Taxation in Austria
Taxation in AustriaUpdated on Monday 12th December 2016
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The corporate tax in Austria is set at a flat rate of 25%, applied to company profit, with business expenses, such as salaries and wages, depreciation, maintenance and office expenses, among others, being deductible. This is the only tax applied to profit.
Our Austrian lawyers are ready to assist you in managing your taxes in this country. In this sense, we provide you with a summary breakdown of the main taxes in Austria.
Austrian group taxation
Austria gives companies the chance to pay taxes as part of a group of associated companies, where even foreign associates may be part of a group, so that the Austrian company or companies in the case of joint ventures, may use the losses of foreign group members.
Foreign tax relief and branch profit taxation
When it comes to foreign company branches in Austria, these are subject to corporate tax on income earned within Austria.
Foreign income is taxed in accordance with regulations for avoiding double taxation. In certain situations, under the Austrian International Affiliation Privilege (IAP), no corporation tax will be applied on dividends and capital gains of an Austrian holding company.
Capital gains tax
For sales of non-business property, there are no taxes applied as long as the property has been held for at least one year.
For sales of new properties and real estate acquired after March 31st, 2002, the capital gains tax is at a flat rate of 30%. This will be assessed based on the profit of the sale, deducting the acquisition costs from the price obtained.
Income tax for individuals and non-residents
Individuals residing or holding an abode in Austria are subject to the Austrian income tax. They have to declare all domestic and foreign income. The income tax is concerned with the yearly earnings of an individual.
Rates for individuals vary between 0 and 55%, depending on yearly income. In the case of individuals not residing in Austria, only income from Austrian sources is taxed. The same rates apply for non-residents, but with the addition of 9,000 euros to the tax computation base when calculating the income tax.
Employees receive a special tax relief, in accordance with the Austrian Income Tax Act, with vacation and Christmas bonuses being taxed at only 6%. In the case of self-employed persons, there is an automatic profit tax allowance of 3,900 euros awarded per year.
VAT is set at 20% in Austria and reduced to 10% on certain goods, such as basic foods or printed material. An additional VAT rate of 13% applies to hotel rooms.
Social security contributions
Contributions to social security include three types of insurances and all Austrian employees are automatically insured. Insurance assessment is based on the monthly gross salary up to 4,860 euros, all excess income being irrelevant to the contribution assessment.
For more information and assistance in managing your taxes, our lawyers in Austria welcome your contact.