Taxes in Austria: a quick overview

Understanding the tax system in Austria is key for individuals and companies to ensure compliance and effectively manage tax responsibilities. This system encompasses a variety of taxes, including income, corporate, and value-added taxes (VAT).

Get an overview of taxes in Austria by exploring the following topics:

The tax system in Austria

The Bundesminsterium für Finanzen (BMF – Federal Ministry of Finance) is the authority in Austria that enforces all fiscal laws and collects taxes. It distributes the tax revenue to public and social services to create a high standard of living for residents.

Austria’s tax year follows the calendar, starting on 1 January and ending on 31 December.

Even though the country has a progressive tax system – from 20 to 55% of earnings – based on income brackets, it has one of the highest personal income tax (PIT) rates for individuals in Europe. It is predicted to decrease to 50% in 2025.

Even though Austria has a wide tax treaty network with 89 countries, it also subscribes to Controlled Foreign Corporation (CFC) rules. Its CFC regulations ensure that companies can’t evade taxes by earning money through businesses they own in other countries, especially if those entities pay very low taxes (less than 12.5%) on things like interest or royalties. Therefore, if a foreign company owned by an Austrian shareholder pays too little tax, the BMF will tax its earnings according to local income brackets while allowing for double taxation agreements.

The national corporate tax rate was reduced to 24% in 2023, which is comparable with many other EU member states, such as Spain (25%), Belgium (25%), and the Netherlands (25.8%), but lower than countries like South Africa (27%) and higher than Singapore (17%).

Austria has no estate, inheritance, gift, or wealth taxes.

What is new about taxes in Austria in 2024?

From 2024, tax advisors will have more time to submit tax returns for their clients. Normally, returns must be filed by 30 June after the assessment year.

However, with this change, tax advisors can submit returns by 31 March of the second year after the tax period, with a possible extension to 30 June. This applies to most tax returns but excludes employee tax assessments. This aims to ease the filing process and is part of broader tax amendments.

Austrian Tax Amendment Act (2023)

Other significant reforms to the Austrian Tax Amendment Act 2023 (Abgabenänderungsgesetz – AbgÄG 2023) published in the Federal Law Gazette include:

• The EU Mobility directive allows more corporate flexibility across borders (e.g., cross-border legal demerger)
• When you invest in a partnership, you must keep a detailed record of the investment’s potential profit for tax purposes
• Austrian withholding tax on dividends is only refunded to the person who owned the shares on the day of the general meeting
• From 2025, the declaration for the exemption from Kapitalertragsteuer (KESt) or capital gains tax on investment homes can only be done digitally
• Clarifications on taxation of cryptocurrencies:
  • only to be taxed if sold for profit, excluding activities like staking, airdrops, bounties, and hard forks
  • calculate the average cost of all units bought over time and in the same wallet/address for tax purposes when you sell the cryptocurrency
  • lending your cryptocurrency to someone else doesn’t count as a trade or sale and will not be taxed
• Profits from selling shares by a foundation can be shifted to lower the purchase cost of new shares. Although this used to include adding value to shares of fully owned subsidiaries, the Supreme Court has ruled that the value reduction on such shares remains but will be taxed when sold.
• If a service provider charges the wrong VAT rate on an invoice, but this mistake doesn’t risk losing tax revenue because the customers can’t claim VAT back, the provider isn’t liable for the incorrect VAT amount. Also, if goods are seized and confiscated for being unlawfully brought into the EU, the customs debt may be cleared, but the import VAT still needs to be paid.
• New rules concerning financial criminal law (to be discussed further under tax avoidance and evasion)

Minimum Tax Act

Austria also introduced a new law, the Minimum Tax Act (Mindestbesteuerungsgesetz), on 30 December 2023.

This policy stipulates that big companies with sales over €750 million in at least two of the last four years must pay a minimum global tax rate of 15%. This is to ensure large corporations pay their fair share of taxes, no matter where they operate.

Starting in 2025, a new rule will ensure that any profits taxed below a certain minimum rate are adjusted to meet this minimum threshold. This is part of a worldwide effort to prevent big businesses from evading taxes by shifting profits to countries with low tax rates.

Who pays tax in Austria?

If you live and earn an income in Austria, you may need to pay income tax whether you are a resident or not.

A resident is an individual whose primary abode is established in Austria for six months or longer, regardless of nationality.

Residents must pay tax on their worldwide income, which includes earnings from employment, business, investments, and property. However, non-residents are only taxed on Austrian-sourced income at the national tax rates, with some adjustments.

How does tax work for expats?

As mentioned above, if you live in Austria and spend more than 180 days (six months) a year in the country, you are officially a tax resident.

However, if you are an expat, you may benefit from the double taxation agreements (DTAs) that Austria has established with many other countries in Europe and worldwide. These DTAs ensure you do not pay taxes twice on the same income. You can access the complete list of treaty partners on Austria’s Federal Ministry of Finance website.

If you are a British citizen, it is worth noting that Austria is included in the Qualifying Recognized Overseas Pension Scheme (QROPS). It allows people who have saved into a UK pension but are retiring abroad to transfer their UK pension to this overseas scheme. The complex rules surrounding transfers and withdrawals make getting financial and tax advice essential.

Austria is a member of the Automatic Exchange of Information (AEOI) system, which allows the exchange of information between tax authorities of different countries to help prevent tax avoidance and evasion.

Do I need a tax ID number in Austria?

In Austria, individuals’ social security numbers (Sozialversicherungsnummer) act as a tax identifier. Your employer usually handles registration for you. Self-employed people can receive theirs through the Social Insurance Institution for the Self-Employed (SVS).

You’ll also need an individual tax number, known as the Abgabenkontonnummer (ATIN). The tax office should issue this to you when you register at a new residence or with the tax authorities. Businesses require a UID Nummer (Umsatzteuer-Identifikationsnummer) for VAT, which you should receive when you register your company.

Types of tax in Austria

Below, you’ll find an overview of the types of taxes in Austria. While some remain the same across the country, others vary according to your region and municipality.

Income tax

The Austrian government levies a tax on residents’ salaries, wages, or any other forms of remuneration, differentiating between income and wage tax. Salaried employees and pensioners pay wage tax (Lohnsteuer), while for self-employed workers, it is income tax (Einkommensteuer). The tax brackets are the same but differ in the collection method.

Austria’s income tax system is progressive, meaning that the rate of taxation (20–55% of taxable income) increases the more you earn.

The government will levy tax on the following types of income:

• Employment
• Self-employment
• Agriculture and forestry
• Commercial operation
• Capital assets
• Rental and leasing
• Other (e.g., savings, interests, and dividends)

You are exempt from paying income tax if your earnings are under the tax threshold of €12,465.

Austria’s tax year runs from 1 January to 31 December, and you must file a paper tax return by 30 April. However, the preferred method is digital, which you can do via the FinanzOnline by 30 June.

The Austrian state uses tax revenue to subsidize various public services and infrastructures.

Income tax for self-employed workers

Income tax (Einkommensteuer) for self-employed workers falls into the same tax brackets as employees. However, as a freelancer (Neue Selbständige), you can expect to pay a tax rate of about 25%. This applies if your income surpasses the tax-free threshold of €12,465.

If your earnings exceed €30,000, you must also pay value-added tax (VAT).

Of course, you can offset several business-related expenses against your income tax return.

Municipal tax

Companies pay municipal taxes (Kommunalsteuer) to the municipality where they have a permanent business establishment. If they have several branches in other regions, the tax is divided among the city councils. In Vienna, businesses also pay an additional employer tax.

Each municipality determines its rate, threshold, and personal allowance for council taxes, ensuring that the tax aligns with local financial needs and priorities. Typically, certain activities or business types might be eligible for reduced rates or exemptions.

As an entrepreneur or company owner, you must calculate the tax due each month and pay it by the 15th of the following month. You can do this electronically via the FinanzOnline portal.

Municipalities use this revenue from municipal taxes to fund public services and infrastructure in their catchment area.

Corporate tax

Corporate tax (Körperschaftsteuer) in Austria has decreased since 2022, from 25% to 24% in 2023. The government will reduce it further in 2024 to 23%.

This rate applies regardless of whether profits are retained or distributed. At the shareholder level, profit distributions face a withholding tax of 23% for corporations and 27.5% for other recipients.

Value-added tax (VAT)

In Austria, Value-added tax (VAT) is called Umsatzsteuer, or UST for short, but you may also hear the term Mehrwertsteuer, as it is often used interchangeably.

Across the country, companies and entrepreneurs must apply a standard 20% VAT rate to the goods or services they sell, with the exemption of the regions of Jungholz and Mittelberg that levy a rate of 19%.

Certain items such as books, newspapers, magazines, and food have reduced VAT rates (i.e., 10%). Also, the BMF taxes tickets to sporting and cultural events, wine production, agricultural supplies, pet food, artists’ services or products, and domestic flights only at 13%.

Companies can still reclaim input VAT for business expenses but charge a 0% VAT rate on the following services or goods:

• Exports or intra-Community supplies of goods from Austria to a third country or another EU member state
• Supply, import, repair, and maintenance of ships and aircrafts under certain conditions
• Supply or import of gold to central banks
• Cross-border passenger transport by air

Other services exempt from VAT include sectors considered essential like healthcare and education and some financial services, for example:

• The sale, purchase, or transfer of ownership of immovable property/real estate
• Healthcare and education supplies
• Insurance and financial services
• Renting of property other than residential
• Supplies of small-and medium-sized enterprises with a yearly (net) turnover below €35,000

Can you get a refund on VAT?

If you visit Austria, you can get a refund on your VAT from shopping if you meet the following criteria:

• You are at least 18
• The purchase amount exceeds €75
• You permanently live outside the European Union (EU)
• You must export the item with your personal belongings within three months of the purchase
• You must prove the export to the seller

Since September 2021, you can have the VAT refund confirmed by Digital Export Validation (DEV) at Vienna International Airport.

VAT for businesses

Businesses in Austria need to register for VAT if their annual turnover exceeds €35,000 or €10,000 for cross-border trade with other EU countries as stipulated by the unified threshold for distance selling across member states (July 2021). However, non-resident entrepreneurs have no threshold; they must sign up for VAT if they have taxable supplies in Austria.

You can register for a VAT number – or UID (Identifikationsnummer für Unternehmen) – electronically via FinanzOnline using the U15 form or submit it to a tax office. This number needs to be visible on all your business invoices. You can also use the FinanzOnline portal to file VAT returns and other tax-related documents and make payments.

If your business activities include cross-border trading with other EU VAT-registered entities (i.e., intra-Community), you also need to electronically file monthly or quarterly ESL (European Sales List) forms (recapitulative statements) to detail these transactions. It ensures accurate tax collection and aids in the prevention of tax evasion.

If your business’s turnover exceeds €750,000 per month, you must also file an Intrastat report, a supplementary declaration.

Generally, companies must file preliminary monthly VAT returns. However, if a business’s annual turnover does not exceed €100,000, they can opt to file quarterly. They also need to file an annual VAT return at the end of the tax year.

Remember that if you are registered as a VAT payer, you must even file a nil VAT return; otherwise, you may be penalized up to 10% of the estimated outstanding VAT payment.

Property tax

In Austria, municipalities levy property tax (Grundsteuer) on the assessed unit value of developed and undeveloped real estate. The tax rate depends on the property’s intended use and is calculated using a special multiplier between 0.1% and 0.2% annually. Councils can apply an assessment rate of up to 500%, increasing the maximum rate to 1.0%.

If the property tax exceeds €75, it is payable in four equal installments on 15 February, May, August, and November. For amounts €75 or below, the full payment is due once a year on 15 May.

Real estate transfer tax (Grunderwerbsteuer) – when you buy or sell a property – is levied at 3.5% of the acquisition price or at least the property value (Grundstückswert). When transferring real estate to close family members in Austria, the tax base is three times the assessed value with a 2% tax rate.

For gifts or inheritances (including those to family or non-family), the tax base is the property’s value, with rates depending on the value:

• 0.5% for under €250,000
• 2% up to €400,000
• 3.5% for over €400,000

Real estate transactions with a tax base of €1,100 or below are exempt.

The state applies a stamp duty to specific types of transactions defined by law that require a written agreement, including:

• Lease agreements: 1%
• Certificates of bonds/pledges: 1%
• Bill of exchange: 0.13%
• Assignment of receivables: 0.8%

Gift and inheritance tax

Austria eliminated inheritance and gift taxes in August 2008. However, you will still have to pay property transfer tax if you inherit real estate. Despite the government abolishing these taxes, you must declare any gifts or inheritance to the tax authority over the value of:

• €50,000: From close relatives and life partners
• €15,000: From anyone else

Notably, you do not need to declare works of art, household items, or occasional gifts up to the value of €1,000.

Payroll taxes

Employers must withhold income tax from salaries and wages above the annual threshold of €12,465 and pay it monthly to the tax authorities. This is called payroll tax and is calculated after deductions (e.g., social security contributions) at a progressive rate of 0 to 55%, depending on the taxpayer’s income bracket.

Road tax

The Austrian motor vehicle tax (Kraftfahrzeugsteuer) applies to all vehicles heavier than 3.5 tonnes. This includes tractors and tractor engines despite their weight. The monthly tax rates are calculated based on the vehicle’s weight, for example:

• 3.5 tonnes to 12 tonnes: €1.55 per tonne
• 12 to 18 tonnes: €1.70 per tonne
• Above 18 tonnes: €1.90 per tonne

The following vehicles are exempt from the Vehicle Taxation Act:

• Used for emergency services (e.g., fire engines and ambulances)
• Buses, rental cars, and taxis
• Tractors and traction vehicles (including trailers) exclusively used for agricultural and forestry operations
• Self-propelled machinery and trailer machines
• Cars with a CO2 emission value of 0g/km (e.g., electric (EV) or hydrogen)
• Vehicles with transit plates, used when legally moving cars across EU borders after buying/selling/importing them

Of course, hybrid vehicles are subject to tax, but only the combustion engine’s power is considered for tax assessment.

When you first register a passenger vehicle (including motorcycles and quad bikes) after buying or importing it, you are also liable to pay the one-off Normverbrauchsabgabe (NoVA) or standardized compensation tax to the dealer who submits it to the tax authorities. As NoVA is calculated based on a vehicle’s CO2 emissions, some are exempt, such as EVs and adapted cars for people with disabilities.

If you plan on driving in Austria on the motorways, you must remember to buy and attach a vignette sticker to your windshield. Prices range depending on the validity periods (i.e., 10 days, two months, and one year). You can learn more and purchase vignette stickers online via the official ASFINAG website.

Environmental tax

In Austria, environmental taxes include the following:

• Energy taxes
• Transport taxes
• Resource and pollution taxes
  • Electricity
  • Natural gas
  • Coal consumption
  • Motor vehicles
  • Vignette for the use of highways
  • Road pricing for heavy vehicles for the use of highways
  • Toll for specific routes on highways
  • Mineral oils
  • Waste deposit levy
  • Fee on water use

Since 1 October 2022, Austria’s Eco-social Tax Reform Act has introduced a carbon tax, initially set at €30 per ton and scheduled to rise to €55 by 2025. To soften the financial impact and prevent companies from relocating, the government introduced measures such as a climate bonus that entities can be offset against tax returns and support for high-energy-use companies.

Several green incentives are also funded by Municipal Credit (Kommunalkredit Public Consulting – KPC) or organizations like the Austrian Promotion Agency (FFG). Examples of these schemes include:

• Raw Materials Management
• Air Pollution Control
• Energy Savings
• Thermal Renovation of Buildings
• Indoor LED Systems
• New Construction in Energy-efficient Design
• Air Conditioning and Cooling
• Thermal Solar Systems

Digital services tax

The digital services tax (Digitalsteuer) in Austria, effective from 1 January 2020, targets large multinational companies. It applies a 5% tax on revenues exceeding €25 million from online advertising services, provided the company’s global revenues are at least €750 million. This tax focuses on the income generated from digital advertising space sales.

Austria intends to eliminate its digital tax once the OECD’s Framework on Base Erosion Profit Shifting (BEPS) Pillar One is in place, aiming to curb tax avoidance, harmonize global tax regulations, and enhance tax transparency.

Tax avoidance and evasion in Austria

According to the Global Tax Haven Index (2021), Austria reported a loss of over $1.3 billion due to global tax abuse. This is equivalent to 1% of the national tax revenue ($125 billion), which is less than the worldwide average of 2.8% and the regional average of 3.1%. The social impact of this lost tax is that it negatively affects 3.82% of the public health budget and 5.82% of the education funds.

The Austrian Tax Amendment Act (2023) has extended the time allowed to investigate and penalize major tax offenses or cross-border VAT fraud from five to ten years, specifically for cases involving fines over €500,000. Furthermore, the court only has jurisdiction to impose sanctions for intentionally committed tax fraud if the penalty exceeds €150,000 (previously €100,000). For other offenses, the amount is €75,000 (previously €50,000), including:

• Smuggling and evasion of import and export duties
• Tax concealment

Austria has adopted the EU’s Anti-Tax Avoidance Directive (ATAD) to stop corporate tax avoidance tactics, including:

• Unfair tax bill reductions
• Improperly reducing interest expenses
• Shifting profits to low-tax countries
• Exploiting differences in tax systems

Fines and penalties for tax fraud in Austria

For tax evasion or avoidance in Austria, there are two types of fiscal criminal proceedings:

• Administrative: By the tax authority for less severe or negligent offenses up to the amount of €100,000
• Judicial: By the ordinary criminal courts for intentional acts of tax fraud above €100,000

Tax fraud and intentional tax avoidance penalties include fines and custodial sentences that vary based on the severity of the offense. For example, tax abuse to the amounts of:

• Over €5,000: Custodial sentence of up to three years
• Over €300,000: Custodial sentence up to 10 years

Additionally, falsifying documents for the purpose of tax evasion can result in fines exceeding €100,000. Negligent tax avoidance typically incurs fines, the amount of which is at the discretion of the authorities.

Penalties for late tax returns

If you fail to submit a VAT return, even a nil one, you may be fined up to 10% of the estimated outstanding VAT payment. Additionally, you may be penalized with 1% of reportable intra-Community supplies, up to €2,200, for failing to submit ESL reports. If you do not file an Infrastat report, you may be liable for a late penalty fee of 10%. These forms are explained under the VAT section.

Failure to declare gifts over specified amounts, as explained under the inheritance tax section, may result in fines of 10% of the value of the donation.

Lastly, if you file your income tax return late without valid reasons, you can incur a surcharge of up to 10% of the due tax. Negligent mistakes on returns might trigger an audit and adjustments, with penalties based on error severity.

Tax advice in Austria

Taxes in Austria can be complex. Therefore, as the information above only provides a general overview, you should always seek professional advice from a financial expert regarding your individual fiscal situation.

The Austrian Chamber of Tax Advisors and Auditors has a handy search portal for finding tax consultants in your area. Alternatively, check out our directory of tax advisors in Austria.

Useful resources

• Bundesminsterium für Finanzen (BMF) – the official Federal Ministry of Finance website with more detailed information on taxes in Austria
• Tax Foundation – more detailed information about the Austrian tax system
• Unternehmenservice Portal – official business service portal of the Austrian Tax Authority
• PWC Austria – detailed explanation of the tax law amendments