Home / National Industrial Relations / Countries / Austria / Financial Participation / Legal background

Financial Participation

Amendments to the Income Tax Law in 2001 have improved general conditions for employee financial participation. The introduction of such schemes is voluntary.

More than 80% of all participation schemes are voluntary1 with respect to their introduction, size and eligibility. Stakeholders in business and politics agree that the voluntary aspect is one of the key requirements for successful participation schemes.

In 2001 the Austrian Income Tax Law (EstG) was amended to provide tax support for employee share ownership. The relevant provisions are to be found in § 3.1.15b (EstG). There is a personal allowance of EUR 1,460 for employee shares received at a discount or free of charge. Various types of shares benefit from this provision: stock, participation rights ("Partizipationsscheine” and "Substanzgenussrechte”), shares in cooperatives and limited companies, and real dormant partnerships.

In more than half of all employee share ownership schemes, employees are encouraged to participate via discounted prices. Such benefits based on an employment contract are exempted from tax.

Many employee share ownership schemes stipulate holding periods in line with income tax legislation. Tax concessions can only be claimed if the shares are held for at least five years. If shares are sold during this period, all benefits are liable to tax.

Employee financial participation was greatly stimulated by the introduction of these tax concessions.

The participation model of Voestalpine AG, to take one example, is tailored to Austrian legislation. The basis of participation is a series of so-called supplementary collective agreements (opening clauses) under which parts of nationwide wage increases may be used for a specific purpose. In the case of internal company wage increases part of the pay increase proper can be used to extend workers’ participation in the form of shares. The full extent of share transfer amounts to around 3.25 per cent of wages and salaries. In the case of transfer existing tax benefits are used as provided for in Austrian tax law to promote share allocation. Thus each year up to a maximum of 1,460 euros’ worth of shares in a worker’s own company can be transferred to workers tax and contribution-free. Exemption from social security contributions also applies to auxiliary wage costs on the employer side. Employees receive this interest in the company as an additional bonus.2

Wilke, Maack and Partner (2014) Country reports on Financial Participation in Europe. Prepared for www.worker-participation.eu. Reports first published in 2007 and fully updated in 2014.