 July 2025 in order to more effectively tax large real estate transactions (share deals), for example by aggregating related purchasers.
- Private foundations: increase of the foundation entrance tax and the foundation entrance tax equivalent to 3.5%, and the interim tax for foundations to 27.5%.
- Dedication gains from dedications will be more effectively recorded for tax purposes in 2025 as part of real estate income tax (dedication levy). This regulation will apply to all legal and natural persons.
- Package of anti-fraud measures: abolition of input tax deduction for luxury properties, extension of the reverse charge system for VAT on real estate, more effective structuring of exit taxation, and effective use of new data sources such as automatic exchange of information on crypto accounts.
- Simplification of withholding tax refunds through rapid implementation of the FASTER Directive (e.g., common digital EU certificate for tax residency); coordinated and legally secure framework conditions for cross-border home office/remote working.