Income tax for EU citizens and other foreign citizens working in Austria

Tax liability in Austria

Only natural persons are liable for income tax in Austria. The Austrian Income Tax Act distinguishes between unlimited and limited liability to pay tax. The nationality of the person is only in exceptional cases a material factor.

Unlimited tax liability

The nationality of the person is not a material factor. Persons who have a domicile in Austria or for whom Austria is their usual place of residence have unlimited tax liability. Those who have a home in the Austrian federal territory that they have regularly used as such over a longer period of time have a domicile in Austria. The home does not need to be their main home but it does have to meet the personal requirements of a home.

Persons have their usual place of residence in Austria if, rather than merely staying there temporarily (e.g. for a holiday or for business travel), they clearly spend longer periods in the federal territory. After a stay in Austria of six months, unlimited tax liability applies in all cases – and on a retrospective basis.

If a person is subject to unlimited tax liability, then all of their income in Austria and abroad (worldwide income) is assessed for tax in Austria.

Limited tax liability

Persons employed in Austria or in receipt of income (e.g. a pension) in Austria, but who have no domicile or usual residence in Austria – regardless of their nationality – are subject to limited tax liability.

Employees with limited tax liability can apply for an assessment of income that is subject to wage tax, which makes it possible to offset certain expenses against tax. For those subject to limited tax liability, however, such an assessment adds the sum of 10,486 Euro to their tax base, which does not apply to those working under payroll accounting terms. The reason for this is that the tax-free minimum subsistence level is taken into account by the country of residence. Since the tax-free limit in Austria is 12,816 Euro, this means that those with limited tax liability have a remaining tax-free basic income of 2,330 Euro.

EU and EEA citizens who are not resident in Austria but whose main income is in Austria (that is, 90 percent of their income comes from Austria, or income from other countries amounts to no more than 12,816 Euro in total) can apply for unlimited tax liability. In such cases, despite the unlimited tax liability, only Austrian income is assessed for tax purposes and the full tax-free minimum subsistence level of 12,816 Euro is taken into account. Moreover, personal tax deductions and extraordinary burdens can be applied.

Tax liability in Austria can be reduced on the basis of double taxation agreements if, for example, the employee has a foreign employer and is working only short-term in Austria. The most important points about double taxation agreements can be found on the website of the Austrian Federal Ministry of Finance (BMF) (see further links).

Paying taxes in Austria

In Austria, there are essentially two different systems for collecting income tax. Employees and pensioners pay a wage tax, while the self-employed pay income tax. The tax rates are the same but wage tax is a special form of income tax and is collected by the employer at the point at which the wage or salary payment is made, and remitted directly to the tax office.

Income tax is collected as part of the assessment process. For this purpose, an income tax return must be submitted to the tax office (generally electronically via FinanzOnline).

For employees, since tax is deducted by the employer, the employees themselves are not required to submit a tax return as a rule. In certain cases, however, they are subject to compulsory assessment, for instance if during the calendar year they have, at least for a time, received two or more incomes simultaneously that were subject to wage tax. Further information on reasons for compulsory assessments can be found on the BMF website (see further links). In particular, if you are resident in Austria and receive your income from an employer located outside Austria, or if you live abroad and receive an Austrian income, it may be useful to find out from the tax office what you need to do regarding the correct assessment of income tax.

Those subject to wage tax will have their income tax assessed by means of the ‘employee assessment’ process. Applications for employee assessment can be submitted to the tax office electronically via FinanzOnline. Using the appropriate forms, it is also possible to send the application by post or to submit it in person to the tax office. Should this result in a retrospective tax demand, the application for employee assessment can be withdrawn unless there are grounds for compulsory assessment.

FinanzOnline

Before starting to use FinanzOnline, a one-time registration is required. You can register with FinanzOnline online on the FinanzOnline home page, in person at a tax office or in writing.

On the FinanzOnline home page, under 'online registration’, an electronic registration form can be opened and registration details entered. Only natural persons can submit an initial online registration to FinanzOnline.

Further links

• FinanzOnline (→ BMF)^{German text}
• Tax Authority Austria (→ BMF)^{German text}
• Austrian double taxation agreements (→ BMF)^{German text}
• Employee assessment (→ BMF)^{German text}
• Personal tax liability (→ BMF)^{German text}
• Wage tax in international context (→ BMF)^{German text}
• The Tax Book (→ BMF)^{German text}
• The Tax Book − English (→ BMF)
• Tax regulations for foreign income (→ AK)^{German text}