Up-to-date information on income tax, types of income, tax rates, tax returns, tax credits, income tax prepayments etc.
Information for newcomers
All individuals who have a domicile in Austria or for whom Austria is their usual place of residence are subject to unrestricted income tax (section 1 para. 2 Income Tax Act [EStG]) – ‘unrestricted’ in the sense that in principle, all of their Austrian and foreign income is subject to income tax. In addition, even individuals who are not domiciled in Austria may be liable for tax on certain income generated in Austria (‘restricted tax liability’, section 1 para. 3 EStG]). EU/EEA citizens who are not domiciled in Austria may be subject to unrestricted income tax if their main source of income is in Austria. This ensures that personal circumstances are taken into account for tax purposes; most importantly, the full tax-free minimum subsistence level of at least 11.000 Euro is guaranteed.
A taxpayer may be subject to tax in several countries at the same time. This is the reason for ‘double taxation agreements’ which ensure that nobody is taxed on the same income both in Austria and in a foreign country. For territories with which there is no effective agreement, a general relief is applied in accordance with double taxation regulations.
Income is made up of the sum of all individual incomes.
These may be divided into the following seven income types:
Trading income (income from profits)
- Income from agriculture and forestry (farmers, gardeners, forest managers etc.)
- Income from self-employment (in particular for professionals such as architects, lawyers, notaries, accountants, supervisory board members, as well as directors of a limited company who have a substantial shareholding (over 25 percent) in the company)
- Income from commercial trading (all other sustained independent activity that goes beyond the mere administration or letting of one’s own assets)
Non-trading income (surplus income)
- Income from work that is not from self-employment (e.g. as an official, worker or pensioner)
- Income from rentals and lettings (in particular property rental)
- Income from capital (e.g. savings accounts, securities – such income, however, is generally taxed on realisation under capital yields tax, in which case it does not have to be included in the tax return). For capital assets acquired since 1 January 2011 and disposed of since 1 April 2012, capital gains (e.g. surplus from the sale of shares) also fall into the scope of capital yields tax and are hence also taxed on realisation.
- Other income (e.g. certain annuities, profits from sales of private land, speculative profits, income from incidental conveyancing and other activities, fees for office-holders)
Capital gains that do not fall within the seven types of income ((e.g. gambling profits, lottery wins, gifts) are not subject to income tax.
Special expenses and exceptional costs are subtracted from the total income value. The resulting income (section 2 para. 2 EStG) forms the basis for calculating income tax (see also the section headed ‘Tax rates/Calculation formulae’).
A certain level of basic income (minimum subsistence level) remains tax-free for all unrestricted taxpayers. The tax-free basic income amounts to an annual sum of at least:
- For employees: 12,6001 Euro
- For the self-employed: 11,000 Euro
1) without other deductions as defined in Section 67 EStG (in particular 13th/14th month’s salary); the fact that the tax-free basic income is higher than the basic level of 11,000 Euro is due to additional tax credits. See ‘Tax credits’ for further information.
In the case of partnerships (companies constituted under civil law, open companies and limited partnerships) the individual partners/shareholders (natural persons) are subject to income tax. First, however, in a separate process prior to the income tax assessment, the profit from the business is calculated and certified (section 188 of the Federal Fiscal Code [BAO]). The value of the share of profits attributed to each individual partner/shareholder is determined according to the partnership/shareholder agreement and to the stipulations of the articles of association. This previously calculated share of the profits is then taxed for each partner/shareholder through his or her income tax return. The required annual declaration for determining shared income can also be submitted electronically via FinanzOnline, under Submissions/Declarations.
Traders registered on the business service portal (USP) are able to make use of FinanzOnline and many other online procedures with a single sign-in to the USP. More detailed information about registering with the USP can be obtained from the online advisor for USP registration.
Legal persons (e.g. limited companies (GmbH), public limited companies (AG)) pay corporation tax of 25 percent instead of income tax. Profits can then be distributed to the partners/shareholders of the partnership/company and are then, as capital yields (income from capital assets) subject to further taxation at 27.5 percent – in the form of a capital yield tax deduction, in the case of distributions within Austria.
Various options are available to the trader for the assessment of profits in terms of forms of trading income. Details can be found in the section headed ‘Commercial accounting’.
- Sections 1, 2 and 67 of the Einkommensteuergesetz (EStG)
- Section 188 of the Bundesabgabenordnung (BAO)
responsible for content: Federal Ministry of Finance