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Income and taxation

Income

The average annual gross earnings of employed workers in full employment in Austria in 2016 amounted to € 32,428 (arithmetical mean).
Average income is lowest in the Tyrol and highest in Lower Austria.

Income tax

The Income Tax Act (Einkommensteuergesetz) lists particular types of income:

  • income from agriculture and forestry
  • from self-employed work
  • from trade and craft activities
  • from employment
  • from capital assets
  • from rents and leases, and so on

In Austria there is a progressive rate of income tax (0-50%). The level of income tax depends on the taxable income received in a calendar year. The calendar year is the same as the business year and comprises a period of twelve months.

Annual tax assessment

Along with social insurance contributions, income tax is deducted from employees’ wages or salaries at source and is transferred to the competent authority by the employer. Income tax on employment is also called earnings tax (Lohnsteuer). The tax withheld is a prepayment on the annual tax due, which is only finally settled with the annual tax assessment (Arbeitnehmerveranlagung, previously Lohnsteuerausgleich) corresponding to the taxpayer’s declaration.

Various expenses can be offset against income tax, and lump sums, allowances and special expenses are tax-deductible. For example:

  • sole breadwinner’s allowance
  • single parent’s allowance
  • children’s allowance
  • flat-rate allowance for commuters
  • professional expenses (e.g. business travel expenses)
  • two households necessitated by work
  • extraordinary expenses (e.g. hospital charges)
  • from 2009: support costs for children (e.g. afternoon care outside school)
Please note:
The income tax declaration must be submitted, the annual tax assessment may be carried out. In many cases, as a result of the annual tax assessment, part of the tax paid will be refunded

Social insurance contributions

Social insurance contributions have to be paid by both employees and employers (exception: accident insurance is only paid by employers).

In 2018, the following rates applied (employees’ and employers’ shares combined):

  • sickness insurance: manual workers, white collar workers, freelance workers, new self-employed (GSVG): 7.65%
  • accident insurance: manual workers, white collar workers, freelance workers: 1.3%
  • unemployment insurance: manual workers, white collar workers, freelance workers: 6%
  • pension insurance: manual workers, white collar workers, freelance workers: 22.8%, new self-employed (GSVG): 18.5%

In addition, employees and freelance workers pay 0.5% of their gross income as Chamber of Labour contribution and 1.00% as the housing construction promotion levy (freelance workers do not pay any housing construction promotion levy).
Where applicable, employees pay trade union contributions and contributions to religious communities (e.g. church tax), which are deducted directly from pay.

Other taxes

  • real estate transfer tax (Grunderwerbsteuer)
  • vehicle tax (Kfz-Steuer; engine-related insurance tax)
  • value added tax (VAT): This is paid as an indirect tax on the purchase of a product or service by the final consumer (current rates 10-20%)
  • corporation tax: legal persons (e.g. companies) pay no income tax, but they do pay corporation tax (27.5%)
  • municipal tax: Businesses pay municipal tax to the municipality in which the business is located
  • turnover tax
  • capital gains tax
  • and others
Please note:
Further information on the various taxes can be obtained from the Inland Revenue office and from the Federal Ministry of Finance. All taxes are payable to the Inland Revenue office responsible. Austria has double taxation agreements with all EU Member States and many other countries.
Please note:
annual tax assessment, income tax declaration and the payment of other taxes are tied to particular deadlines.
 

Further information and useful links

Links

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