Germany and Austria tax regulation changes

Germany and Austria have announced various tax regulation updates scheduled for implementation on January 1, 2027.

In Germany, new VAT rules for public law legal entities will take effect following a transitional period ending in late 2026. Under the revised system, federal, state, and municipal authorities, as well as public foundations and guilds, will not be considered entrepreneurs when performing tasks within the scope of public authority, provided no significant market distortions occur.

In Austria, legislative changes aim to provide relief for older entrepreneurs. A new amendment expected in December will allow business owners over age 60 to access a half-rate income tax on profits from business sales or closures, even if they remain active in the workforce.

Additionally, Austria will implement changes to the taxation of remote work under the Budget Accompanying Act 2027–2028. The existing tax exemption for teleworking allowances will be abolished, making these payments fully taxable income subject to social security contributions. This change may increase non-wage labor costs for employers, particularly in cases involving net wage clauses where employers might be required to bear the additional tax and social security burdens.