When it comes to the regulations concerning finance and tax in Austria, what exactly do you need to know? How do the taxes in this European country affect you?
A landlocked country in Europe with so much to offer, Austria is a popular choice for those looking to relocate. Sharing its borders with Germany, Czechia, Slovakian Hungary, Slovenia, Italy and Liechtenstein it has so much to offer. With a mixture of the modern and the historic, this republic is among the wealthiest European countries.
The capital Vienna is home to a quarter of the country’s population and is among the best cities in the world. As one of the founders of the OECD (Organisation for Economic Co-operation and Development), it has a high standard of living. The job opportunities for expats make it a popular choice for many.
Austria has always extended a warm welcome to expats further extending its appeal.
So with it being such a popular choice how does the finance and tax in Austria operate? We take a look at the various taxes and social security system to see how it affects those considering a new life there.
Tax obligations when moving to a new country
Like every country, there are various finance and tax in Austria contributions that need to be paid. They will largely depend on whether you are employed, self-employed or operating your own corporation. Whatever your circumstances, unless you are not working or have no considerable assets to declare, then you will need to pay tax.
For those that are employed, you will be subject to income tax and social security. If you are self-employed, you will need to investigate your self-assessment obligations.
For those that are running a business, it is critical to find out whether you have to pay corporate tax on your worldwide earnings or just those profits that are made in Austria.
First and foremost you need to ensure that you tie up any loose ends in your original country. If you are moving part way through a tax period, you will need to ensure that you have declared and paid any tax owed. You must also inform the tax offices of your new address.
You need to ensure that you receive any correspondence regarding your affairs.
If you are employed, you may discover that you are entitled to a tax refund if you move part way through a tax period.
Once you arrive in Austria, you need to declare your arrival. If you are self-employed, you will need to register for self-assessment. If you are employed, it is up to your employer to inform the tax department, but you may wish to do this too just to be sure.
Income tax rates in Austria
While none of us relish the prospect of paying income tax, unfortunately, it is a necessity.
If you are employed, it is much simpler as your employer does everything for you. If you have a second income, however, you will need to self-assess and submit a tax return.
Income tax is charged at a progressive rate ranging from 0% on earnings up to €11,000 to 55% for earnings on over €100,000.
There are many levels of tax though. For earnings of between €11,001 and €18,000, the rate is 25%. For earnings of €18,001 – €30,000 it is charged at 35% and so on in stages up to 55%. If you are self-employed, you must make quarterly payments in advance.
If you are unsure as to any of the income tax rules and regulations, then it is recommended that you seek the professional advice of an accountant. You can find lots of useful help and resource online as well.
Social security contributions in Malta
Like most European countries if you are moving within Europe then you are covered under the social security system if you are making contributions in your home country.
If your relocation is a permanent arrangement though you are obliged to make payments into the Austria social insurance scheme. This provides you with benefits such as a pension, unemployment benefit, sickness benefits, accident insurance, family benefits etc.
If you are employed, then your employer will make the contributions directly from your salary along with their contributions on your behalf.
If you are self-employed or a contractor then you must register separately and make contributions yourself.
Corporate tax in Austria
The resident address of your company and whether or not you trade solely in Austria will dictate the corporate tax you pay.
If you are solely based in Austria and trading just in this country, then you will be taxed on your profits in Austria.
For people trading worldwide, but your base is in Austria, then you will be taxed on your worldwide profits.
If you are based outside of the country but have an office or branch there, then you will only be taxed on your Austrian profits.
25% on profit
Corporate tax is charged at a rate of 25% on profit.
VAT in Austria
VAT in Austria is known as Mehrwertsteuer or MwSt and is charged at the standard rate 20%. There are reduced rates which apply to some goods and services.
There are reduced rates which apply to some goods and services.
These reduced rates are 13% and 10%.
13% applies to domestic flights, sporting events, wine production and some other services and goods.
10% applies to take-away food, water supplies, domestic transport and a few other products and services.
There is a VAT exemption on intra-community and international transport although this does exclude road and rail.
The VAT threshold for companies is €11,000.
Other Austrian taxes
There is no wealth tax in Austria although the finance and tax in Austria do include a few other taxes.
There is, of course, capital gains tax and dividend tax. Property tax was abolished in 1989, but there is a land transfer tax of 3.5% of the sales price. Another tax that was abolished was the inheritance and gift tax. This was ceased in 2008.
there isn’t a long list of taxes
So apart from the usual as detailed above, there isn’t a long list of taxes that you need to be aware of.
That said if you are unsure as to how the finance and tax in Austria apply to you make sure you do your research.
Perhaps you could enlist the professional services of an accountant if you don’t already have one. It will make your transition into your new life much easier.