Taxes / Tax return in Austria

 

When it comes to taxation in Austria, many people have the feeling that tax rates are too high and tax laws are too complicated. Well, they are right... in general :-) A least in your case high taxation rates can be fought by filing a tax return or claiming VAT in certain circumstances; the complexity remains.

The following article will give you a brief overview on taxation in Austria relevant for trainees and employees from abroad. It is not be understood as a tax consultancy service. The provided information is based on the tax legislation in force as at May 2013. 

Please note: Pursuant to local legislation IAESTE must not give advise on taxation in any kind. Do not rely on the information furnished below without seeking advise from a professional tax consultant. The information provided is not complete and/or may not outline specific matters relevant for you.

Personal Income Tax  
Value Added Tax (VAT return)

Personal Income Tax / Social Insurance 

As a trainee/employee from abroad you will be taxed as employee pursuant to Austrian Income Tax Act (AIT). As a rule, the tax and the social insurance contribution is levied by way of withholding by the employer. 

Relevant for your tax situtation is, whether you are a limited taxpayer or an unlimited taxpayer in Austria. As unlimited taxpayer the worldwide income you generate (eg wages, capital gains,...) - for the term you have the unlimted taxpayer status in Austria - is in principal subject to taxation in Austria (exemptions are likely). As limited taxpayer only income with connection to Austria is subject to taxation in Austria (eg. wages from employed work in Austria).

Am I a  limited or unlimited taxpayer?

This question requires an analysis of your situation. Nevertheless, some examples:

  • your work contract  is 4 months, only, and you intend to leave Austria after the term => (in general) limited taxpayer (according to tax literature)
  • your work contract is longer than 6 months and you have a permanent residence in Austria (eg rented appartment) => unlimited taxpayer (in principle)
  • you spent more than 183 days per year in Austria => unlimited taxpayer (in principle)

Taxation regime for Unlimited Taxpayers

  • it is mandatory to annouce your status as unlimited taxpayer to the relevant tax office within 30 days. No special form required. Failing in doing so, might result in a fine of up to EUR 5,000 and more
  • in principle worldwide income is subject to Austrian taxation (many exemptions)
  • advantage: income of EUR 11,000 p.a. is free of taxes
  • not required to file tax return
  • if you earn less than EUR 11,000 p.a. and/or if you have high deductible expenses, filing of tax return is recommended

Taxation regime for Limited Taxpayers

  • voluntary filing of tax return for non-self-employed income
  • if tax return is filed an amount of EUR 9,000 is added to your income
  • advantage: income from foreign sources is in general not subject to Austrian taxation. Only "Austrian" income will be taxed.
  • filing of a tax return is in general not recommended for limited tax payers

Opting-in as unlimited taxpayer

Limited taxpayers may opt-in to be deemed an unlimted taxpayer in Austria, if the following prerequisits are met:

  • Austrian income >90% of worldwide income or foreign income < EUR 11,000 (foreign tax office must confirm income)
  • Filing of application for unlimited taxpayer status
  • In general only for EU or EEA (Norway, Iceland, Lichtenstein) citizens

How much will I earn net of taxes and social insurance?

for unlimited taxpayers:

Examples wages and net incomes. All figures approximations and in EUR.*)
gross wage / month net / month length of work contract potential total tax return (per anno)
 1000  849  2   70 
 1000  849   3   110
 1000  849  12  110
 1250  1035  3   150
 1500  1149   2   268
 1500  1149  3  348
 1500  1149  6  584
 3000  1905  2  1104

*) Amounts may differ slightly depending on the Austrian city you are located.

Does it pay off to file a tax return?

For unlimted taxpayers or those who can opt-in as unlimted taxpayers:

  • In general the more you earn, the higher your potential return is (in the examples above e.g. more than EUR 1,104.). 
  • If you earn around EUR 1000 a month, you would often get a return of EUR 110, only.

Limited taxpayers:

  • For non-self-employed income, filing is not mandatory and in general not recommend 

How do I claim the potential tax return?

In general the tax return must be filed using a online tool from the financial authorities after year end (Finanzonline, German only). In order to receive the maximum return, it might be required to deduct additional expenses from your income. Please note that there might be bilateral agreements between your home country and Austria; such agreement will include additional rules regarding taxation.

If you require help with filing the tax return or have additional questions, please get in touch with Erich at erich@iaeste.at. Please let us know in time if you intend to file a tax return to make sure you have access to neccessary information.

Do I need a tax advisor to file the return?

Not neccessarily, there is no legal obligation to use such services. Please be aware that the Austrian nominal tax rate is comparable high, on the other hand Austrian tax law offers many examptions and tax deductible items, which you may take advantage of. Especially, if you moved to Austria for working it is advisable to seek professional tax consultation in order to reduce your tax burden. In addition, the fee for tax consulting services are tax deductible if paid during your term in Austria (advance payment possible). The fee for tax consulting services will range from about EUR 250-400, therefore please estimate your potential tax return (see table above), whether it pays off to engage a tax advisor.  

VAT

Tourists including trainees might be eligible to claim VAT on purchases in the European Union upon departure under the following conditions:

  • no residence within the European Union (data in passport is relevant)
  • export in the personal luggage
  • bill/invoice exceeds EUR 75 (incl VAT)
  • export within 3 months after purchase

In practice the process is as follows: after shopping tell the shop assistant that you are a tourist and he/she will fill-in the applicable form "U34" for you. Upon departure this form has to be presented to the EU customs officers at the airport or at the outer-border of the European Union (when travelling by car or train) and you will receive a customs stamp. The stamped form must be returned to the shop, and you will receive the VAT return.

Many tourists use also the services of companies specialized in VAT returns such as www.global-blue.com or www.taxfreeworldwide.com

In most cases you will be obliged to declare customs and settle import VAT once you return to your non-EU home country.

Addtional questions regarding tax issues?

Please get in contact with us at erich@iaeste.at, and we will take care of your queries.