Taxes in Austria

Written by Lais Cattassini Moderated by Oleksandra Dosii

Lais Cattassini

Lais is a Brazilian journalist and copywriter with over 17 years of experience, writing about things she knows really well (travelling, cinema, social media trends) and things she loves learning about.

Oleksandra Dosii

Oleksandra is a dedicated marketer with a passion for growing HR-tech products. She believes content marketing is about delivering high-quality content that provides value—not just generating leads. Since 2016, Oleksandra has been involved in tech talent relocation.

Last update: September 29, 2024

Next update: Scheduled for February 1, 2025

In Austria, the taxation system is progressive, meaning that the more you earn, the higher your tax rate. The Ministry of Finance is the branch of the government responsible for the taxation system, and the key components of taxes in Austria include income tax, corporate tax, value-added tax (VAT), and social security contributions.

Income tax in Austria applies to both individuals (employees and the self-employed) and businesses. Austrian residents are taxed on their worldwide income, while non-residents are taxed only on income sourced within Austria. Taxable income includes wages, self-employment earnings, rental income, capital gains, and other forms of income.

For employees, income tax is withheld at the source by the employer. This is known as "Lohnsteuer," and it is deducted from an employee's monthly salary before it is paid. Self-employed individuals and those with additional sources of income must file an annual tax return. Most employed individuals do not need to file a return unless they have additional income or are eligible for certain deductions and credits.

In addition to income tax, both employees and employers contribute to Austria’s social security system, which covers healthcare, pensions, unemployment insurance, and other social benefits. Contributions are mandatory and based on gross income, with employees contributing around 18% of their earnings and employers covering a similar percentage.

What is the income tax in Austria?

Income tax in Austria ranges from 0% to 55%, with the average resident paying around 40%. Both residents and non-residents are subject to income tax in Austria, but residents are taxed on their worldwide income, while non-residents are taxed only on income sourced within Austria.

Austria's income tax rates are divided into several brackets:

Income subject to taxation includes wages, salaries, income from self-employment, capital gains, rental income, and certain other sources.

For employees, income tax is automatically deducted from wages or salaries by the employer each month through the payroll withholding system known as Lohnsteuer.

Social Security contributions

In addition to income tax, employees contribute 37.45% of their salary to Austria's social security system. Contributions cover healthcare, pensions, unemployment insurance, and other social services. These contributions are separate from income tax but based on earnings.

Included in social security contributions are healthcare services (approximately 7.65% of gross salary), pension insurance (22.8%), unemployment insurance (5.9%), and accident insurance (1.1%). Employers also contribute to social security, with rates generally mirroring those of employees.

Self-employed individuals are also required to make social contributions, which cover health insurance, pension insurance, and other social benefits. The rates are similar to those for employees but are based on declared income. Self-employed individuals typically have to file annual returns to determine their contribution amounts.

Online tax calculator for taxes in Austria

To calculate income tax in Austria, you need to understand your salary, rental income, investment income, and other sources of income. You’ll also need to subtract any applicable deductions to determine your taxable income.

Then, you can apply the progressive income tax rates to this amount. You can calculate your net income here.

Annual tax returns in Austria

While some individuals are automatically taxed through the payroll withholding system (Lohnsteuer) and may not need to file a return, self-employed individuals, people with additional income exceeding €730 per year, individuals who have received unemployment benefits or other social benefits exceeding €22,000, non-residents with income sourced in Austria, and individuals seeking tax refunds due to eligible deductions, credits, or allowances should do so.

The Austrian tax year follows the calendar year (January 1 to December 31), and the tax return must be filed by April 30 of the following year if done via paper submission, or June 30 if submitted electronically via FinanzOnline, the Austrian tax authority’s online portal.

How to file your tax return in Austria

If filing electronically, you must first register on FinanzOnline. You will need your Social Security Number (SVNR) and an access code, which can be requested from the tax office.

You will need to present wage slips (Lohnzettel), proof of additional income, deduction receipts, and proof of dependents. There are different forms depending on your income type. The L1 Form is for individuals with standard employment income. The E1 Form is for self-employed individuals or those with business income. E1a and E1b Forms are for detailed reporting of specific income sources, such as rental or foreign income.

You will need to report your income, deductions, and tax credits, such as the child tax credit or single-parent credit.

FinanzOnline will calculate your taxes automatically once you input the required details.

Once the tax return is submitted, the Austrian tax authority (Finanzamt) will review your filing. This process can take anywhere from a few weeks to several months, depending on the complexity of your return and whether additional information or documentation is required. The Finanzamt will then issue a tax assessment notice (Steuerbescheid), outlining whether you owe additional taxes or are due a refund.

If you owe taxes, you’ll need to pay this amount by the deadline specified in the notice. Payments can be made via bank transfer or through the FinanzOnline portal. If the calculation shows that you’ve overpaid taxes due to eligible deductions or credits, the refund will be credited to your bank account. Refunds are typically processed within a few weeks after the assessment notice is issued.

How to pay less taxes

Taxpayers can reduce their tax liability by taking advantage of various tax deductions, credits, and allowances.

Work-related deductions

Taxpayers can claim deductions for costs incurred directly related to their employment or self-employment, such as employee allowance (Arbeitnehmerabsetzbetrag) and work-related expenses (Werbungskosten) like travel expenses, tools and equipment.

Family and child-related deductions

Austria offers generous deductions and allowances for families with children. With the Child Tax Credit (Kinderabsetzbetrag), parents can claim a credit of €58.40 per child per month. This credit is paid out automatically with the family allowance (Familienbeihilfe).

Taxpayers can also deduct up to €2,300 per year per child for childcare expenses, including daycare, nannies, or babysitters, for children under 10 years of age. Single parents can claim a tax credit of up to €1,500 per year, depending on the number of children.

Pension and retirement contributions

Deductions are available for contributions to private pension plans or retirement savings accounts. Contributions made to private pension schemes (such as Zukunftsvorsorge) are deductible up to €2,928 per year. Additional pension insurance premiums are also tax-deductible.

Health-related deductions

Out-of-pocket medical expenses that are not covered by insurance can be deductible, especially for serious illness or disability-related care. Premiums paid for private health insurance, which covers services beyond statutory health insurance, can be deducted.

Individuals with disabilities or parents of children with disabilities can claim higher deductions for certain medical expenses or equipment.

Education and training expenses

Costs for courses, training, or education related to your current profession are fully deductible. These include course fees, materials, and travel expenses related to the course.

Deductions are also allowed for retraining costs if the training is meant to help change professions.

Charitable donations

Donations to recognised charitable organisations in Austria are tax-deductible.

Many charitable organisations report donations directly to the tax authorities, so taxpayers don't have to submit additional paperwork.

Talk to a tax advisor

It can be beneficial to consult a tax advisor or accountant to ensure you pay due taxes correctly and collect the benefits, allowances, and deductions you are entitled to. For expats, services like these can be even more beneficial, as they help foreigners overcome language barriers and the complicated tax regulations of a new country.

Other Austrian taxes

In addition to income tax, Austria has a variety of other taxes that individuals may be required to pay.

Value added tax (VAT) – Umsatzsteuer (USt)

The standard VAT rate is 20%, with reduced rates of 10%, for food, books, and newspapers and 13% for cultural events and accommodation services.

Consumers pay VAT on goods and services, while businesses are responsible for collecting and remitting the tax to the Austrian tax authorities.

Capital gains tax (Kapitalertragsteuer – KESt)

Capital gains tax is levied on profits earned from investments, such as dividends, interest, and the sale of assets like shares, bonds, or real estate. The rate is 27.5% on capital gains, including dividends, interest, and profits from the sale of securities. For savings deposits and insurance payouts, the rate is 25%.

Real estate transfer tax (Grunderwerbsteuer)

This tax is levied when real estate is transferred between parties, whether through sale, inheritance, or gift. The rate is 3.5% of the property’s purchase price. For family transfers of property, the rate is based on the property’s value and is typically 0.5%-3.5%.

The buyer or recipient of the property is responsible for paying this tax.

Property tax (Grundsteuer)

Property tax is calculated based on the assessed value of the property (which is typically lower than the market value) and the local tax rate, often between 0.1% and 0.2%.

Property owners are required to pay property tax each year.

Motor vehicle tax (Motorbezogene versicherungssteuer)

This tax is charged to vehicle owners, and it is paid as part of vehicle insurance premiums. In Austria, there is essentially a road tax for using motor vehicles. It is based on the power of the vehicle’s engine (kW) and can range from around €6 to €40 per kW annually for cars and motorcycles.

Insurance tax (Versicherungssteuer)

This tax is levied on the premiums paid for various types of insurance policies, including life, health, property, and vehicle insurance. The standard rate is 4% of insurance premiums, with specific rates applied to life insurance (11%) and property insurance (up to 16%).

Church tax (Kirchenbeitrag)

Church tax is a voluntary contribution for members of recognised religious communities, primarily the Roman Catholic and Protestant churches. It is used to fund church activities, clergy salaries, and social programs. The rate is around 1% to 1.5% of annual income, depending on the religious denomination.

Members of recognized religious communities are obligated to pay this tax, though individuals can opt out by officially leaving the church.

Tax treaties with Austria

Austria’s wide network of tax treaties, covering over 90 countries, plays a critical role in facilitating international business and preventing double taxation. These treaties help reduce tax burdens on cross-border income.

You can find more information about specific agreements on Austria’s Finance Ministry page.