Employers in Austria have several tax responsibilities. These include mandatory social security contributions and other mandatory contributions.

Mandatory Social Security Contributions

Employers are required to make the following social security contributions:

• Accident Insurance (Unfallversicherung - UV): Rates vary by industry/risk but average around 1.3% of gross salary. This is fully paid by the employer.
• Health Insurance (Krankenversicherung - KV): 3.87% of gross salary paid by the employer.
• Pension Insurance (Pensionsversicherung - PV): 10.25% of gross salary paid by the employer.
• Unemployment Insurance (Arbeitslosenversicherung - AV): 3% of gross salary paid by the employer.
• Severance Payment Fund (Mitarbeitervorsorgekasse - MV): 1.53% of gross salary paid by the employer for employees hired after January 1, 2003. This ensures funds are available should an employee be terminated.

Other Mandatory Contributions

In addition to social security contributions, employers are also required to make the following contributions:

• Family Burden Equalization Fund (Familienlastenausgleichsfonds - FLAF): 3.9% of gross salary. This supports family-focused benefits.
• Chamber of Commerce (Wirtschaftskammerumlage - WKU): 0.32% to 0.40% of gross salary (rate varies by federal state). This supports the Austrian Chamber of Commerce's activities.
• Municipal Tax (Kommunalsteuer): 3% of gross salary, but only levied on employers with a permanent establishment in Austria.
• Housing Construction Promotion Contribution (Wohnbauförderungsbeitrag - WBFB): 1% of gross salary. Supports affordable housing initiatives.

Tax Treatment of Special Payments

Employers should also be aware of the tax treatment of special payments:

• 13th and 14th Salary Payments (Christmas and Holiday Bonuses): These receive special tax treatment, taxed at a reduced rate up to a certain threshold.

In Austria, there are several mandatory deductions from an employee's salary. These include:

Income Tax (Lohnsteuer)

Austria operates a progressive income tax system, with rates ranging from 0% to 55% based on your taxable income. This tax is withheld directly from your paycheck by your employer.

Social Security Contributions

These contributions are broken down into four categories:

• Health Insurance (Krankenversicherung): 3.87% of gross salary
• Pension Insurance (Pensionsversicherung): 10.25% of gross salary
• Unemployment Insurance (Arbeitslosenversicherung): 3% of gross salary
• Accident Insurance (Unfallversicherung): Approximately 1.3% of gross salary (rates depend on the industry)

Church Tax (Kirchensteuer)

If you're a member of a recognized religious institution, you'll pay an additional church tax of 1-1.5% of your taxable income.

There are also several deductions that can be used to reduce your taxable income:

Work-Related Expenses (Werbungskosten)

These include trade union dues or membership fees for professional associations, work-related tools and equipment, commuting costs (you can choose between a fixed-rate deduction or claim actual expenses if they exceed the fixed rate), and job-related training and continuing education expenses.

Exceptional Expenses (Außergewöhnliche Belastungen)

These include medical expenses exceeding a certain threshold, costs related to disabilities, and expenses due to family hardships.

Special Expenses (Sonderausgaben)

These include voluntary pension contributions, certain insurance premiums, and expenses related to housing.

In Austria, the standard VAT rate is 20%, which applies to most services supplied within the country. There are also reduced rates of 10% and 13% for specific services such as foodstuffs, hotel accommodation, admission to cultural events, passenger transportation, printed publications, wine and other agricultural products, and the sale of live plants and flowers.

The place where a service is considered supplied for VAT purposes is crucial as it determines where VAT is charged and who is responsible for accounting for it. For B2B (Business-to-Business) Services, the place of supply is generally where the business customer is established. For B2C (Business-to-Consumer) Services, the place of supply is usually where the supplier of the service is established. However, specific rules apply to services related to real estate, cultural, artistic, sporting, scientific, educational, entertainment events, and passenger transport.

VAT Registration Requirements

Businesses supplying taxable services in Austria may have to register for VAT if their annual turnover exceeds specific thresholds. VAT returns are usually filed on a monthly or quarterly basis, depending on your business turnover.

VAT on Intra-Community Supplies

Services supplied to businesses established in other EU member states are considered intra-community supplies. These supplies of services are generally zero-rated in Austria. The customer is responsible for accounting for VAT in their own country (under the reverse-charge mechanism). It's important to collect and validate the VAT Identification Number (VAT ID) of your EU customers.

VAT on Electronically Supplied Services

If you supply electronic services (e.g., e-books, software, online courses) to consumers in the EU, the VAT rate of the consumer's country of residence generally applies. Consider registering for the Mini One-Stop Shop (MOSS) scheme to simplify your VAT reporting obligations for electronically supplied services.

In Austria, there are several tax incentives available for businesses, particularly those involved in research and development, investment, environmental protection, and other specific sectors.

Research & Development Incentives

Businesses involved in research and development can benefit from a 14% tax credit for eligible R&D expenses. To obtain the full premium, an expert opinion from the Austrian Research Promotion Agency might be necessary. Additionally, R&D costs are fully tax-deductible in the year they are incurred.

Investment Incentives

Investment incentives include a tax deduction of 10% (or 15% for green investments) of eligible investment costs, capped at €1 million per year. There are also regional investment incentives targeted towards businesses investing in certain less-developed regions of Austria.

Environmental Protection Incentives

The eco-social tax reform has extended incentives to various renewable energy sources such as solar and wind.

Other Incentives

There are various programs to support new businesses, including tax breaks, grants, and subsidized loans. The film industry in Austria also benefits from tax credits and support programs.

Finding the Right Incentives

The Austrian Business Agency provides comprehensive information about incentives for businesses in Austria. The Oesterreichische Kontrollbank offers financial support and administers certain incentive programs. Consulting a tax advisor specializing in Austrian business incentives is essential for maximizing potential benefits.