AUSTRIA - The introduction of a capital gains tax (CGT), the so-called Vermögenszuwachssteuer, in Austria will not affect increases in pension assets, finance minister Wilhelm Molterer has confirmed.

The coalition government of the social democratic SPÖ and the conservative ÖVP want to tax any increases in personal assets by 25% from next year.

This will include profits from selling shares or property and may be extended to an increase in value of pieces of art someone owns.

Details are currently being negotiated, but the finance minister has confirmed three types of capital gain will be exempt:

Flats and houses owned to live in; the land the houses are standing on, and pension provision.

The last categories will include life insurances and employee profit-share schemes in companies, the finance minister noted in a statement.

"As we want to create tax incentives both in the field of pension provision and employee profit-sharing, we naturally will not include those under the new capital gains tax," said Molterer, adding life insurance was "also a part of pension provision".

Union representatives last week urged the government not to include pension assets in the tax.

"Personal retirement provision is a young plant which has to be watered, not trampled on by a tax," said Alfred Fajdosik, from the conservative civil servants' union ÖAAB.

The sale of shares or property other than one's own, is currently subject to a speculation tax of up to 50% if sold within a year of purchase, but after that is tax free.

The coalition partners in the Austrian government want to raise several million euros with the new tax, as this will go towards filling financial holes in the health insurance companies.

Similar plans are currently being made in Germany as the so-called "Abgeltungssteuer", also a form of capital gains tax, will also exempt pension vehicles from the tax.

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