Austria notoriously has an excellent but expensive social system. Austrian cities rank high on quality of life due to their great public services, including public transportation, parks and pools, security and social benefits for the population (hello, free childcare!).

All of that, though, comes at a price. If you are employed in Austria, expect a chunk of your gross salary to be deducted immediately from your payslip.  

The most considerable deduction is almost certainly Sozialversicherungsbeiträge or social insurance contributions. It may be broken down into Pensionsversicherung (pension insurance — you pay 10.25 percent of your salary for this), Krankenversicherung (sickness insurance — 3.87 percent of your salary), Arbeitslosenversicherung (unemployment insurance — 3 percent of your salary). 

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If you are employed, your social contributions total 18.1 percent of your salary, while your employer contributes 22.5 percent. However, the rules for self-employed workers and freelancers are different.

After that, you’ll have to pay income tax on anything that surpasses € 11,693 in a year. If you are an employed worker and your salary is your only source of income, you don’t have to file a tax return. However, if you didn’t receive your wages during the whole year or if you have certain deductions of expenses, it might be worth it to do so. 

How much do you pay in income tax in Austria?

Austria has a progressive tax system, meaning the more you earn, the higher your taxes. If, after deductions (including the social security contributions), you earn less than €11,693 in a year, you won’t have to pay any income tax. 

Tax rates are:

These rates and income basis are valid in 2023. From then on, Austria decided to adjust the income amounts yearly based on inflation. You can check more information HERE.

When do you have to do it?

You can file your tax return (also called the ANV or “Arbeitnehmerveranlagung”) for the year of 2022 by April 30th 2023, or by June 30th 2023, if you file your tax return online. There are also different deadlines for those filing through a tax advisor. 

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However, there is still the possibility of filing retroactively for up to five years. So, in 2023, you can file your tax returns for 2018 up to 2023. If you are deducting expenses, be sure to keep the relevant invoices and documents for at least seven years in case of a tax audit.

How do you submit it?

It’s relatively easy to submit your tax declaration online via the official platform FinanzOnline. However, you do need a HandySignatur or Austria ID (which will require some back and forth with mailed letters and an authentication app on your smartphone. 

You can either file your ANV automatically, which is a good option for those expecting returns due to not having been employed for the 12 months of the previous year, or you can do a manual filing. This will be the case for anyone who is claiming deductible expenses.

The system is very straightforward, though you might want the help of a good dictionary or a German speaker. You can add each possible deductible expense or claim allowance in different lines. 

You can then add the IBAN of the bank account you want to receive your tax return if you haven’t done so already. In some cases, the system will ask for an Austrian IBAN, but you can use banks from anywhere in the SEPA area. If you get an error notification, you can just go to the general information on your profile and enter your IBAN as a “foreign bank account”. 

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What can you deduct from your taxes?

You can deduct many things from the taxes that might help you get some money back from the government. For example, in terms of work, any equipment supply or even courses you’ve taken that are related to your job could be deducted. 

If you work from home (at least 26 days in the calendar year), as of 2022, employees can declare a deduction of up to €300, known as the Home Office Pauschale, home office supplies are also considered work-related expenses, which you can deduct individually.

If you incurred unforeseen expenses in 2021 that surpassed your ability to pay them, you might be able to claim them as tax-deductible, according to FinanzOnline. Such costs include medical bills not covered by your health insurance, braces, health care expenses, nursing expenses, and expenses associated with a physical disability.

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Individuals can claim a deduction for church tax up to a maximum of €400. At the same time, charitable contributions to eligible institutions can be deducted up to 10 percent of the current year’s taxable income. Additionally, Austrian tax adviser fees are fully deductible.

The government also gives several allowances. Some, such as the commuter allowance, are usually already added to your payslip. However, you can also claim allowances if you are the sole wage earner (the amount depends on how many children you have) or if you pay child alimony, for example. 

A tax credit known as a Family bonus plus of €2,000 per child can be claimed for children up to the age of 18 years who live in Austria and are entitled to the family allowance (Familienbeihilfe). For children between 19 and 24 (in some cases, 25), the family bonus plus scan be granted up to an amount of €650 yearly.

NOTE: This article is only a guide to some of the more common rules and procedures associated with paying tax in Austria. It is not intended to serve as legal advice. Have we missed something? Get in touch at [email protected]