Expatriates taking up employment in Austria will be subject to comprehensive regulations and, in some cases, employment visa requirements. The expatriate services team at Grant Thornton Austria assists expatriates and their employers deal with Austrian tax matters, as well as Austrian labour and social security issues.
In particular, Grant Thornton Austria help expatriates, and their employers identify tax planning opportunities and review tax equalisation policies, as well as provide compliance services regarding Austrian tax, social security and labour law requirements.
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Before expatriates take up employment in Austria, it is important to ensure that the expatriate’s employment contract and benefits package are structured in a tax-efficient manner.
In addition, visa and work permit requirements may have to be observed:
Non-EU/EEA citizens may file applications for the issuance of work permits with the Public Employment Service (AMS).
The Austrian tax period is set for a calendar year.
Monthly payroll tax has to be deducted and paid to the Austrian tax authorities by the employer if he or she has a permanent establishment (PE) for payroll tax purposes (in general, if the employment is longer than one month). Furthermore, the employer has to comply with annual payroll tax reporting requirements. Employer payroll tax reports are due by the end of February of the following tax year when filed electronically.
For the employee, the income tax requirements can be fulfilled through the payment of payroll tax. However, an annual tax declaration may be obligatory, if the employee has other sources of income in Austria, depending on the specific circumstances.
Tax declarations are also obligatory for employees with Austrian Double Tax Treaty (DTT) residency, if they have additional foreign income that is exempt from Austrian taxation under the DTT.
Employee income tax declarations are due by June 30th of the following calendar year (or by April 30th if submitted in paper form) if the employee is not represented by a tax advisor. A penalty of up to 10% of the tax due may be imposed at the discretion of the tax authorities in cases of late filings of tax declarations. In addition, interest is due on any tax owed.
Employees with limited tax liability in Austria only have to file a tax declaration if their Austrian source income that has not been subject to payroll tax exceeds € 2,421.00-.
Employees who are not required to file a tax return can still choose to file one within five years after the end of the respective tax year e.g. to consider deductible expenses that have not yet been taken into account in the payroll.
The following progressive income tax rates apply to the annual taxable income:
Income (2024) Tax Rate (2024)
up to € 12,816 0 %
up to € 20,818 20 %
up to € 34,513 30 %
up to € 66,612 40 %
up to € 99,266 48 %
up to € 1,000,000 50%
above € 1,000,000 55 %
Income (2025) Tax Rate (2025)
up to € 13,308 0 %
up to € 21,617 20 %
up to € 35,836 30 %
up to € 69,166 40 %
up to € 103,072 48 %
up to € 1,000,000 50%
above € 1,000,000 55 %
Employees pay income tax at reduced rates on special payments such as the 13th and 14th salary and certain bonuses provided that these payments remain within the annual limit, which is one-sixth of their annual regular salary in the respective year.
Annual amount of irregular
remuneration in € (within the
ceiling amount
and after deducting
corresponding employee
social security contributions) Tax rate that applies to special payments
First € 620 0,00%
Next € 24,380 6,00%
next € 25,000 27,00%
next € 33,333 35,75%
above € 83,333 regular tax rate
The employee has no children and receives a monthly salary of € 3,000 per month and € 6,000,- special payments (holiday and Christmas payment) per year. The employee’s home is 30 kilometres from his place of work and using public transport for the commute would theoretically be possible. In line with most collective agreements in Austria, he is entitled to 14 salary payments per year.
42,000.00 Gross Salary
- 7,529.40 Social Security Contributions
- 3,491.15 Wage Tax
= 30,979.45 Net Salary
For tax purposes, individuals are considered tax residents in Austria if they have either their domicile or habitual abode in Austria. Resident taxpayers are in general taxable on their worldwide income (unlimited tax liability). Married individuals and children are taxed separately.
Individual non-resident taxpayers are generally subject to tax in Austria on their income received for work performed in Austria. A tax must be filed if the Austrian income that has not been taxed through withholding (payroll tax) exceeds € 2,421.
The zero-bracket for income up to € 13.308 in the income tax table does not apply to non-residents. Instead, an amount of €10,887 is added to their taxable income when determining the tax. Therefore, the zero-tax bracket only applies up to € 2.421.00 taxable income. Furthermore, a tax declaration is obligatory in cases where the non-resident taxpayer earns income subject to Austrian payroll tax from two sources. Generally, a non-resident may only deduct expenses that are linked to their taxable income in Austria. Personal tax credits are usually not granted to non-residents.
Non-residents from the EU and the EEA can apply to be treated as residents for Austrian tax purposes if at least 90% of their worldwide income is subject to Austrian income tax, or if income not taxed in Austria does not exceed € 13,308.
Domicile
A domicile is a place where the individual maintains a residence under circumstances, which indicate that they will keep and use it on more than just a temporary basis.
Habitual abode
An individual is considered to have their habitual abode in Austria if the person is physically present in Austria for more than 183 days within a year.
Income from employment includes any remuneration, in cash or in kind received by an employee, regardless of whether paid by the employer directly or by a third party.
As a rule, the employer is required to deduct and retain the tax on such income at source. The taxation at source applies to most expatriates moving to Austria. In addition, they have to file a tax declaration if they have other sources of taxable income or if they intend to consider certain deductible expenses.
The regulations of the double taxation agreement between Austria and the respective other country must be observed. In general, the source of employment income is deemed to be in Austria if the work was performed in Austria. For this purpose, it is irrelevant, when, where and in which currency the remuneration is paid or where the contract was signed.
In Austria, most non-monetary benefits are taxable and subject to social security contributions and income tax as well as to employer payroll taxes (incidental wage costs). In any case, the benefit and incentive package of expatriates coming to Austria should be reviewed in detail regarding tax implications.
The most common types of taxable benefits in kind for expatriates include:
Insurance premiums paid by the employer whereby the employee or his/her family are beneficiaries are generally taxable. A tax-free amount of € 300 applies for certain types of insurance under certain condition.
Employer contributions to a pension fund are tax free under certain conditions.
Company events are tax free up to an amount of € 365 per employee per year. Non-cash benefits (e.g. Christmas presents) are tax free up to an amount of € 186 per employee per year.
Employee stock purchase programs that meet certain requirements may be tax exempt up to an annual amount of € 3,000.
Payments the employer makes towards childcare costs of the employee are tax free up to an amount of € 2,000 per child per year.
Employee meal vouchers may be tax-free up to an amount of € 8,00 (if consumption at workplace or a restaurant or prepared by a restaurant) or € 2,00 (for purchase of food) per working day.
Inbound expatriates
Starting with the year 2016, it is possible to consider for inbound expatriates a lump-sum amount of 20% (up to € 10.000 per year) of the employee salary as expenses in the monthly payroll. The lump sum expense may also be considered in the tax declaration instead. This provision applies to expats who:
Additionally, instead of the lump sum, employees may deduct actual expenses. Eligible expenses include:
Outbound expatriates
In cases of temporary assignments abroad it is possible under certain conditions to exempt 60% of the remuneration for the assignment (limited to the social security ceiling amount). The assignment abroad has to involve aggravating work risk factors (e.g. temperature, dust, dirt, health risks) or aggravating assignment country factors (countries where travel warnings have been issued or countries that are listed on the DAC List of ODA Recipients issued by the OECD).
The exemption is applicable for employees that are assigned to the project abroad by an employer resident in the EU/EEC or Switzerland or from a permanent establishment located within the EU/EEC or Switzerland provided that:
This tax exemption does not apply to irregular remuneration such as the 13th and 14th salary in Austria and certain bonuses.
Austria has concluded double taxation agreements with more than 80 countries in the world. Where a Double Taxation Agreement (DTA) exists, double taxation is eliminated in accordance with the exemption or the imputation method foreseen in the DTA.
Where no DTA applies, double taxation on most foreign income is alleviated by exempting the foreign income from taxation in Austria provided that the average tax rates and taxation in the other country are comparable and appropriate documentation is maintained.
The foreign income is still considered to determine tax progression. If the conditions are not met, foreign tax paid can be deducted from the Austrian tax payable on this type of income. The credit can however not be higher than the amount of Austrian taxes on such income.
Deductions may include special personal or family expenditures and extraordinary expenses, which can either be claimed in full or up to a certain amount.
Non-resident taxpayers can only deduct expenses that are directly related to their Austrian income. Personal and family expenditures of non-resident taxpayers cannot be considered.
Standard lump sum deduction for expenses: € 132 per year
Tax deduction for commuting, when public transport is considered reasonable, depending on the distance between work and home:
Tax deduction for commuting, if public transport is deemed unreasonable:
Increased values for the period May 2022 – June 2023 applicable Standard lump sum deduction for special personal expenses € 60.
The most frequent tax credits to be deducted from income tax are:
In the personal income tax declaration, various expenses may be deducted from taxable income, including:
In case of assignment to Austria the Anti-Wage and Social Dumping Act (LSD-BG) applies. In accordance to this Act certain documents have to be kept ready (assignment agreement in German or English, salary slips, ZKO form, A1 form).
The assigning company has a duty to notify the Central Co-Ordinating Agency (ZKO - Zentrale Koordinationsstelle des Bundesministeriums für Finanzen), charged with investigating illegal employment, of the Federal Ministry for Finance.
This must happen before taking up an assignment.
For this purpose, the ZKO provides two different forms:
Each must be filed electronically by the permanent employer in the case of an assignment.
The employer is obliged to hold the following documents (in German or English) on site in paper or in electronic form (alternatively with authorized persons – these persons have to be cited in the ZKO form):
Please note: Failure to comply with the LSD-BG requirements or failure to provide the necessary documents during an inspection may result in very high penalties in Austria.
In general, capital gains are considered taxable income irrespective of the holding period (e.g. income from capital investments, dividends, etc.).
The income tax rate on capital gains is in principle 27,5%. A reduced tax rate applies to certain capital gains such as interests from savings accounts and current accounts. In most cases, the capital gains tax is paid by withholding at the source (e.g. by Austrian banks).
This tax in the amount of 30% of the profit may have to be paid in cases of income from real estate sellings. There are exceptional provisions, e.g. for selling a previous primary residence, and for properties bought before March 31st, 2002.
Individuals must generally declare income from the letting or leasing of real estate to the tax office. Only the income, i.e. the surplus, is subject to income tax. The costs associated with letting or leasing, in particular depreciation and other expenses, can be deducted from the rental income as so-called income-related expenses (income - income-related expenses = income).
Income from letting and leasing must be declared in the income tax return regardless of whether the property is located in Austria or abroad. In order to avoid double taxation, foreign rental income can be exempted within the framework of progression or the foreign tax can be credited. The exemption method depends on the respective double taxation agreement.
The income from the various types of income is added together and subject to the progressive income tax rate after deduction of special expenses and extraordinary expenses. The amount of income tax therefore depends on the total amount of income.
As of August 1st, 2008, inheritance and gift taxes have been abolished in Austria. There are however reporting requirements for gifts.
In Austria certain types of taxes are levied by the local communities, while others are imposed at the federal level.
Immovable property situated in Austria is subject to a relatively low real estate tax.
The tax is levied based on the assessed standard value of immovable property. In general, the assessed value of real estate is substantially lower than its market value. Real estate tax is levied at an annual basic federal rate of 0,1% - 0.2% multiplied by a municipal coefficient. Municipal coefficients can range up to 500%.
The acquisition of real estate is also taxable in Austria. The basic tax rate is 3.5%. A lower rate applies to certain ‘acquisitions’, such as inheritances and gifts. The basis for this tax is usually the value of the compensation received.
In certain instances e.g. when the value of the compensation cannot be determined or there is no compensation, the assessed standard value of immovable property times three is used as the basis.
In general, employees are subject to compulsory social security under the Austrian social security system with income they receive for work mainly performed in Austria. Under certain conditions, employees who are placed in another country for not more than five years continue to be subject to social security in Austria even when their place of work is not in Austria during that time. EU/EEC regulations and bilateral social security agreements may override this rule.
Within the EU/EEC and Switzerland, employees are subject to social security in only one country. Collision rules determine which country’s social security system applies based on:
Austria has entered into social security agreements with several countries. Some of these agreements do however only cover pension insurance such a the agreement with the USA or Canada. Full scope social security agreements are in place with other countries such as Serbia and Bosnia.
Generally, these social security agreements only apply to short term assignments and do not cover employees maintaining employment relationships in two countries simultaneously. In such cases employees may be subject to social security in two countries, with each country levying social security on income derived from work primarily performed within its territory.
According to the Austrian social security regulations Social security contributions are only levied on income up to a certain limit:
A separate ceiling applies to certain irregular payments (e.g., 13th and 14th monthly salaries, bonuses):
For 2025, the employee contribution rates are:
Contribution for:
Employee social security contributions are deductible for income tax purpose For 2025 the employer contribution rates are:
Contribution for:
The employer is also liable to certain payroll taxes which are:
In January 2021 a new working from home regulation entered into force. The employer is entitled to pay a tax-free amount of up to € 300 per year (up to € 3 per home office day, up to 100 home office days per year).
If the lump sum is not exhausted, the employee can claim the difference up to this maximum of € 300 as income-related expenses. Additionally, the employee can tax-deduct the costs for the purchase of ergonomic office furniture up to an amount of € 300 per year.
Stock options are treated as income from employment and are subject to the individual progressive tax rates. If the stock options are not publicly traded options taxes are levied at the time of exercise, rather than at the grant date. Tax treaties often refer to the vesting date instead.
There is currently no wealth tax in Austria.
Stamp duties are levied if certain legal transactions such as lease and rental agreements (with extensive exceptions e.g. in cases of housing) or guarantee agreements are concluded in written form. The rates vary between 0,8% and 2% and some duties are levied as a fixed amount.
Under certain conditions even legal documents executed abroad may be subject to Austrian stamp duty, especially if the transaction will be performed in Austria or refers to an object situated in Austria.
Earnings description:
For further information on expatriate tax services in Austria please contact:
Christoph Schmidl
Email: Christoph.Schmidl@at.gt.com
Julia Saric-Bischof
Email: julia.saric-bischof@at.gt.com
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