Understanding Tax Filing Requirements In Austria

Austria's tax system can be confusing, but it's important to understand your obligations if you live and work there. In this guide, we'll answer the question: do you have to file taxes in Austria? We'll cover who needs to file a tax return, how to determine your tax rate, and the deadlines for submitting your return. So whether you're a resident, a freelancer, or an employee, read on to learn more about navigating the tax system in Austria.

Income tax in Austria: who is liable to pay?

The Austrian government levies a tax on all income above the €11,000 to €12,465 threshold from residents and non-residents living and working in the country. The government differentiates between income and wage tax. Salaried employees and pensioners pay wage tax (Lohnsteuer), while self-employed workers pay income tax (Einkommensteuer). The tax brackets are the same but differ in the collection method.

Who needs to file an income tax return?

The government distinguishes between limited and unlimited tax liability. You have unlimited tax liability if Austria is your primary country of residence and you receive an income. This includes:

• Income as a cross-border employee
• Income from a foreign employer who is not obligated to deduct wage tax in Austria
• Income from a foreign diplomatic mission or an international organisation
• Income from a foreign pension

If you are self-employed or receive income from multiple sources, you need to file an income tax return at the end of the tax year. However, if you only receive one employed income, you likely do not need to file a tax return, as your employer will deduct a wage tax from your monthly salary.

You must also file an income tax return if you have limited tax liability and receive foreign income from an entity that does not deduct tax, while Austria can levy wage tax.

Who is exempt from Austrian income tax?

Some individuals living in Austria may be exempt from paying income tax or filing a return. These include:

• If you earn less than the annual tax threshold of €12,465
• If your student stipends for writing a master’s or PhD thesis do not exceed the Austrian Study Grant or earnings from internships/part-time jobs are below the tax threshold
• Some pensions may be tax-free depending on the source and amount
• Foreign diplomats and international organisation employees
• Certain tax-free savings accounts and investment income
• Non-residents whose Austrian income is below the tax threshold

Income tax rates: how much tax will you pay?

Austria's income tax system is progressive, meaning that the rate of taxation increases incrementally as earnings increase. The more you earn, the more you will be taxed. The highest marginal tax rate is 55% for individuals who earn over €1,000,000 per year.

The Austrian government taxes residents' salaries, wages, or any other forms of remuneration, differentiating between income and wage tax. Salaried employees and pensioners pay wage tax, while self-employed workers pay income tax. The tax brackets are the same, but the collection method differs.

• €12,465.01–20,397
• €20,397.01–34,192
• €34,192.01–66,178
• €66,178.01–99,266
• €99,266.01–1,000,000
• 1,000,000.01 and above

It's important to note that the tax thresholds and rates are typically adjusted annually to account for inflation and provide tax relief. For example, the 2023 tax year brackets were slightly different:

• €11,693.01–19,134
• €19,134.01–32,075
• €32,075.01–62,080
• €62,080.01–93,120
• €93,120.01–1,000,000

Additionally, Austria has a standard corporate income tax rate of 25% for companies with their legal seat or effective management in the country. There is also a minimum tax for limited liability companies and joint-stock companies, equal to 5% of their registered capital.

Income tax returns: how to file your return

Who needs to file an income tax return in Austria?

If you live and work in Austria, you are likely liable to pay income tax and file a return. Austria levies tax on all income above the €12,465 threshold from residents and non-residents living and working in the country. The government differentiates between income tax for the self-employed (Einkommensteuer) and wage tax for salaried employees and pensioners (Lohnsteuer).

The government also distinguishes between limited and unlimited tax liability. You have unlimited tax liability if Austria is your primary country of residence and you receive an income. In this case, you need to file an income tax return at the end of the tax year. However, if you only have one employed income, you probably won't need to file a tax return as your employer will deduct wage tax from your monthly salary.

You must file an income tax return if you have limited tax liability and receive foreign income from an entity that does not deduct tax, while Austria can levy wage tax.

When to file your return

The Austrian tax year lasts from 1 January to 31 December. You can file your tax return by 30 April of the following year if you submit a paper return, or by 30 June if you file electronically via the public FinanzOnline platform. If you have only salary income where wage tax has already been withheld, you can file a tax return within five years after the end of the tax year.

What you need to file your return

If you are legally obliged to complete an income tax return in Austria, you need to use the following forms:

• E1: Personal income tax
• E1a: Business income and expenditure (if self-employed)

These forms are in German and include sections on personal and contact details, tax credits, exemptions and deductions, childcare allowance, benefits, pension contributions, and a detailed description of all sources of income.

How to file your return

You can digitally sign up, request a tax number, file your income tax return, and pay via FinanzOnline, the government's tax office portal.

Alternatively, you can register for a tax number and submit your return in person at your local tax office. You will need to book an appointment in advance.

Tax deductions and relief

You can claim certain deductions against your taxable income in Austria, including:

• Sickness, life, and accident insurance premiums
• Extraordinary burdens (e.g. illness or disaster costs not covered by insurance)
• Voluntary employer pension contributions
• Building or renovating expenses
• Family Bonus Plus tax credit
• Single earner/parent's tax credit
• Professional expenses
• Education costs for retraining or career development
• Hospital charges (not covered by health insurance)
• Charitable contributions to certain institutions
• Austrian tax adviser fees
• A tax break for cars with a low CO2 value or electric vehicles
• Travel or commuter allowance

Income tax deductions: what can you deduct?

If you live and work in Austria, you are liable to pay income tax and file a return. The Austrian tax system offers many opportunities for deducting expenses and writing off costs.

You can claim certain deductions against your taxable income in Austria, including:

• Sickness, life, and accident insurance premiums
• Extraordinary burdens (e.g., illness or disaster costs not covered by insurance)
• Voluntary employer pension contributions
• Building a new house or renovating expenses
• Family Bonus Plus tax credit, which combines the childcare deduction and the child tax-free amounts
• Single earner/parent's tax credit
• Professional expenses
• Education costs for retraining or career development
• Hospital charges (not covered by health insurance)
• Charitable contributions to certain institutions
• Austrian tax adviser fees
• A tax break for cars with a CO2 value of up to 95g/km and purely electric vehicles (EVs)
• Travel or commuter allowance

If you are self-employed, you can offset several business-related expenses from your income tax in Austria, including:

• Transportation/travel
• Administration costs and office supplies
• Career development expenses
• Professional body memberships

As a low-income earner, you may also be eligible to claim 'negative tax' or refunds on your social security contributions.

Income tax refunds: how to claim your refund

If you are employed in Austria, you are likely eligible to claim a tax refund. Here is a step-by-step guide on how to claim your refund.

Step 1: Check Your Eligibility

First, check if you are eligible to claim a tax refund. You can claim a tax refund if:

• You have worked in Austria during the last five years.
• Your employer deducted a higher amount of tax from your paycheck than they should have.
• You worked in Austria for only a portion of the year.
• You worked for multiple employers.
• You switched from one job to another during the year.
• You had work commute expenses.
• You financed a household or lived both abroad and in Austria.

Step 2: Gather the Necessary Documents

Once you have confirmed your eligibility, gather the following documents:

• A copy of your passport or ID card.
• Official documents certifying the holder's identity and citizenship.
• Forms Jahreslohnzettel or payslips Lohnzettel.
• State social insurance form from the State Social Insurance Fund Board or form E9-Bescheinigung EU/EWR from the State Tax Inspection.
• Registration and deregistration documents of residence in Austria (if applicable).
• Rent agreement Mietvertrag (if applicable).
• Rent bills, if they were not compensated by your employer (if applicable).

Step 3: Submit Your Documents

You can submit your documents to the Austrian tax office either by paper or electronically. The deadline for submitting your documents by paper is April 30, and the deadline for electronic submission is June 30. You can submit your documents electronically via the official platform FinanzOnline or the mobile "Steuer-App."

Step 4: Wait for Your Refund

The tax office will take approximately 2-5 months to process your request and transfer the money to your bank account. The average refund is €560, but you may receive more if you had extra tax-deductible expenses.

Tips for Maximizing Your Tax Refund

• Keep all your bills and receipts for at least seven years in case of a tax audit.
• Deduct work-related expenses, such as work clothes, professional development materials, and your smartphone bill.
• If you have been working from home, you can claim a deduction of up to €300 from your income taxes thanks to the home office standard deduction ("Home-Office-Pauschale").
• If you have children, you may be eligible for the Family Bonus Plus, which allows you to directly reduce your tax burden.
• If you are a single earner or a single parent with a low income, you may receive a child allowance (Kindermehrbetrag) of €550 per year and child.
• If you have three or more children, you can apply for the multiple-child allowance (Mehrkindzuschlag) and receive €21.20 per month per child.

Frequently asked questions