Works contract with business licence
Just like new self-employed persons, traders exercise their activities within the scope of contracts for work. However, traders require a business licence to carry out their contractual activities.
Under the ABGB, working in exchange for payment constitutes a contract for work. In contrast to a contract of employment, the product of the service is the key element of a contract for work. The work (a specific service) or a particular outcome must be delivered.
It can be difficult to clearly distinguish between the activities performed by a new self-employed person under a contract for work and those performed by a trader in certain cases.
The key features of activities under a contract for work with a business licence are:
- Personal and economic independence from the client
- In general, the activities do not have to be completed personally (representation by third parties)
- Contractors are not bound to follow instructions
- Clients have a corporate structure (office, equipment, etc.)
- The completion of the work or the establishment of a successful outcome automatically leads to the termination of the contractual obligation.
Self-employed persons are not subject to the safeguards under labour law!
Women who are subject to compulsory insurance under the GSVG (Federal Act on Social Insurance for Persons engaged in Trade and Commerce) are entitled to assistance as a benefit in kind and to a maternity allowance.
Since 1 January 2008 contractors with a business licence have been integrated into the self-employed provision model, in a similar way to "redundancy payment (new)" for employees. Further information can be found in the chapter "Provision for self-employed traders and the new self-employed"
Information about professional activities can be found on the website of the relevant chamber or the relevant professional body.
A contractor must fundamentally independently report their activities to the Social Insurance Institution for the Self-Employed (SVS). Irrespective of the above, the contractor must also notify the trade authority of the commencement of activities. This authority then forwards the notification on to the Social Insurance Institution for the Self-Employed.
Deadline: Within one month of authorisation
Contractors have health, pension and accident insurance. Insurance starts on the date that the contractor is authorised to carry out the activities and ends on the last day of the calendar month in which the authorisation on which the compulsory insurance is based expires.
Contractors with marginal income may be exempted from the compulsory insurance upon request. Any person who can prove that they do not reach the annual income threshold of 35,000 euros in accordance with the UStG 1994 (Federal Turnover Tax Act 1994) and whose income from these activities (profit) does not exceed the annual de minimis limit of 5,830.20 Euro for 2022 (5,710.32 Euro for 2021), may be exempted from compulsory health and pension insurance.
However, this only applies for persons who
- were not subject to compulsory insurance for more than twelve calendar months within the past 60 calendar months in accordance with the GSVG ( Federal Act on Social Insurance for Persons engaged in Trade and Commerce) or
- have reached the standard pension age (60 for women and 65 for men) or
- have reached 57 years of age and have satisfied the standard statutory requirements within the last five calendar years before the application.
Inclusion in unemployment insurance
From 1 January 2009 self-employed people who are subject to compulsory pension insurance under the GSVG because of their occupation or are exempt under Section 5 GSVG, can sign up for unemployment insurance voluntarily.
Deadline: Anyone who began to work as a self-employed person on or after 1 January 2009 can join within six months of receiving confirmation of eligibility for voluntary unemployment insurance from the Unemployment Insurance Institution. If they join within three months of receiving confirmation, the unemployment insurance begins at the same time as the pension insurance. If they join later, the insurance begins in the following month.
They must notify the Unemployment Insurance Institution of their intention to join in writing.
Contractors are liable for income tax, but not salaries tax and must submit an income tax statement (form E1German text together E1aGerman text) to the tax office in the following year.
Anyone starting work as a self-employed person must apply to the competent tax office (→ BMF)German text for a tax number.
- Taxation of income earned under a contract for work (→ BMF)German text
- Compulsory insurance for traders (→ SVS)German text
- Contribution calculator (→ SVS)German text
- Unemployment insurance for traders and the new self-employed (→ SVS)German text
- Brochures (→ SVS)German text
- Self-employment (→ EURES)
- Allgemeines Bürgerliches Gesetzbuch (ABGB)
- Gewerbliches Sozialversicherungsgesetz (GSVG)
- Umsatzsteuergesetz 1994 (UStG 1994)
- Federal Ministry of Finance
- Federal Ministry of Labour and Economy