Austria Proposes VAT Changes in Draft Budget Accompanying Act 2025

On May 2, 2025, Austria’s Ministry of Finance released the draft Budget Accompanying Act 2025, proposing key tax changes effective January 1, 2026. These include raising the contribution tax on private foundations from 2.5% to 3.5% and introducing a VAT exemption for contraceptives and feminine hygiene products, with full input VAT deduction rights preserved.

On May 2, 2025, the Federal Ministry of Finance (BMF) released the draft version of the Budget Accompanying Act 2025 (BBG 2025) for review. The proposed legislative changes include the following measures:

-          Increase in Contribution Tax for Private Foundations

Effective January 1, 2026, the tax rate on contributions to private foundations will rise from 2.5% to 3.5%.

-          VAT Exemption for Certain Health Products

Also effective January 1, 2026, contraceptives and feminine hygiene products will be exempt from value-added tax (VAT). Businesses will maintain the right to claim full input VAT deductions for these items.