Interim tax (Austria)
Zwischensteuer
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Tax on certain investment income of an Austrian private foundation at the corporate income tax rate, credited when the foundation later makes distributions.
The interim tax prevents income from being accumulated in the foundation without tax. When the foundation makes distributions subject to capital gains tax, the interim tax is credited.
In practice
The interim tax compensates for the fact that a private foundation accumulates certain investment income instead of distributing it to beneficiaries. It is credited later, when distributions are made to beneficiaries and are subject to capital gains tax there. In practice, the foundation's interim tax accounts are updated continuously so that it is clear, at the time of each distribution, which credits are available.
Distinctions and common mistakes
The interim tax is not a final burden but a kind of prepayment: it is credited as soon as the private foundation makes distributions that are subject to capital gains tax. It mainly covers interest and gains from capital assets; dividends from participations generally remain exempt. Typical mistakes are missing records of the interim tax still available for credit and distribution plans that ignore the credit.
Relevant in: Austria
Related terms
- Private foundation (Austria)
- Austrian legal form under the Private Foundations Act for permanently dedicating assets to a purpose set by the founder.
- Foundation entry tax (Austria)
- Austrian tax on contributions to a private foundation, generally 2.5 percent of the assets contributed.