Enhanced Fraud Detection Measures Projected to Generate EUR110 Million for Austria

The Austrian government is moving forward with a comprehensive anti-fraud legislative package, anticipated to yield nearly EUR270 million in additional revenue. Central to this initiative are stricter oversight protocols and improved data utilization, with approximately EUR110 million expected to stem from enhanced inspections, increased staffing of auditors, and optimized data analysis processes.

This legislative proposal, currently under consideration in the National Council, includes a variety of fiscal reforms designed to curb fraudulent activities and close tax loopholes. One significant adjustment involves the elimination of input tax deductions on the rental of luxury properties. Previously, businesses were able to reclaim value-added tax (VAT) paid on residential construction from the government. The removal of this benefit is projected to contribute around EUR50 million in savings, making it the second-largest revenue source within the package.

Further changes target the automotive sector, specifically restricting the reimbursement of the standard consumption tax (Normverbrauchsabgabe) for the sale of car wrecks to foreign buyers. This action is estimated to provide an additional EUR40 million in revenue. Another measure focuses on insolvency proceedings, aiming to make withholding taxes--particularly VAT and payroll taxes--as well as social security contributions non-contestable in court, except where a lack of assets prevents regular bankruptcy proceedings. In such cases, challenges will remain permissible up to a maximum of EUR4,000 to cover procedural costs. This policy is expected to generate EUR30 million.

Penalties for tax evasion are also set to become more stringent. Future regulations will require fines to be imposed even if deliberate fraud results in financial losses rather than gains. Additionally, cash transactions at tax offices will be capped at EUR10,000, aligning with similar restrictions at banking institutions to deter money laundering and the circulation of undeclared funds.

The package also expands disclosure and investigative duties in social insurance fraud cases. Previously, only employers and insured individuals were required to provide information to authorities. Under the new regulations, anyone with relevant knowledge about employment conditions--including clients and employees of other businesses--must cooperate with fraud investigators.

In the construction industry, the government plans to address fraudulent subcontracting arrangements by increasing the principal contractor's liability on projects. The maximum liability rate will rise from 25 percent to 40 percent of the total contract value, reflecting the widespread practice of classifying most fraudulent services as pure labor leasing. This measure is anticipated to add EUR16 million to public revenues.

Government representatives emphasize that tackling tax fraud is not solely a budgetary necessity but also a matter of fairness. The reforms aim to safeguard compliant businesses and taxpayers while closing loopholes that have disproportionately benefited high-income individuals using aggressive tax minimization strategies. The package is also expected to enhance legal certainty and streamline administrative procedures, contributing to fiscal consolidation and promoting greater equity in the Austrian tax system.