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TAXES

Austrian tax season: What deductions and claims can help you get your money back?

Austria's high taxes and compulsory contributions help pay for its renowned public services and healthcare - but that doesn't mean you can't use legal deductions and claims to get some money back come tax season.

taxes
Tax season can be complicated. Photo: Elisa Ventur / Unsplash

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 can 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). 

After that, you’ll have to pay income tax on anything that surpasses € 11,693 in a year. It can add up to a substantial amount of your gross income, and contributions are taken automatically from your paycheck if you are a salaried worker.

You can read more about how to file your taxes in Austria HERE.  

However, you can add many tax deductions to your tax return filing to help you get some of your overpaid taxes back.

Tax-reducing expenses

Certain expenses can reduce your taxable income as long as they are directly connected to the revenue, also known as business expenses. This could include training costs, office supplies, and others. 

There are particular circumstances and regulations for some items, especially working from home, training and transportation costs, so it is worth checking your specific case with a tax advisor. 

Every employee can also use a lump sum of €132 per year or calculate each item individually.

READ ALSO: EXPLAINED: The main Austrian ‘tax traps’ foreigners should be aware of

Tax deductions

There are also several tax deductions that you can claim (some, like the pensioner or transportation deduction, will come automatically with your payments and wage). Here are the tax deductions for 2023:

  • Family Bonus Plus up to 18 years: €166.68/month and Family Bonus Plus from 18 years: €54.18/month

Parents whose child is entitled to family allowance are entitled to the Family Bonus Plus.

  • Transportation deduction: €421/year

All employees are entitled to the transportation deduction, which is automatically considered by the employer and settled by a lump sum. 

  • Pensioner deduction: up to €868/year

The agency paying out your pension settles the pensioner deduction automatically.

  • Increased pensioner deduction: up to €1,278/year

This applies if the current pension income does not exceed €19,930 during the calendar year, the person lives in a marriage or registered partnership with someone who earns no more than €2,200 per year and has no entitlement to the single-earner tax credit.

  • Cost of living tax credit: up to €500/year

This year, low-income employees will receive a cost of living tax credit which is automatically taken into account in the employee tax assessment if the requirements are met.

  • Single-earner tax credit: €520/year (in case of one child, more if there are more children)

The single-earner tax credit is due if a taxpayer with at least one child is, for more than six months in the calendar year, married or a registered partner to a spouse subject to unlimited tax liability, or the spouse receives income in 2022 of no more than €6,000 in the calendar year.

  • Support money deduction: up to €62 per month and per child

This tax deduction is for parents who pay child support for a child not living in the household.

READ ALSO: EXPLAINED: What is Austria’s church tax and how do I avoid paying it?

(Photo by MIGUEL MEDINA / AFP)

Other deductions

  • Special expenses

Certain private expenses can be claimed in your tax return, including church tax payments (up to €400), tax-consultancy costs to an unlimited amount, insurance coverage, donations to recognised organisations (deductible only to the extent that they do not exceed 10 percent of the total amount of income of the relevant year of assessment).

  • Environmental expenses

Certain expenses to improve the energy and heat efficiency of a building (such as insulation of external walls, roofs or replacement of windows) are also tax-deductible.

  • Extraordinary burdens

Certain expenses may be considered extraordinary if they are inevitable and if they considerably affect your economic performance capacity. This is often the case with medical expenses, which can be deducted up to a certain amount, depending on income. Prescribed medication is fully deductible; you can also deduct expenses for therapeutic aids, childbirth costs, disabilities and more.

Certain diseases with dietary requirements prescribed by a physician have separate lump sums. For example, people diagnosed with diabetes have a monthly tax allowance of €70.

Extraordinary expenses for dependants can also be deducted in the same way.

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For members

TAXES

Everything you need to know about filing taxes in Austria

One of the difficult things about moving to a new country is figuring out the bureaucracy, especially regarding taxes. Here's what you need to know about the Austrian tax system.

Everything you need to know about filing taxes in Austria

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). 

READ ALSO: EXPLAINED: The main Austrian ‘tax traps’ foreigners should be aware of

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:

Income (€)

Tax rate (%)

11,693 and below

0

11,694 to 19,134

20

19,135 to 32,075

30

32,076 to 62,080

41

62,081 to 93,120

48

93,121 to 1,000,000

50

above 1,000,000

55

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. 

READ ALSO: Explained: How to understand your payslip in Austria

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”. 

READ ALSO: Reader question: Do I need to open a local bank account when moving to Austria?

Filing your taxes is not exactly a fun activity. Photo: Markus Winkler on Unsplash

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.

READ ALSO: EXPLAINED: What is Austria’s church tax and how do I avoid paying it?

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]

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