Austria – Taxation

How does the tax system in Austria work?

Austria’s tax framework is administered centrally by the Austrian Federal Ministry of Finance (Bundesministerium für Finanzen, or BMF), with income tax governed by the Einkommensteuergesetz (EStG). Assessment and collection are handled by the national tax authority. This differs from federal systems in countries where regional governments impose their own separate layers of income tax — in Austria, income tax is set and collected exclusively at the federal level, making the overall structure more transparent for those new to the country.

Austria applies a progressive income tax scale running from 0% to 50%, with an additional band for income exceeding €1 million. The amount of tax owed depends on the total taxable income earned within a given calendar year, which coincides with the business year and covers a full twelve-month period.

Under Section 1(2) of the Austrian Income Tax Act (EStG 1988), a person is subject to unlimited tax liability if they hold a domicile or maintain their habitual abode in Austria. This means that all income — whether earned domestically or abroad — falls within the scope of Austrian taxation once residency is established. This principle mirrors the approach taken by neighbouring countries such as Germany and France, where becoming a tax resident brings global income into charge.

Habitual abode in Austria is distinguished from temporary stays such as holidays or short business visits by the evident intention to spend extended periods in the country. Once a continuous stay reaches six months, unlimited tax liability applies automatically — and crucially, it takes effect retroactively from the very first day of that stay. Expats who are close to this threshold should be aware that crossing it triggers liability from their arrival date, not merely from the day the threshold is breached.

Nationality alone does not determine residency or tax liability, though it may be taken into account as supporting evidence when residency status is ambiguous. Holding a non-Austrian passport therefore provides no automatic exemption from Austrian tax obligations if you are actually living and working in the country.

For employees, income tax is withheld at source from wages and salaries — a system known as earnings tax (Lohnsteuer) — with the employer remitting the deducted amounts to the relevant authority. These withholdings function as advance payments against the final annual tax liability, which is reconciled once a year through the tax assessment process. This operates in a similar way to PAYE arrangements found in countries such as the UK and Ireland, although the year-end reconciliation may result in either an additional payment or a refund.

Authoritative guidance on income tax rules, current rates, and official forms is published by the Austrian Federal Ministry of Finance (BMF). The government information portal USP.gv.at also offers accessible English-language explanations. Since thresholds and rates are revised each year, it is advisable to check these sources regularly for the most up-to-date information.

Does Austria have double taxation agreements, and how do they affect expats?

Austria has concluded double taxation agreements (DTAs) with around 84 countries and territories worldwide. These treaties exist because a taxpayer can, in certain circumstances, face tax obligations in more than one jurisdiction simultaneously — DTAs are designed to ensure that the same income is not taxed twice, once in Austria and again in another country.

Where a DTA is in place, double taxation is eliminated through either the exemption method or the credit method, depending on what is specified in the relevant treaty. Austria’s treaties predominantly rely on the exemption method. Under this approach, income that qualifies for exemption is not included in the Austrian tax base — but it may still be factored into the calculation of the rate applied to Austrian income under the so-called progression clause. This is a detail that often catches expats by surprise: even exempt foreign income can push the applicable rate on Austrian earnings higher.

The credit method works differently: taxes already paid in another country are offset against the Austrian tax liability arising on that same income. However, this credit cannot exceed the amount of Austrian tax that would otherwise be due on the income in question. Which method applies — and to which categories of income — depends on the specific terms of the treaty between Austria and your previous country of residence.

If you are living in Austria while still receiving income from another country, DTAs can provide meaningful relief. They establish which state holds taxing rights over particular income streams — whether that is employment earnings from a foreign employer, pension payments originating abroad, rental income from overseas property, or dividends from international investments — and prevent that income from being taxed in both jurisdictions.

In the absence of a relevant DTA, Austria generally alleviates double taxation on most foreign income by exempting it from Austrian tax, provided that the level of taxation in the other country is broadly comparable to the Austrian rate. This serves as a useful backstop for residents whose home country has not concluded a treaty with Austria.

The complete and current list of Austria’s DTAs is maintained by the Federal Ministry of Finance. For those uncertain whether a particular treaty applies to their circumstances — or how it affects specific income types — consulting a tax adviser with cross-border expertise is strongly recommended.

What taxes do expats need to pay in Austria?

Income tax

Austria’s income tax scale is progressive, ranging from 0% to 55%. From 2026, the tax-free threshold stands at €13,541, with rates structured as follows: 0% on income up to €13,541; 20% on income between €13,541 and €21,992; 30% between €21,992 and €36,458; 40% between €36,458 and €70,365; 48% between €70,365 and €104,859; 50% between €104,859 and €1,000,000; and 55% on income exceeding €1 million. These brackets are reviewed and updated each year.

From 2023 onwards, to counteract the effect of so-called cold progression — whereby inflation silently increases real tax burdens without any legislative change — all tax brackets except the topmost one above €1 million are adjusted annually by two-thirds of the prevailing inflation rate. This automatic indexation is a relatively recent innovation in Austrian tax law and represents a meaningful protection for taxpayers against real-terms tax increases driven purely by wage growth.

The 55% top rate on income above €1 million was introduced as a temporary measure covering the years 2016 to 2025. Whether this rate will be extended or made permanent should be confirmed on the BMF website, as the position may change.

Capital gains tax

Austria applies a flat capital gains tax (CGT) rate of 27.5% to most capital assets. Capital gains on assets acquired from 1 January 2011 and sold from 1 April 2012 onwards — including profits from the disposal of shares — are subject to capital yields tax and are taxed at the point of realisation. This flat rate covers shares, bonds, and other financial instruments broadly. Unlike some other jurisdictions, such as the UK, Austria does not provide a general annual CGT allowance for private investors, meaning gains are fully taxable from the first euro.

Social security contributions

Expats in employment in Austria are obliged to contribute to the Austrian social security system, which provides cover for healthcare, pensions, unemployment, and accident insurance. Contributions are split between employee and employer and are deducted directly from gross salary. As of 2025, the monthly contribution ceiling is €6,450. Employees contribute approximately 18% of their gross salary, while employers contribute around 21%, bringing the combined rate to roughly 39%. These contributions are separate from income tax but are deductible in calculating your taxable income.

Wealth tax and inheritance tax

Austria levies no net wealth tax, and inheritance tax was abolished in 2008 — meaning beneficiaries of an estate face no tax liability on inherited assets regardless of their value. This represents a notable advantage over countries such as Germany or France, where inheritance tax rates can be substantial depending on the relationship between the benefactor and heir. Gift tax was abolished at the same time, though transfers into private foundations may still attract a foundation entry tax — current rates should be verified with the BMF.

Property taxes

The standard rate of property transfer tax in Austria is 3.5%, and an annual real estate tax of between 0.1% and 0.2% of the assessed value is also levied. These rates are comparatively modest when set against transaction taxes in countries such as the UK or Australia. Importantly, the assessed value used for annual property tax purposes typically falls well below the market value of the property, keeping the ongoing annual charge low.

VAT

Austria’s standard VAT rate is 20%, applying to the majority of goods and services. Reduced rates of between 10% and 13% apply to certain categories including food, books, selected transport services, and specific cultural events. Expats who are self-employed or operating a business will need to register for VAT once their turnover exceeds the applicable threshold.

Are there any tax breaks or special regimes for expats in Austria?

Austria does not offer a broad non-domicile regime, a remittance-based taxation system of the kind that existed in the UK until recently, or a flat-rate residency incentive comparable to Portugal’s former NHR programme or Italy’s €100,000 flat-tax scheme for newly arrived residents. Nevertheless, there are a number of important reliefs and provisions that expats living in Austria should understand.

EU and EEA citizens who are not domiciled in Austria but whose primary source of income is Austrian may opt into unlimited tax liability. The qualifying condition is that at least 90% of their worldwide income is generated in Austria, or that income from other countries does not exceed €13,539. Under this arrangement, only Austrian-sourced income is assessed for tax, and the individual benefits from the full personal tax-free allowance as well as eligibility for personal deductions and claims for extraordinary expenditure.

A specific exemption applies to employees posted abroad by an employer based in the EU, EEA, or Switzerland. To qualify, the assignment location must be at least 400 kilometres from the Austrian border, the posting must last at least one month, and the activity carried out abroad must not be of a permanent nature. Where these conditions are met, the exemption can provide meaningful relief on income earned during the overseas assignment.

A range of deductions is available to all Austrian tax residents and can considerably reduce the amount of taxable income. These include allowances for single earners (€601), single parents (€601 plus supplementary amounts for additional children), pensioners (€1,002–€1,476), commuting costs (€487), and various professional and personal expenditures. These figures are updated annually, so current amounts should be confirmed with the BMF.

Families with children resident in Austria can benefit from the Family Bonus Plus, which directly reduces tax liability rather than merely reducing taxable income. From 2023 onwards, the maximum deductible amount per child under the age of 18 is €2,000 per year, while for children aged 18 and over the amount is €650. Eligibility requires receipt of family allowance (Familienbeihilfe) for the child concerned and unlimited tax liability in Austria.

Highly skilled international professionals considering a move to Austria are encouraged to consult both the Austrian Migration Portal and a qualified tax adviser at an early stage — particularly in relation to treaty benefits, the optimal timing for establishing residency, and any available deductions for relocation costs. While Austria does not offer the eye-catching flat-tax incentives available in some southern European countries, its combination of no inheritance or wealth tax, treaty-based relief mechanisms, and inflation-linked tax brackets can produce a competitive overall tax position for many expats.

How and when do expats file a tax return in Austria?

Austria’s tax year runs from 1 January to 31 December — identical to the calendar year and the business year — and is consistent with the approach used in Germany, France, and most other continental European countries. This differs from the April-to-April tax year familiar to those with experience of the UK system.

For paper filings, tax returns must be submitted by 30 April of the year following the relevant tax year. If filing electronically via FinanzOnline, the deadline is extended to 30 June. Returns handled by a professional tax adviser or accountant may qualify for a further extension. By way of example, the return for the 2025 tax year is due by 30 April 2026 on paper or 30 June 2026 if submitted online.

A different deadline of 30 September applies where a taxpayer has received income from two or more sources subject to income tax, or where the sole-earner or single-parent tax credit has been factored into the withholding calculation during the year. Austria also operates a three-day grace period across all tax deadlines, meaning that filings received within three days of the due date carry no legal consequence for lateness.

The step-by-step process for registering and filing is as follows:

1. Obtain your Tax Identification Number (TIN): Your TIN can be obtained by visiting your local tax office (Finanzamt) in person or through FinanzOnline. For international residents, the TIN typically appears on official documents relating to your Austrian residency status, such as your residence permit or registration certificate.
2. Register with FinanzOnline: FinanzOnline is the government’s official online tax portal, through which you can sign up digitally, request a tax number, file your income tax return, and make payments. Registration can be completed using ID Austria. If you have not yet obtained ID Austria, your access credentials will be sent to you by post within a few days of applying.
3. Gather your documents: Assemble all relevant documentation before beginning your return, including wage certificates (Form L 17 from your employer), bank and investment account statements, records of any rental income, and evidence of deductible expenses.
4. Select the correct form: The standard income tax return for individuals is the E1 (Einkommensteuererklärung). Employees who are simply seeking to reconcile their annual wage tax may instead use the simplified L1 form for the annual wage tax assessment (Arbeitnehmerveranlagung).
5. Complete and submit your return: After logging into FinanzOnline, navigate to Eingaben (tax entries) and Erklärungen (tax declarations), complete the relevant sections, and submit your return electronically. Tax payments can also be made through the same platform.
6. Alternatively, file in person: It is possible to register for a tax number and file a paper return at your local tax office. An appointment must be booked in advance, either by calling 050 233 700 or through the online booking facility.
7. Await your assessment notice: Once your return has been processed, the BMF issues a formal tax assessment notice (Bescheid). Where the assessment indicates that you have overpaid and a refund is due, the amount is ordinarily credited to your registered bank account within a few weeks.

Failing to file on time in Austria can result in penalties. A late submission typically triggers a standard assessment that may not incorporate all available deductions and reliefs, potentially resulting in a higher tax bill than necessary. Where an inaccurate or incomplete return is filed deliberately, this may be treated as tax evasion — an offence that can attract fines of up to 10% of the tax owed, or significantly more in serious cases.

The official online filing platform is FinanzOnline, operated by the Austrian Federal Ministry of Finance. The interface is primarily in German; expats with limited German proficiency are strongly advised to engage a local tax adviser to handle preparation and submission on their behalf.

What are the tax implications of leaving Austria?

Departing Austria and ceasing to be a tax resident there involves a set of important tax considerations that must be addressed before, during, and after your move. Managing these steps correctly can prevent unexpected liabilities from arising long after you have relocated elsewhere.

When Austrian tax residency is terminated and Austria consequently loses its right to tax certain assets, exit taxation is triggered. Austria’s exit tax provisions are broadly consistent with EU requirements and apply to unrealised gains on particular assets — notably shareholdings, investment funds, and other financial instruments — as at the date of departure. The taxable gain is calculated as though the asset had been disposed of on the day you left, using the market value at that point in time.

It is a formal legal requirement to notify your tax office of the cessation of your Austrian residence. This step should not be overlooked: failure to deregister properly can result in the Austrian tax authorities continuing to treat you as a resident based on registered addresses or other indicators of ongoing presence, potentially giving rise to continued tax obligations.

A final income tax return must also be filed covering the portion of the tax year during which you were resident in Austria. Depending on your circumstances, additional filing obligations may persist after your departure — for example, if you continue to receive any compensation, rental income from Austrian property, dividends from Austrian companies, or certain pension income that remains subject to Austrian tax under limited liability rules even once you are no longer a resident.

Austrian real estate that you retain after leaving the country may still attract property transfer taxes and potentially income tax on any future gains if and when you sell — your residency status at the time of disposal will be a relevant factor. Where a DTA exists between Austria and your new country of residence, the treaty’s tie-breaker provisions will determine which jurisdiction holds primary taxing rights over your income and assets going forward.

In practical terms, the key steps to take before leaving Austria are: formally deregistering your address at the local municipal office (Meldeamt); informing your tax office of your change of residence; settling any outstanding tax liabilities; and obtaining advice from a qualified tax professional regarding whether exit tax applies to assets you hold. The BMF website and an experienced Austrian tax adviser should be your primary references throughout this process.

Practical tips for managing taxes as an expat in Austria

• Keep precise records of your time in Austria. Maintaining detailed documentation of your presence — including travel records, boarding passes, hotel receipts, and diary entries — will prove invaluable if your residency status is ever scrutinised by the authorities. The 183-day threshold is pivotal, and accurate records are your best safeguard.
• Be aware that residency can arise sooner than anticipated. The criteria for having an Austrian domicile include the existence of a dwelling set up for regular habitation, the legal or practical ability to use that dwelling at any time, and surrounding circumstances indicating an intention to maintain and return to it. A permanently rented flat, a holiday property, or even a spouse’s home in Austria can all qualify as an Austrian domicile under this definition.
• Make active use of any applicable DTA. Before arriving in Austria, identify whether your current country has a treaty with Austria and analyse how it treats each category of income you receive — employment earnings, pensions, rental income, dividends, and capital gains may each be handled differently under the same agreement. Understanding your treaty position in advance avoids surprises later.
• Seek advice before disposing of significant assets. Anyone with interests in multiple countries or homes in more than one jurisdiction should obtain a thorough cross-border tax analysis before proceeding with major asset transactions. The timing of a property sale or investment disposal in relation to your residency status can have a substantial bearing on your total tax exposure.
• Get registered on FinanzOnline early. Registering with the Austrian tax portal promptly after arriving in Austria ensures you receive official correspondence electronically and avoids the pressure of last-minute registration when filing deadlines approach. You can also use the platform to request your tax number, submit returns, and make payments.
• Claim every deduction you are entitled to. Austria’s tax system provides a broad range of deductions covering professional costs, commuting, family circumstances, and extraordinary expenditure. A significant number of expats miss out on refunds by failing to file an annual assessment return — even when employed and subject to withholding tax — simply because they are unaware that a refund may be due.
• Engage a specialist in cross-border taxation. The interaction between Austrian tax rules and those of other countries can be intricate, particularly in areas such as exit taxation, foreign pension income, and investment returns from overseas. Working with a qualified Steuerberater (tax adviser) who has demonstrable experience with internationally mobile clients is strongly recommended. The Austrian Chamber of Tax Advisers and Public Accountants maintains a searchable directory of registered professionals.

Frequently asked questions

When do I become a tax resident in Austria?

Tax residency in Austria is established either by maintaining a permanent home there or by being present in the country for more than 183 days in a given year. Once residency is established, unlimited tax liability applies, meaning your worldwide income becomes subject to Austrian tax. Non-residents, by contrast, face only limited liability and are taxed solely on income with an Austrian source. Residency may also be triggered earlier if the Austrian authorities determine that Austria represents your principal centre of life interests.

Is my worldwide income taxable in Austria?

Any individual who maintains a domicile in Austria or whose habitual abode is in Austria is subject to unlimited income tax liability — which means, in principle, that both their Austrian and foreign income are within the scope of Austrian income tax. In practice, double taxation treaties concluded between Austria and your country of origin may limit the portion of that foreign income that is actually taxed in Austria, either through exemption or by means of a tax credit.

What is the income tax filing deadline in Austria?

The standard filing deadline is 30 April of the year following the tax year for paper returns, or 30 June for electronic submissions via FinanzOnline. Returns prepared and filed by a registered tax adviser may qualify for a further extension beyond these dates. It is advisable to confirm current deadlines directly with the BMF or your tax office, as extensions are occasionally announced.

How are foreign pensions taxed in Austria?

Pension income received from abroad by an Austrian tax resident is generally included as part of worldwide income and subject to Austrian income tax. However, the DTA between Austria and the country from which the pension is paid determines whether Austria or the source country holds primary taxing rights. Certain treaties exempt specific categories of pension — particularly government or civil service pensions — from taxation in the recipient’s country of residence. The applicable treaty provisions should be reviewed carefully, and professional advice sought where necessary.

Does Austria tax capital gains?

Yes. Austria imposes a flat capital gains tax rate of 27.5% on most capital assets. For assets acquired from 1 January 2011 and disposed of from 1 April 2012 onwards, gains including profits from share sales fall within the scope of capital yields tax and are taxed upon realisation. This rate applies broadly to shares, bonds, and similar financial instruments. The tax treatment of gains on privately held real estate may differ — a qualified tax adviser should be consulted for specific situations.

Is there inheritance or wealth tax in Austria?

Austria imposes neither a net wealth tax nor an inheritance tax. Inheritance tax was abolished in 2008, meaning that heirs pay no tax on assets they inherit, whatever their total value. Gift tax was removed at the same time, though transfers made to private foundations may attract a foundation entry tax. Current rates and any recent legislative changes should be verified with the BMF.

Can I file my Austrian tax return in English?

FinanzOnline, the official government platform for online tax filing, operates in German and does not offer an English-language interface. Expats who lack confidence in German are advised to work with a qualified Austrian tax adviser (Steuerberater), who can prepare and submit the return on their behalf. Many advisers based in Vienna and other major Austrian cities are well-accustomed to working with internationally mobile clients and can communicate in English.

What happens to my Austrian tax obligations if I leave Austria?

When Austrian tax residency ends and Austria loses its right to tax certain assets, exit taxation may apply to unrealised gains on shareholdings and other financial instruments as at the date of departure. You are also required to formally notify your tax office of the termination of your residence, file a final Austrian income tax return for the period you were resident, and deregister your address at the local municipal office. Ongoing income from Austrian sources — such as rent from Austrian property — may continue to attract limited tax liability even after you have left. Professional advice should be sought well before your planned departure date.