Austrian tax system and how to pay income tax

Learn about the Austrian tax system, how to get your tax ID, tax refunds, and what income taxes in Austria you have to pay.

Greta

6 minute read

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Updated on 16 Sep 2024

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Living

Navigating Austria's tax system can be complex with its multi-level tax approach, involving taxes at the federal, state, and municipal levels. But we’re here to guide you through the intricacies in simple terms. Learn about the income tax brackets, how to file taxes, available tax deductions and what other taxes you need to pay in Austria.

Austria collects taxes based on residency. This means that people who are considered residents of Austria for tax purposes have to pay taxes in Austria.

You're a resident taxpayer of Austria if

• Your primary residence is in Austria, meaning you live more than 183 days per calendar year in the country
• You work in Austria
• You're a full-time student in Austria
• You earn additional income in Austria, e.g. from real estate or investments

If you're a resident of Austria for tax purposes, you’ll have unlimited liability to pay tax. This means you’ll be liable to pay taxes on your worldwide income. Students who are working part-time and earning more than the tax-free allowance of €11,693 are also liable to pay income tax.

You're a non-resident taxpayer in Austria if

• You live in Austria for less than 183 days per calendar year
• You earn a portion of your income in Austria

If you don’t have Austria as your main residence but work in Austria, you’ll have limited liability to pay tax. In this case, you’ll be taxed in Austria only on your Austrian income.

If you're considered a tax paying resident of Austria there are a few types of taxes you pay. There are some taxes in Austria that are paid by businesses, such as VAT and which are included in the costs of goods you buy but aren't paid by you directly.

But there are also those Austrian taxes which you pay as an individual and which vary depending on your income source and place of residence. Generally, the Austrian taxes you need to pay can be following:

• Income tax
• Social security contributions
• Capital gains tax, which is applied to investments, dividents and savings

Under the Austrian tax system, income tax is collected in 2 different ways: income tax and wage tax. Your type of employment determines which one you pay.

If you're in paid employment you pay wage tax in Austria. Taxes are authomatically deducted from your gross salary before you receive it.

If you're self-employed you pay income tax in Austria. This is the case for freelancers and small-business owners. Taxes aren't authomatically deducted from your salary and you need to file them yourself.

Who needs to pay income tax in Austria?

All income earned in Austria is subject to Austrian income tax. Non-residents also pay income tax on money earned from Austrian sources. Income could be from sources such as employment, rent, capital assets, trade, etc.

Under the Austrian tax system, income tax is charged progressively, ranging from 20% to 55%. You can calculate how much income tax will be deducted by looking at the Austrian income tax rates for 2024 and 2025:

If you have limited liability to pay tax because you’re a non-resident in Austria, you must add a fixed amount of €9,567 to your actual income. This "fictional income increase" ensures fair taxation for residents and non-residents. Additionally, tax-free basic income for non-residents is reduced to €2,000 from €11,000.

Use the Austrian salary calculator to easily determine your earnings after taxes.

Besides paying income tax, you also pay social security contributions. Paying social security contributions is mandatory for everyone working in Austria, and your employer will deduct this amount before paying you your wage.

As an employee in Austria, you pay 18.12% towards social security contributions, and your employer will contribute the remaining 21.03%. If you're a freelancer or business owner, you have to cover your social security contributions by yourself in full.

Depending on your income the social security contributions in Austria in 2024 are:

If you're earning above €76,000 your social security contributions remain the same.

If you're a freelancer, a business owner or you have multiple sources of income, you need to file your tax return.

If you’re working in Austria as an employee, you typically don’t have to file an income tax return. Your employer will deduct income tax and social security contributions every month and send them to the tax office. The net amount will be what you receive in your Austrian bank account.

As an employee you should file a tax return if your personal situation has changed. If that’s not the case for you, then filing an income tax return is necessary. Otherwise, you’ll pay too much or too little tax. For instance, if you got a promotion, lost your job, or simply are eligible for tax refunds based on your personal situation.

How to file income tax in Austria

To file taxes in Austria, log in to FinanzOnline and register yourself on the online portal. You can register using ID Austria. If you don’t have one yet, you will receive access information by post in a few days. Once registered, fill in the L1 form and then declare any tax deductions you may be eligible for.

Alternatively, you can register in person at the tax office.

Check out the demo to get a feel of the FinanzOnlien portal.

The deadline for filing taxes in Austria is 30th June of the following year if you're filling them electronically. If you're filling your taxes via mail, you need to file them before 30th April of the following year. If you miss the deadline, you could receive a late payment penalty.

In Austria, all tax-paying residents receive a Tax Identification Number (TIN), known as Steuernummer or Steuerliche Identifikationsnummer. This 9-digit number is crucial for filing your tax return.

To obtain your TIN, visit your local tax office (Finanzamt) or access it through Finanzonline. As an international resident, you'll find your TIN on official documents related to your Austrian residency, such as your residence permit and registration certificate.

Double taxation agreements are your financial safeguard, ensuring you're not hit with double taxes, one in Austria and another in your home country. They provide clear guidelines on where your income should be taxed. Austria has thoughtfully established double taxation agreements with approximately 84 countries and territories globally. If you're an expat, it's essential to verify the specific terms and provisions of the agreement between Austria and your home country to ensure you're paying the appropriate amount of taxes.

A tax refund in Austria means getting back some of the money you paid in taxes. This typically happens when the deducted tax exceeds the actual amount of tax owed.

Here's what you can claim:

1. Work-related expenses: If you spend money because of your job, like getting to work or buying stuff for work, you can get some of that money back. In 2020 and 2021, you could also get money back for buying office furniture if you work from home.

2. Home office costs: If you work from home, you can get money back for some of the expenses, like part of your rent or the electricity you use.

3. Healthcare bills: If you paid for things like going to the doctor or getting medicine and your insurance didn't cover it all, you can get some of that money back.

4. Education expenses: If you're studying, you can get some money back for things like tuition or books.

5. Giving to charity: If you give money to charities, you can get some of it back as well.

6. Saving for retirement: If you save money for your retirement in a special account, you can pay less tax.

7. Childcare costs: If you're paying for childcare, some of those costs can be refunded.

8. Loan interest: If you're paying interest on loans, you might get some of that money back too.

To apply for a refund, you can fill out a form called ArbeitnehmerInnenveranlagung and submit it to the Austrian tax office. Make sure to keep all your receipts and records, and always check the latest tax rules.