Austria’s green incentives grab attention of business owners

Employers may be interested in Austria’s incentives to encourage business investment in green technologies, writes Günther Stenico, a Partner and tax specialist at TPA Austria.

As Austria strengthens incentives to encourage business investment in green technologies, including battery-powered cars and bicycles, changes to benefit-in-kind taxes may grab the attention of employers.

In June, Austria’s Minister for Climate, Energy and Transportation announced electric car buyers will get a €5,000 subsidy, increased from €3,000.

Grants for electric charging points also went up from July 2020 – subsidies for installing charging infrastructure tripled to €600 for domestic wallboxes and €1,800 for charging stations in multi-party buildings.

These incentives came after Austria released its Investment Premium Act that included funding guidelines by the Federal Ministry for Digitalization and Business Location, as part of its economic stimulus response to COVID-19.

Grants of up to 14 per cent will be available through the investment premium program, which runs from September 1, 2020, to February 28, 2021, if the investment is related to digitization, greening, or health and life science.

An investment in electric cars for a business falls under the category of greening, meaning a grant of 14 per cent will be available, in addition to other incentives.

Pure electric vehicles are also exempt from standard consumption tax and motor-related insurance tax, while the benefit-in-kind tax for employees is reduced to 0 per cent.

The cut to benefit-in-kind tax may be of particular interest to employers.

Combined with a partial input tax deduction for the employer and the new investment premium of 14 per cent for electric cars, the provision of an electric car compared to a salary payment can bring up a cost saving of up to 50 per cent.

The changes mean converting part of an employee’s salary package, or incorporating an increase in salary, into providing an e-car is financially a very attractive alternative.

Like many countries, Government stimulus is helping the national economy recover from the shock brought about by COVID-19.

In Austria, it is being directed preferentially to a sustainable recovery. The Investment Premium Act gives increased rates of support for businesses making green investments.

But it also explicitly excludes support for investments that negatively impact on the climate.

Austria saw a rapid rise in plug-in electric car sales during the first two months of 2020, up 67 per cent year-on-year, before COVID-19 brought the momentum to a rapid halt.

But the nation has lagged behind others in terms of battery electric cars, which make up less than 1 per cent of vehicles on its roads.

Benefits extend not only to cars but special e-vehicles such as e-forklifts and e-construction machines, as well as charging point infrastructure.

The one caveat is that the sale cost of a vehicle must not exceed €60,000, however that ceiling leaves many cars in reach, including the Audi e-tron, BMW i3, Kia e-Niro, Renault Zoe and Tesla Model 3.