Tax checklist for the end of 2020

An unusual year is coming to a close, but even so it is still possible to take measures for tax optimization at the end of the year. In addition, not only with granted subsidies, but also with some fiscal innovations, there are things that you should consider and keep in mind in this unforgettable year 2020:

Corona measures

1. Short-time work Phase 3
   From October 1, 2020 to March 31, 2021, short-time work will enter Phase 3. The amount of work can be limited to 30% – 80%. Due to the current lockdown in November, a reduction to 0% is also possible for sectors directly affected.
2. Lockdown November 2020 – directly affected industries will receive an 80% loss of sales. Applications due by December 15, 2020.
3. Applications for the overhead cost subsidy Phase I (over 3 months in the period from March 16 to September 15, 2020) is still possible until August 31, 2021. The regulations on the extension for Phase II (period from June 2020 to March 15 2021) are still a long way off.
4. Hardship fund: the relief measures from the hardship fund will be extended for up to 12 months from mid-March 2020 to mid-March 2021. Subsidies that have been paid out from the hardship fund are to be left tax-free; they are not to be regarded as income.
5. Deferred submission and accommodation of payments: deferrals are currently granted until January 15, 2021. Until that date there will be no deferred interest. It will only then be increased gradually. Payments by installment will also be possible. Discussions are currently underway for planned extensions of the deferrals due to the unfavourable corona situation.

General innovations for investments

1. Low-value assets — purchase by December 31, 2020
   In 2020, the limit for the valuation of a low-value asset was increased to €800 each. This means that all purchases from 2020 onwards of up to €800 in the current year are fully deductible.
2. Investment bonus
   If you have any planned long-term investments, you should act now. Thanks to the AWS (Austria Wirtschaft (Economic) Service) funding, bonuses of 7% for new investments and 14% in investments in the areas of ​​digitization, green (ecological) investments, or health and life science can be applied for. Electric vehicles are currently subsidized twice: on the one hand, by the federal states and the federal government, and on the other hand, by the AWS, in full. The investment bonus is tax-free and does not lead to a reduction in expenses.
3. Half-year depreciation/declining balance depreciation
   If you make purchases in 2020, they can be depreciation for another six months provided they are put into operation this year, even if payment is not made until the next year.For the first time, depreciation can also be applied using the declining balance method. This means that the highest depreciation can be applied in the first year (although in 2021 probably only a half-yearly depreciation can be applied as the regulation only applies from 1.7.2020).

Basic information on tax optimization at the end of the year

Optimization of income and expenditure
Acquisition due by December 31, 2020
At the end of the year, planned expenses can be used to reduce the profit for the current year. By managing payment deadlines, income can also be postponed to the next year liquidity permitting. However, you should keep in mind that these are only temporary tax effects.

The investment-related profit allowance
Acquisition due by December 31, 2020
Up to a profit of €30.000 per year, every taxpayer is entitled to a basic tax allowance of 13%, and a maximum of €3.900 per year. This allowance reduces the tax base. If the profit is more than €30.000 per year, a so-called investment-related profit allowance of 13% of the profit can be claimed. In order to use this, however, an investment of over €800 must be made in an unused, depreciable asset, which should have a useful life of at least 4 years. In addition, preferential securities can also be purchased to cover the investment; these should also be kept for 4 years. The sale of these securities after 4 years is tax neutral. A responsible bank advisor will be able to advise you on any selection of securities that you may have enquiries about.

GSVG contributions
Reductions by December 31, 2020
We help our clients to determine the probable GSVG additional charge for the current year by means of a forecast calculation. Liquidity permitting, this GSVG back payment can be made before 31.12 to the SVS. Should this take place, this expense, which will be due after taxation has been assessed, will reduce the current tax burden.

GSVG exemption for small businesses
Application by December 31, 2020
Tradespeople, doctors and dentists can apply for an exemption of health and pension insurance retroactively for the current year, from the GSVG by December 31st. Prerequisites for this are a turnover in the current year of maximum €35.000, and the taxable income is a maximum of €5.527.92. In this case you would only be covered by compulsorily accident insurance.

Entertainment expenses
Expenses in the period from July 1, 2020 to December 31, 2020 for entertaining business partners can be deducted at 75% (instead of 50% previously).

Increase in flat rates for business expenses
In 2020, the flat rates for determining profit were also increased. Companies are entitled to a flat rate of 45% and service companies to a flat rate of 20% of all sales. In addition, the basic tax allowance is also available.

Naturally, we will be at your side and available if you have any questions.

To make an appointment for a Zoom Meeting, or with us in person, e-mail: info@artus.at or call 01-513 79 00-0.