Doing Business Tax matters

However, Austrian citizens receive considerable added value for the taxes they pay.

A large number of high-quality public services such as healthcare, education, social security and a well-developed infrastructure are financed by tax revenues. These investments in the country’s society and economy ensure a high quality of life, job security and a strong economy overall. As a result, higher tax burdens contribute to a good economic climate. Here we take a closer look at the most important taxes and tax rates in Austria, tax benefits and the tax reform.

Attractive tax incentives such as the investment allowance and the 14% research premium further reduce the overall effective tax burden. According to the BAK Taxation Index 2022, the tax burden at 22.5% is lower than in France (27.1%), Germany (29.3%) and the USA (33.4%).

Companies benefit from the following, among others:

• Reduction of the corporate tax rate from 24% to 23% by 2024.
• Increase in the tax-deductible amount for low-value assets from € 800 to € 1,000.
• Investment allowance of 10% or 15% (for ecological investments) respectively with the assessment base (for acquisition and production costs) capped at € 1 million per year and company.
• Extension of existing tax benefits for electricity produced in Austria to all renewable sources of energy.
• No electricity levy will be imposed upon self-generated and consumed electricity energy if it is derived from a renewable energy source.
• The 2nd rate bracket for income and payroll taxes of employees has been reduced from 35% to 30% in July 2022; furthermore, the tax rate for the 3rd tack bracket declined from 42% to 40% in July 2023. These measures has resulted in € 3.9 billion in tax relief.

Income Tax in Austria

The Austrian income tax covers various types of income, including income from employment, self-employment, capital assets and rental income.

The tax rate in Austria varies depending on income level and is usually between 0% and 55%. There are also tax allowances and deductions that can reduce the tax burden. 

The 20% tax rate in Austria is the rule. Sales where the tax rate of 10% or 13% is applied are the exception. These are fully listed in Section 10 of the Value Added Tax Act (UStG).

For example, the 10% VAT rate applies to:

• Letting and leasing of properties for residential use
• Accommodation provided in furnished living rooms and bedrooms and regularly supplied additional services (including heating)
• The rental (transfer of use) of properties for camping purposes
• Passenger transport other than by aircraft domestically (13 percent) 
• Waste removal
• The delivery of books, newspapers, magazines, food

The 13 percent tax rate in Austria applies, for example, to:

• The delivery of living animals and plants, firewood, ect.
• Sales from artistic work
• Film or circus performances
• Admission to sporting events

In order to avoid double or multiple taxation of the same income in two or more countries, Austria has concluded double taxation conventionsdouble taxation conventions () with numerous countries based on the OECD Model Tax Convention. These agreements regulate which country is entitled to the right of taxation for the particular income.