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Doing Business Tax matters

Austria holds a top position on the scale of business-friendly countries. In addition, the eco-social tax reform offers tangible tax relief for companies.

Tax Rates in Austria

Tax rates in Austria play a crucial role and significantly impact the country's economic and social landscape. In international comparison, Austria is not considered a low-tax country.

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.

Tax benefits
for international companies

Austria offers several tax advantages to your company, including a corporate income tax. The corporate income tax rate is 23% by 2024. There are no further taxes on corporate profits.

Attractive tax incentives such as the investment allowance and the 14% research tax credit 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%).

Moreover, the Austrian Federal Government adopted a far-reaching eco-social tax reform in January 2022 that offers tangible tax relief to companies and their employees. This means that taxes in Austria will be further reduced for entrepreneurs. This makes Austria even more attractive as a location for international companies.

The eco-social tax reform
Tangible tax relief for companies

The eco-social tax reform reduces the tax ratio (taxes and levies) down towards the 40% level and strengthens the competitiveness of Austrian industry. This results in a perceptible decrease in the tax burden for companies and employees. 

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.
  • From 1 July 2022 onwards, 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 will be reduced from 35% to 30% as of July 2022; furthermore, the tax rate for the 3rd tack bracket will decline from 42% to 40% starting in July 2023. These measures will result in € 3.9 billion in tax relief.

Did you know...

This not only reduces paper consumption but ensure shorter lines of communication. For example, VAT tax credits are offset against other taxes and paid out directly.

…that you can handle your entire correspondence with the tax office online?

Tax rates and duties in Austria

But which taxes in Austria do I have to consider as an entrepreneur? 


Municipal tax

The municipal tax is a unique local tax.

It amounts to three percent of the gross monthly salary of employees of a business establishment located in Austria. The trade tax in Austria helps to strengthen the local economy and support the municipalities, and enables the financing of public projects and services.


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. 

Value-added tax

The most important tax rates are:

  • the general value added tax rate of 20% (standard tax rate)
  • reduced tax rate of 10% or 13%

The following sales are subject to the value added tax in Austria:

  • Deliveries and other services which an entrepreneur renders in Austria for a fee 
  • Own consumption in Austria (removal or private use of objects which are assigned to the company)
  • Import of objects from third countries to Austria (import sales tax)
  • Since January 1, 2020, electronic publications such as e-books/e-papers (see VAT Guidelines 2000) and audio books have also been subject to the reduced tax rate of 10% (Tax Reform Act 2020 (BGBI I No. 103/2019)).

 Further information can also be found on the website of the Austrian Federal Ministry of Finance.

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

Group taxation and double taxation conventions

Group taxation is a means of increasing the competitiveness of regional headquarters and minimising the risk of entering new markets. The profits and losses of foreign subsidiaries can be offset against the profits and losses of the Austrian parent company. The basis is the participation of an Austrian stock corporation of more than 50% of the share capital.

In order to avoid double or multiple taxation of the same income in two or more countries, Austria has concluded double 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.

Tax tips

  1. 01

    The New Companies Promotion Act stipulates the exemption of startups from paying specified fees and taxes, including court and stamp duties as well as the land acquisition tax and certain charges linked to wages and salaries.  

  2. 02

    Austria is more generous than other countries in some cases when it comes to writing down items. Your tax adviser can work together with you to clarify which costs reduce the assessment base for your tax burden.

  3. 03

    In order to simplify the payroll accounting of international employees who are posted to Austria, a flat-rate advertising allowance of up to € 10,000 can be claimed directly in payroll accounting.

  4. 04

    The value threshold for immediately writing off "low value assets" equals € 1,000s.

  1. 05

    Profits up to € 30,000 are subject to the basic tax-free allowance of 15%. If the profit exceeds € 30,000, an investment-related tax-exempt profit allowance can be claimed in addition to the basic tax-free allowance.

  2. 06

    Companies with research and development costs can claim the so-called research tax credit. It amounts to 14% of total research costs incurred during a financial year, is credited by the tax office and also benefits companies which do not generate any profits.

  3. 07

    From July 2022 onwards, the Family Bonus Plus has increased to € 2,000 per child and year. The supplementary child allowance has been raised to € 450. These measures support parents, employees as well as the self-employed in their work and strengthens their purchasing power.

E-Government in Austria

E-government in Austria fosters the use of information technology and digital services in governmental operations and citizen interactions.

All you need is access to the Internet. E-government offers citizens convenient access to government services and information via online platforms.

These range from applying for identity documents to applying online for a tax number and online tax returns. This not only benefits the users, but also the government. Costs are saved, efficiency is increased and access to customers is improved through rapid retrieval. The trend towards e-government is on the rise worldwide and contributes to the modernisation and transparency of administration.

Coordinate taxes in Austria

To effectively manage your taxation in Austria, our services can assist you in coordinating all tax-related matters. Contact us now, we will be happy to support you with taxes in Austria and advise you if you want to expand your company to Austria and set up a business here. For further information on this topic visit our blog.

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