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The tax system in Austria

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Tax revenue in Austria plays a vital role in the Austrian economy and infrastructure, funding essential services, such as healthcare, education and public works. Please see below for details on the Austrian taxation system.

Income tax

Before paying income tax, it is important to know if you are considered a resident for tax purposes. If you have been living in Austria for six months or less during the previous tax year, you only need to pay tax on income earned in Austria, but if you have been a resident for six months or more, then tax will be due on your income worldwide. In Austria, the financial year is the same as the calendar year.

Income is taxed at a proportional rate, based on your annual income. Rates are subject to yearly change, but currently, vary from 25%-55%. There is also a tax-free threshold, and those who earn under the limit do not have to pay if they meet the requirements.

Tax is paid directly from employer deductions made from your salary, but those who are self-employed will need to file and pay either online, or through the assistance of an accountant. Tax submissions are due for all residents by the 30th of April, or by 30th of June if filing electronically. Tax deductions can be claimed for a variety of work-related expenses, contact the Finance Ministry for more information.

Income tax applies to income earned in a variety of ways, including employment, capital assets, income earned from rental properties, trade and craft sales, and self-employed income.

 Good to know:

Capital gains are taxed at 27.50%.

Sales tax

VAT, or Value Added Tax, is a sales tax added on to the purchase of most goods and services within Austria. The standard tax charge is 20%, but a reduced rate of 13% is imposed on certain products and services, including accommodation, domestic transportation, food and cultural events.

Double taxation agreements

The Austrian government has signed double taxation agreements with many countries worldwide, to ensure citizens and residents who have lived in both Austria and abroad are not taxed twice on the same income earned. For more information on double taxation, please visit the Austria’s Federal Ministry of Finance.

Corporate tax

Corporate income tax is currently at a rate of 25%. This tax applies to both income and capital gains that businesses have earned over the past year. Both foreign businesses who trade in Austria and companies who have incorporated in Austria are obligated to pay this tax. Businesses must also pay a municipal tax, which goes to the local municipality where the company is based.

Other taxes

Other relevant taxes that expats should be aware of include capital gains tax, real estate transfer tax, vehicle tax, and turnover tax.

 Useful links:

Finance Ministry
Income tax calculator (German)
Income and taxation (Austrian government)

We do our best to provide accurate and up to date information. However, if you have noticed any inaccuracies in this article, please let us know in the comments section below.
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