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Glossar · Tax
Capital Gains Tax Ordinance (KESt-VO)
The legal ordinance defining how Austrian domestic custodians withhold and remit KESt for investors, and which acquisition-cost methods apply.
In essence
The KESt-VO (Kapitalertragsteuer-Verordnung) is a supplementary regulation issued by Austria's Federal Ministry of Finance. It spells out how Austrian custodian banks and brokers are to apply, in practice, the capital-gains-tax concept set out in the Income Tax Act. In particular, it standardises the technical questions that have to be answered identically by every domestic provider withholding KESt.
The Income Tax Act (sections 27 ff.) defines the substantive framework — what is taxable and at what rate. The KESt-VO answers the operational questions: how is cost basis determined? Which method applies when there have been several purchases? How are foreign-currency transactions converted?
Key operational rules
The regulation's central provisions cover:
- Cost-basis methodology: when selling securities acquired through several partial purchases at different prices, the KESt-VO prescribes the weighted moving average price. The earlier-permitted FIFO method has been dropped.
- Treatment of crypto holdings: since 1 March 2022 the weighted moving-average method also applies to cryptocurrencies. Holdings acquired before 28 February 2021 ("legacy holdings") sit outside the regime and remain tax-free.
- Loss offsetting: losses within the financial-asset income category can be offset automatically across all accounts held at the same Austrian institution — the bank issues a year-end loss-offset certificate.
- Foreign-currency conversion: trades in USD or other currencies are converted at the ECB reference rate for the transaction day.
A practical example
An investor holds 100 shares of stock X in a single account, bought on three different dates at €30, €40 and €50. On a sale of 50 shares, the weighted average price is: (€30 × 30 + €40 × 40 + €50 × 30) / 100 = €40 per share. Sold at €55, the taxable gain is €15 per share, or €750 in total. KESt at 27.5% comes to €206.25.
The custodian runs that calculation automatically. The tax certificate handed to the investor already shows the computed gain and the withheld tax.
What the textbooks often leave out
What happens if I hold accounts at several banks? Automatic loss offsetting only runs within a single institution. Losses at Bank A and gains at Bank B can only be offset through the annual income tax return the following year (the assessment option).