Taxation in Austria

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In Austria, taxes are levied by the state and the tax revenue in Austria was 42.7% of GDP in 2016 according to the World Bank[1] The most important revenue source for the government is the income tax, corporate tax, social security contributions, value added tax and tax on goods and services.[2] Another important taxes are municipal tax, real-estate tax, vehicle insurance tax, property tax, tobacco tax. The Financial Secrecy Index ranks Austria as the 35th safest tax haven in the world.[3]

Income tax (Einkommensteuer)

Persons, who have residence or habitual residence in Austria are subject to unlimited taxation. Unlimited because all of the income (inside or outside Austria) has to be taxed. Besides that, even some income can be taxed even if the person does not have residence or habitual residence in Austria.[4]

The income tax in Austria was set progressively in 1988. There were many amendments since then. In the last one from 2016, the tax rates were reduced (see the table). There are seven fare zones. People who earn annually less than 11 000 € do not pay any tax. The highest marginal tax rate is 55% for people, whose yearly income exceeds 1 000 000 €. The tax is paid monthly.[5]

Marginal tax rate from 2016 Marginal tax rate from 2009 to 2015 Salary range
0% 0% 0 - €11,000
25% 36,5% €11,001 - €18,000
35% 36,5% €18,001 - €25,000
35% 43,2143% €18,001 - €31,000
42% 43,2143% €31,001 - €60,000
48% 50% €60,001 - €90,000
50% 50% €90,001 - €1,000,000
55% 50% Over €1,000,000

Corporate tax (Körperschaftssteuer)

Corporations are subject to unlimited taxation in Austria of their entire income if they have their legal seat or place of effective management in Austria[6]

Corporations are qualified as independent tax subjects, a distinction must always be made between tax ramifications at the level of the company and those at the shareholder level. At the level of the company, profits are taxed at the standard corporate income tax rate of 25%. At the shareholder level, the profit distributions are usually subject to withholding tax of 25% for corporations and 27.5% for other recipients.[7]

Social security contributions

Austrian social insurance is compulsory and comprises health insurance, pension insurance, unemployment insurance, and accident insurance.

The contributions are determined as percentage of the total monthly earnings (but only up to specified maximum amounts) and are paid partly by the employee and partly by the employer.

The maximum contribution basis for regular payments amount to EUR 4,980 per month. The maximum contribution base for special payments (those that do not occur on a monthly basis, such as a bonus) amounts to EUR 9,960 per year.

From 1 January 2017, the percentages are as follows.[8]

Type of insurance Paid by employer Paid by employee Total
Pension insurance 12.55% 10.25% 22.80%
Accident insurance 1.30% 0.00% 1.30%
Health insurance 3.78% 3.87% 7.65%
Unemployment insurance* 3.00% 3.00%* 6.00%
Others .85% 1.00% 1.85%
Total 21.48% 18.12% 39.60%
Severance fund 1.53% 0.00% 1.53%

Value added tax (VAT)

An Austrian customer must pay the net sales plus 20% value added tax, which is listed separately on the supplier’s invoice. The customer, in effect, pays the supplier’s tax burden. The amount is thereafter deductible from the customer’s own value added tax burden.

The ultimate retail consumer absorbs the final burden. Among others, exports and certain services for foreign customers are exempt from value added tax. Import transactions from non-EC countries are subject to an import turnover tax at the same rate as sales tax.

Value added tax is reduced to 10% on certain products, this applies to basic foods and printed material, for example. Additionally, there is a VAT of 13% for hostel rooms.[9]

Other Taxes

Austria has a number of other types of taxation, these include the following:

• Real estate transfer tax (Grunderwerbsteuer)

• Vehicle tax (Kfz-Steuer) - This is levied on all Austrian vehicles and on all foreign vehicles registered in Austria. The basis of taxation is cylinder capacity for motorcycles and horsepower for all other vehicles.

• Municipal tax: Businesses pay municipal tax to the municipality in which the business is located

• Land transfer tax

References

  1. ^ "Revenue statictics - 2017" (PDF).
  2. ^ "Revenue statistics - Austria" (PDF).
  3. ^ User, Super. "View 2018 Results". www.financialsecrecyindex.com. Retrieved 2018-05-02.
  4. ^ "BMF - Einkommensteuer". www.bmf.gv.at (in German). Retrieved 2018-05-02.
  5. ^ "Austria - Income Tax". KPMG. 2017-05-05. Retrieved 2018-05-02.
  6. ^ "Austria - Taxes on corporate income". taxsummaries.pwc.com. Retrieved 2018-05-02.
  7. ^ "Austria - Taxes on general income".
  8. ^ "Other taxes and levies". KPMG. 2017-05-05. Retrieved 2018-05-02.
  9. ^ "The austrian tax system - Steuerberatung Casapicola & Gross, 1010 Wien". Steuerberatung Casapicola & Gross, 1010 Wien. Retrieved 6 June 2018.
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