AustriaTax Obligations Detailed

As of today, February 5, 2025, Austrian employers face several tax obligations related to their employees. These obligations encompass income tax, social security contributions, and other levies.

Income Tax

• Withholding and Reporting: Employers withhold income tax directly from employee salaries and remit it to the Austrian tax authority by the 15th of the following month. An annual income tax statement for each employee is due by the end of February (or end of January for non-electronic filings).
• Rates: Income tax rates are progressive, ranging from 0% to 55%. The specific rates for 2025 are as follows:
  • Up to €11,693: 0%
  • €11,693 to €19,134: 20%
  • €19,134 to €32,075: 30%
  • €32,075 to €62,080: 41%
  • €62,080 to €93,120: 48%
  • €93,120 to €1,000,000: 50%
  • Over €1,000,000: 55%
• Special Payments: "Special payments," such as the 13th and 14th-month salaries, have a favorable tax treatment. The first €620 is tax-free. The remaining amount is taxed at 6%, up to one-sixth of the annual regular salary.
• Tax Return: Employees are generally not obligated to file a tax return if their income comes solely from employment. If required, the deadline is April 30th of the following year or June 30th for electronic filings. If using a tax advisor, the deadline extends to March 31st of the second following year.

Social Security Contributions

• Employee and Employer Contributions: Both employees and employers contribute to the social security system, which covers health, accident, unemployment, and pension insurance.
• Rates and Basis: The employee contribution rate is 18.07% for regular payments and 17.07% for special payments. The employer contribution is 20.98% on regular payments and 20.48% on special payments. These contribution rates are calculated using the gross regular payments and special payments respectively. Regular payments have a monthly contribution basis limit of €6,060 while the contribution basis limit for special payments is €12,900 annually.
• EU Regulations and Agreements: EU Regulation 883/2004 and various social security agreements may exempt certain employees, such as extended business travelers, from Austrian social security contributions.

Other Taxes and Levies

• Family Burden Equalization Fund (FLAF): Employers contribute 3.7% of gross salary to the FLAF.
• Municipal Payroll Tax: A 3% tax on gross monthly salaries applies to employers with a permanent establishment in Austria.
• Chamber of Commerce Surcharge: Members of the Austrian Chamber of Commerce pay an additional surcharge, which ranges from 0.31% to 0.40%, depending on the federal state.
• Public Transportation Levy (Vienna): Employers in Vienna pay €2 per week per employee for public transportation.

General Information

• Registration: Before processing payroll, employers must register with the local tax authority and the social security authority.
• Payroll Cycle: Salaries are typically paid monthly, by the last working day of the month.
• Minimum Wage: While there's no statutory minimum wage, the Austrian law against wage and social dumping ensures similar wage conditions within the same industry. A benchmark figure is €1,700 per month for full-time employees.
• Working Hours: The standard workweek is generally 38.5 or 40 hours, with a maximum of 12 hours per day (including overtime).

It is important to remember that this information is current as of February 5, 2025, and may be subject to change due to legal or regulatory updates. Consulting with a tax advisor is always recommended for personalized advice.

In Austria, employee tax deductions encompass income tax, social security contributions, and other potential deductions for specific expenses and allowances.

Income Tax

• Progressive Tax Rates: Austria's income tax system uses progressive rates, meaning higher earners pay a larger percentage of their income in tax. For 2025, the tax brackets are:
  • Up to €13,308: 0%
  • €13,308 to €21,617: 20%
  • €21,617 to €35,836: 30%
  • €35,836 to €69,166: 40%
  • €69,166 to €103,072: 48%
  • €103,072 to €1,000,000: 50%
  • Above €1,000,000: 55%
• Tax-Free Allowance: A basic amount of income (€19,618.53 for employees in 2025 without 13th/14th-month salaries) is tax-free, including certain tax credits like transportation deductions.
• Lohnsteuer (Payroll Withholding): Employers deduct income tax directly from employee salaries monthly and remit it to the tax authorities.
• Special Payments (13th/14th Salary): These payments are generally taxed at a lower rate of 6% up to certain limits, with the first €620 being tax-free.
• Annual Tax Assessment (Arbeitnehmerveranlagung): Employees are not usually required to file an annual tax return if their sole income is employment income subject to Lohnsteuer. However, filing a return is recommended to claim deductions or if income circumstances change mid-year. The deadline for paper filing is April 30th of the following year, and electronic filing (via FinanzOnline) is June 30th.

Social Security Contributions

• Employee and Employer Contributions: Both employees and employers contribute to the social security system.
• Contribution Rate: The total contribution is typically around 37.45% of the employee's gross salary, with the employee portion deducted directly from the salary.
• Coverage: Social security contributions cover healthcare, pensions, unemployment insurance, and other benefits.

Other Deductions and Allowances

• Work-Related Expenses: Employees can deduct certain work-related expenses, including home office expenses (up to €300 as of 2024), work equipment, training costs, and transportation. A standard deduction of €132 applies if no specific expenses are listed.
• Special Expenses: Deductions are available for specific expenses like church tax, certain donations, and tax consultancy costs.
• Extraordinary Burdens: Deductions are possible for extraordinary burdens, such as high healthcare costs or childcare expenses exceeding certain thresholds.
• Allowances: Various allowances, such as the single-earner or single-parent allowance and the commuting allowance (Pendlerpauschale), can reduce the taxable income.

This information is current as of February 5, 2025, and may be subject to change.

Austrian VAT (Umsatzsteuer, USt) is a consumption tax levied on most goods and services.

VAT Rates

• Standard Rate: 20% (19% in Jungholz and Mittelberg). This applies to most goods and services not covered by reduced or zero rates.
• Reduced Rate (1): 13%. Applies to specific goods and services like certain foodstuffs, admission to sporting and cultural events, wine, and some agricultural supplies.
• Reduced Rate (2): 10%. Applies to certain foodstuffs, restaurant and catering services, books, newspapers, periodicals, passenger transport, and pharmaceuticals.
• Zero Rate: 0%. Applies to intra-community and international transport, exports and certain imports.

VAT Registration

As of January 1, 2025, the annual turnover threshold for mandatory VAT registration for businesses established in Austria is €55,000. There is no threshold for non-resident businesses. For EU-based businesses selling goods online to Austrian consumers, the distance selling registration threshold is €10,000. Businesses participating in fulfillment programs involving Austrian warehouses also require registration. An Austrian VAT number consists of the prefix "ATU" followed by eight digits.

VAT Filing and Payment

• Monthly Returns: Businesses with an annual turnover exceeding €100,000.
• Quarterly Returns: Businesses with an annual turnover between €55,000 and €100,000.
• Annual Return (Umsatzsteuererklärung): Required for all registered businesses, summarizing the year's transactions. The deadline is April 30th of the following year for paper submissions and June 30th for electronic submissions via FinanzOnline.
• Payment Deadline: VAT payments are due by the 15th day of the second month following the reporting period (month or quarter).

Exempt Goods and Services

Several goods and services are exempt from Austrian VAT. These include healthcare, education, financial services, rental of immovable property (excluding residential), betting and gambling, welfare services and certain art forms.

Small Business Exemption (Kleinunternehmerregelung)

Businesses with an annual turnover not exceeding €55,000 (as of 2025) can opt for the small business exemption, allowing them to avoid charging VAT. This also applies to EU-based businesses if their total EU turnover doesn't exceed €100,000. This information is current as of February 5, 2025, and regulations may change. For precise details regarding specific circumstances, consult with a tax advisor.

In Austria, various tax incentives are available for businesses, individuals, and specific activities like research and development.

Individual Tax Incentives

• Personal Allowances: These are tax credits deducted from the tax payable and include allowances for transportation, single taxpayers, sole earners, and retirees. Specific amounts and income limits apply. As of 2025, the transport allowance is €487. Sole earners with one child receive €601, with two children receive €813, with an additional €268 per child. The retiree allowance can be up to €1,476 based on specific criteria such as marital status and income levels.

• Family Allowance: This is a monthly cash payment for children up to age 18 (or 24 if in school or handicapped) and varies according to the child's age. The allowance is dependent on not receiving foreign child benefits and ranges from €138.40 to €171.80 per month depending on the child's age.

• Tax Brackets Adjustments: For 2025, income tax brackets have been adjusted for inflation. The tax-exempt allowance has increased to €13,308. The tax rates remain at 0% (up to €13,308), 20% (€13,309-€21,617), 30% (€21,618-€35,836), 40% (€35,837-€69,166), 48% (€69,167-€103,072), 50% (€103,073-€1,000,000), and 55% (over €1,000,000).

• Incoming Scientists and Researchers: Tax benefits are available for eligible foreign researchers and scientists, including relocation allowance for up to five years (30% deduction on income from scientific activities) and elimination of additional tax burden on specific foreign income for up to 10 years.

Corporate Tax Incentives

• Research and Development (R&D): An R&D tax credit is available, requiring approval from the Austrian Research Promotion Agency (FFG) for tax years beginning on or after January 1, 2012. The application is made after the fiscal year and involves describing projects and demonstrating compliance with requirements.

• Investment Premium: Tax credits of 10% or 15% are available for investments in specific depreciable fixed assets, capped at €1 million per year.

• Value Added Tax (VAT) Exemption for Small Businesses: As of January 1, 2025, small businesses established in other EU Member States can utilize the VAT exemption in Austria under certain conditions.

• Electric Vehicle Incentives: Companies benefit from exemptions on ownership tax, investment incentives for purchases, and exemptions from pollution tax for zero-emission cars. Employee benefits include tax exemptions on private use of company electric vehicles.

Other Tax Incentives

• Donations: Individuals can deduct donations made to specific scientific and artistic institutions up to 10% of their taxable income.

• Double Tax Conventions: Relief from Austrian withholding taxes is available under applicable double tax conventions through either relief at source or refund procedures.

Application Procedures

Specific application procedures vary depending on the tax incentive. Some require applications to the relevant tax office, often along with the annual tax return. Others involve separate applications to specific agencies like the FFG for R&D incentives. For incentives related to international taxation, specific forms and documentation might be required. Always consult official sources and tax advisors for the latest information and specific requirements, as tax laws are subject to change.