Austria is a European country known for its stunning Alpine scenery, rich history, and thriving economy. In this article, we will explain how the taxation system works in Austria, whether the country offers any double taxation agreements, the main taxes expats need to be aware of, any special tax breaks that could apply to expats, how and when to file a tax return as an expat, and the tax exit procedures for anyone leaving Austria to move abroad.
How the taxation system works in Austria
Austria has a residency-based taxation system, meaning that residents of Austria are taxed on their worldwide income, while non-residents are taxed only on income earned in Austria. The tax system in Austria is divided into two main types of taxes: direct taxes and indirect taxes.
Direct taxes are taxes paid on income and wealth, and they are paid by individuals and companies. The main direct taxes in Austria are the personal income tax (PIT) and the corporate tax (CT). The personal income tax is based on a progressive scale that ranges from 0% to 55%, depending on the amount of income earned. The corporate tax, on the other hand, is a flat rate of 25% on profits.
Indirect taxes, on the other hand, are taxes paid on goods and services. These taxes are paid by consumers, and they include the value-added tax (VAT) and excise duties. The VAT in Austria is currently set at 20%.
Double taxation agreements
Austria has signed several double taxation agreements with other countries to avoid double taxation for individuals and companies. These agreements ensure that income is not taxed twice in both countries, which can result in a significant tax burden for taxpayers. Some of the countries that have signed double taxation agreements with Austria include the United States, Canada, and the United Kingdom.
Main taxes expats need to be aware of in Austria
As an expat in Austria, there are several taxes that you need to be aware of. The main taxes include the personal income tax, the corporate tax, and the value-added tax.
Personal income tax (PIT)
The personal income tax in Austria is based on a progressive scale that ranges from 0% to 55%, depending on the amount of income earned. The tax year in Austria runs from January 1st to December 31st. As an expat, you are required to pay personal income tax on any income earned in Austria. This includes income from employment, self-employment, and any other source of income.
Corporate tax (CT)
The corporate tax in Austria is a flat rate of 25% on profits. Companies are required to file their tax returns by the end of September of the following year. The tax year for companies in Austria runs from January 1st to December 31st. As an expat, if you own a company in Austria, you are required to pay corporate tax on any profits earned.
Value-added tax (VAT)
The value-added tax in Austria is currently set at 20%. The VAT is applied to the sale of goods and services in Austria, and it is paid by consumers. As an expat, you will need to pay VAT on any goods and services that you purchase in Austria.
Special tax breaks for expats
Austria offers several tax breaks for expats who live and work in the country. One of the main tax breaks is the “183-day rule,” which allows expats to avoid paying tax on income earned outside of Austria if they spend less than 183 days in the country. This tax break can be a great benefit for expats who work remotely and earn income from other countries.
Additionally, Austria also offers tax breaks for companies that invest in certain industries, such as research and development and renewable energy. Companies that invest in these industries can receive tax credits and other incentives that can reduce their overall tax burden.
Filing a tax return in Austria as an expat
As an expat in Austria, you are required to file a tax return if you have earned income in the country. The tax year in Austria runs from January 1st to December 31st, and tax returns must be filed by the end of June of the following year. For example, the tax return for the year 2022 must be filed by June 30, 2023.
To file your tax return in Austria, you will need to obtain a tax identification number (TIN) from the government. You will also need to gather all the necessary documentation, including income statements and receipts for any deductions. The tax return can be filed online through the government’s tax portal, or it can be filed in person at the tax office.
Tax exit procedures for leaving Austria
If you are an expat leaving Austria to move abroad, you will need to follow certain tax exit procedures. The first step is to inform the government that you are leaving the country and that you are no longer a tax resident. You will need to provide a deregistration form to the tax authorities, which should include your personal details, the date of departure, and your new country of residence.
Once you have informed the tax authorities of your departure, you will need to file a tax return for the year up to the date of departure. This return must be filed by the end of June of the following year. If you have any outstanding tax liabilities, you will need to settle them before leaving the country.
Austria has a residency-based taxation system, meaning that residents of Austria are taxed on their worldwide income, while non-residents are taxed only on income earned in Austria. The main taxes that expats need to be aware of in Austria include the personal income tax, the corporate tax, and the value-added tax. Expats can take advantage of several tax breaks, including the “183-day rule” and tax credits for investing in certain industries. If you are leaving Austria to move abroad, you will need to follow certain tax exit procedures, including informing the government of your departure and filing a tax return for the year up to the date of departure.