Prepayments of income tax
Employees subject to income tax receive their salaries or wages as a net amount. The employer withholds wage tax from each wage payment and pays the tax to the tax office.
In order that traders, who are not subject to deduction of tax and are assessed after the end of the year, should not be treated more favourably than employees, the former must also make prepayments during the year towards the anticipated income tax liability (Section 45 paragraph 1 of the Einkommensteuergesetz – EStG).
The basis for the calculation of income tax is taxable income, but this can be finally determined only in retrospect. The anticipated income tax, however, must be paid during the current year as income tax prepayments. These prepayments must be made by the following dates:
- 15 February
- 15 May
- 15 August
- 15 November
You will be reminded of the relevant income tax prepayment sums through a notification issued approximately one month before they are due. If you would prefer not to be bothered with the due dates and making payments on time, it is also possible to pay your income tax prepayments conveniently by means of a SEPA direct debit.
In a trader’s first financial year, an estimate of profits is used as the basis of calculation for income tax prepayments.
In subsequent years, the tax office determines the income tax prepayments for the current and following years when it issues the income tax assessment (the prepayments for this year, however, will generally be amended only if the income tax assessment is issued by 30 September).
In general, these regulations also apply to all traders from EU Member States in Austria.
As with the income tax assessment, appeals against the prepayment assessment can be submitted to the tax office supported by a declaration and justification for the requested amendments.
Within one month of the issuing of an assessment
Regardless of the above, a reduction in prepayments can be applied up to 30 September if it is anticipated that the income tax liability will be lower in the current year. This application must be appropriately supported.
On the income tax assessment, the prepayments – like wage tax – are credited to the income tax calculated against the tax tariff. If the income tax prepayments prove to be too low, interest will be charged on corrective payments from 1 October of the following year (arrears interest). This can be avoided by remitting a payment corresponding to the value of the expected corrective payment. There is, however, an exemption limit of 50 Euro. Conversely, if the prepayments have been too high, credit balances will attract interest payable to the taxpayer from 1 October of the following year.
- Section 45 of the Einkommensteuergesetz (EStG)
- Sections 205 and 205a of the Bundesabgabenordnung (BAO)
- Sections 243 to 292 of the Bundesabgabenordnung (BAO)
Responsible for the content: Federal Ministry of Finance