Budgetary Accompanying Law 2027/28: Focus on Payroll Accounting
Following the Chancellor of the Exchequer's budget speech, the government's draft bill for the 2027/28 Budget Accompanying Law was published. Here is an overview of the key points relevant to payroll accounting:
Unemployment insurance contribution for low earners
The legislator strikes the Reduction in AOV contributions for low wages for new entrants from 01.01.2027, so instead of 0 %, 1 % or 2 %, the standard contribution rate of 2.95 % applies to the employee’s share.
For employment relationships With effect from 01.01.2027, a transitional arrangement lasting several years will likely apply:
| ALV employee share | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 |
|---|---|---|---|---|---|---|---|
| Previous 0 % level: | 0 % | 0,5 % | 1 % | 1,5 % | 2 % | 2,5 % | 2,95 % |
| Previous 1 % level: | 1 % | 1,5 % | 2 % | 2,5 % | 2,95 % | 2,95 % | 2,95 % |
| Previous 2 % level: | 2 % | 2,5 % | 2,95 % | 2,95 % | 2,95 % | 2,95 % | 2,95 % |
Unemployment insurance contributions and the IESG supplement for older people
With effect from 01.01.2027, the general exemption from unemployment insurance for persons aged 63 and over will be rescinded: The employer's contribution to unemployment insurance must continue to be paid until the requirements for retirement are met. Also with effect from 01.01.2027, the exemption from the IESG surcharge for persons aged 63 and over will be abolished.
Maximum contribution base
For 2027, the maximum contribution base will be extraordinarily increased by an additional EUR 150.00 per month or EUR 5.00 per day, and for 2028 by a further EUR 50.00 per month or EUR 1.67 per day.
Home office allowance abolished
From 01.01.2027, both the duty exemption and the tax deductibility of home office allowances will cease.
Family Bonus Plus Split Regulated Anew
With effect from 01.01.2027, the Distribution of Fabo Plus among eligible beneficiaries (Recipient of family allowance, partner or person paying maintenance) restricted: If there is no child under the age of four living in the household and there is no entitlement to increased family allowance, it is no longer possible for one person alone to claim the full amount of Fabo Plus. From the month following the child’s fourth birthday, the Fabo Plus – provided there is no entitlement to increased family allowance – can generally only be divided between the eligible recipients in a ratio of 75:25 or 50:50. According to the intention behind this new regulation, it is designed to create stronger incentives to work.
In order to implement the revised allocation of Fabo Plus, the tax authorities will likely need to amend Form E30. This is expected to result in an increased workload for payroll accounting at the start of 2027.
Benefit-in-kind liability for company electric cars from 2027
A draft amendment to the Regulation on the Value of Non-Cash Benefits provides for the previously announced Abolition of the tax exemption for company electric cars used privately . In 2027, the monthly benefit in kind is to amount to 0.375 % of the acquisition costs, up to a maximum of EUR 180.00. From 2028, an increase to 0.625 % is planned, with a maximum value of EUR 300.00.
It should also be noted that, according to the draft regulation, the requirement to provide benefits in kind applies to pay periods ending after 31 December 2026. From 1 January 2027, it will therefore apply not only to newly registered vehicles or those newly made available to employees, but also to electric cars that were made available previously.
Freezing of family, social and health insurance benefits
The adjustment of family allowance, childcare allowance, family time bonus, sickness benefit, rehabilitation benefit and reintegration allowance will also be suspended for the year 2028.
Employer’s contribution to the FLAF
From 1 January 2028, the DB will fall from 3.7 % to 2.7 %.
The DB concession for people aged 60 and over will cease to apply from 01.01.2028.
Caution Several further measures that have been intensively discussed in recent weeks are now unlikely to be implemented after all. Based on the current state of information, both the intended reintroduction of the redundancy levy and the planned waiting period for unemployment benefit in cases of consensual termination have been taken off the political agenda again.
Status: 01.07.2026
Source: Kraft & Kronberger specialised publications
Photo: Parliamentary Directorate/Bernadette Sattler-Remling
