For Expats

The Austrian Tax System in a Nutshell

The following information is of general nature and may not replace professional advice. It should provide a first guidance on Austrian taxation.

The Austrian tax system is similar to the tax systems within the EU with a focus on income tax and value added tax (VAT). In addition, taxes on wages and salaries, automobilies and real estate are important taxes. Austria, however, does not have gift or estate taxes and longer – they were replaced by a mere gift reporting obligation and the transfer tax on real estate was extended to gifts and inheritances.

1. Income Tax on Individuals

Resident individuals (based on a domicile or habitual abode) are subject to taxation on their wordwide income. Non-resident individuals are subject only on income from Austrian sources.

Certain individuals enjoy privileges based on their international status as employees of international organizations or international institutions (eg international schools). They may be exempt from Austrian taxation on certain income or only subject to Austrian source income.

Double taxation in Austria and a foreign country may be avoided by double tax treaties between Austria and that country. Depending on the residence and the tax treaty, the country of main residence may either tax income exclusively, exempt foreign income, or tax foreign income, but credit foreign taxes paid.

Income is generally subject to progressive rates from 0% to 55%. Residents enjoy a tax-free income of EUR 11.000 per year with tax credits for commuting and children lowering the tax exposure. Flat rates apply to certain investment income (25% or 27,5%) and gains on the sale of real estate (30%). Taxpayers may opt to be taxed at progressive rates (if beneficial) instead by filing a tax return.

Taxes are levied either by way of withholding, self-calculation or prepayment and assessment. Employment income is generally levied by way of wage withholding tax by the employer (Lohnsteuer). Investment income may be levied by banks and corporations as withholding tax (KESt). Gains on the sale of real estate is generally levied by self-calculation by notaries or attorneys that carry out the real estate transfer (Immobilienertragsteuer). Income not levied by withholding or self-calculation taxes are levied by filing a tax return (Steuererklärung) and assessment by the tax authorities (Veranlagung) resulting in a formal tax notice (Bescheid).

Tax filing deadlines are 30 April or 30 June of the following year (electronic filing). In certain cases, deadlines may be extended. For taxpayers that are represented by a tax advisor, the deadline will generally be extended up to March the second-following year.

2. Income Tax on Corporations

Resident corporations (based on a legal seat or place of management) are subject to taxation on their wordwide income. Non-resident corporations are subject only on income from Austrian sources.

Double taxation in Austria and a foreign country may be avoided by double tax treaties between Austria and that country. Depending on the residence and the tax treaty, the country of main residence may either tax income exclusively, exempt foreign income, or tax foreign income, but credit foreign taxes paid.

Income is generally subject to flat tax of currently 25% (reduced to 24% and 23% in the next years). Certain income is subject to tax-exemption, in particular dividends and gains from international participations. Otherwise, corporations are subject to rules against tax avoidance and abuse, resulting in non-deductibility of expenses and taxation of controlled foreign corporations.

Taxes are levied either by way of withholding or prepayment and assessment. Investment income may be levied by banks and corporations as withholding tax (KESt). Corporations are generelly obliged to file a tax return annually (Steuererklärung), tax is then assessment by the tax authorities (Veranlagung) resulting in a formal tax notice (Bescheid).

Tax filing deadlines are 30 April or 30 June of the following year (electronic filing). In certain cases, deadlines may be extended. For corporations that are represented by a tax advisor, the deadline will generally be extended up to March the second-following year.