Austria’s income tax rate
In Austria, income tax is known as Einkommensteuer. The tax system is pay-as-you-earn and is paid throughout the year. Anyone who lives in Austria is liable to pay an unlimited tax liability. Those who have no residence but work in Austria pay a limited tax liability. They are subject to tax only from the income earned in Austria and not elsewhere.
Researchers have three options in the way they are employed – stipend/grant/scholarship, independent personal services and employment. This is the determining factor in whether money earned is tax-free or taxable.
A stipend is tax-free if it is a remuneration for educational purposes, especially when grants are received for the writing of a master’s or PhD thesis. However, this must meet certain criteria. The grant cannot be a substitution of income, and the grant cannot be any higher than the yearly amount of the Austrian Study Grant (Studienbeihilfe) which is €8,148. Should the stipend be higher, this will then be subject to tax liability.
Independent Personal Service is essentially self-employment, where the individual comes to live in Austria to engage with a contract for work (Werkvertrag). This would be the most common form of employability within the tax system for researchers and scientists coming from outside Austria. It is the individual’s responsibility to file a tax declaration with the tax office (Finanzamt). If regular residence is not taken up but you conclude the contract for work, the income is subjected to tax liability. The institution withholds 20 per cent of the agreed amount, known as a withholding tax, and this is given to the tax office by the employer.
Wages are subjected to tax liability if you conclude an employment contract with your employer or host institution. As the employer is obliged to deduct the tax and social security contributions, you have no responsibility concerning tax matters.
In Austria it is also possible to work under a contract with a host institution in which you are free to decide when and how you work – known as a “freelance contract service” (Freier Dienstvertrag). Though you work as a freelancer, your employer is obliged to pay your social insurance contribution, but you are responsible for filing an income tax declaration as this is considered a form of self-employment.
Because tax in Austria is a pay-as-you-go system, tax brackets are entirely defined by how much is earned in a calendar year before special circumstances are applied. This is different to neighbouring Germany.
The Austrian tax system gives consideration to exceptional situations, such as special expenses and extraordinary burdens and it is therefore possible to receive a tax rebate. These include doctor’s fees and hospital costs, as well as cost for childcare and dental treatment. The individual can fill in an application known as ArbeitnehmerInnenveranlagung with the tax office.
Austrian social security tax is a compulsory element in employment taxation. It comprises of health insurance, pension insurance, unemployment insurance and accident insurance. These figures are determined as a percentage of total monthly earnings. The tax is partially paid for by the employee and partially by the employer.
The maximum contribution on a regular basis per month is €4,980. Special payments, which are those payments that do not occur monthly, such as a bonus, are also liable for social security tax. The taxation figure for these is capped at €9,960 a year.