Lawyer
An expert in corporate and international corporate law. He has many years of experience in establishing and reorganizing companies, supporting M&A transactions, as well as providing legal support for opening and running a business in the EU, Asia, and North America.
TAX CONSULTATION IN AUSTRIA
The Austrian tax system is based on a federal structure, where the federal government, the federal states (Bundesländer) and the municipalities have their own tax collection powers.
The Austrian tax administration (Finanzverwaltung) consists of three levels:
- Bundesfinanzministerium (Federal Ministry of Finance)
- Bundesfinanzdirektionen (Federal Finance Directorates)
- Finanzämter (Local tax offices)

The main laws governing the tax system in Austria are:
- Bundesabgabenordnung (BAO) – Federal Tax Law
- Einkommensteuergesetz (EStG) – Personal Income Tax Act
- Körperschaftsteuergesetz (KStG) – Corporate Tax Act
- Umsatzsteuergesetz (UStG) – Value Added Tax Act
- Gewerbesteuergesetz – Trade Tax Act
The tax year in Austria generally coincides with the calendar year (January 1 – December 31).
Main forms of business and their taxation
- Sole Proprietorship (Einzelunternehmen)
- The income of an entrepreneur is taxed at the Einkommensteuer (personal income tax) rates.
- A progressive scale from 0% to 55% (2023) applies.
- The need to pay Gewerbesteuer (trade tax) if income exceeds €5,000 per year
- Obligation to pay contributions to Sozialversicherung (social insurance)
- General Partnership (Offene Gesellschaft, OG)
- “Transparent” structure for tax purposes
- Partners’ income is taxed through Einkommensteuer.
- Each partner receives a share of the profit/loss
- OG pays Gewerbesteuer
- Limited Partnership (Kommanditgesellschaft, KG)
- “Transparent” structure for tax purposes
Two types of partners:
- Komplementäre (general partners): Unlimited liability, taxation through Einkommensteuer
- Kommanditisten (limited partners): Limited liability, taxation through Einkommensteuer
- KG pays Gewerbesteuer
- Limited Liability Company (Gesellschaft mit beschränkter Haftung, GmbH)
- A separate legal entity, taxed at Körperschaftsteuer (corporate tax) rates
- Corporate tax rate: 25%
- Obligation to pay trade tax
- GmbH has limited liability
- Possibility of distributing profits through dividends
- Joint Stock Company (Aktiengesellschaft, AG)
- Separate legal entity, taxed at Körperschaftsteuer rates (25%)
- Obligation to pay trade tax
- Shares are freely transferable.
- Requires a supervisory board (Aufsichtsrat) if the number of employees exceeds 300
- Societas Europaea (SE)
- European company, taxed at Körperschaftsteuer rates (25%)
- Obligation to pay trade tax
- Can be moved between EU countries without liquidation
Corporate tax (Körperschaftsteuer)
Tax rates and base: The standard rate is 25% (from 2022). A reduced rate of 23% applies to companies with an annual turnover of up to €30 million and a book value of up to €30 million.
An enterprise foundation (Unternehmensstiftung) is taxed at a rate of 13.5%, and investment funds are taxed at 0% (under certain conditions).
The tax base is the profit as determined in the financial statements and adjusted for tax purposes.
Tax adjustments include:
- deductible expenses (Abzugsfähige Kosten) – business expenses, depreciation, interest on loans;
- non-deductible expenses (Nicht abzugsfähige Kosten) – private expenses, fines, 50% entertainment expenses;
- and special valuation rules (Bewertungsfreiheit), e.g. revaluation of assets.
Benefits and filing procedure:
The corporate tax system provides for several benefits:
- Forschungsaussetzung (25% of R&D costs can be attributed to expenses in double volume);
- § 6a EStG (the possibility of setting aside up to 15.5% of salary for pension contributions);
- Sachbezugsregelung (special rules for the assessment of in-kind benefits to employees);
- Verschonungsregelungen für Betriebsvermögen (benefits for business assets when transferred to descendants).
The corporate tax return (Körperschaftsteuererklärung) is filed annually by 30 September of the following year.
Companies make quarterly advance payments (Vorauszahlungen) based on estimates, and the final settlement (Körperschaftsteuernachzahlung) is made by 31 December after the end of the tax year. 4. Value Added Tax (Umsatzsteuer, USt)
Benefits and exemptions
- Kleinunternehmerregelung (Small Business Regulation): If annual turnover < €35,000, VAT exemption can be chosen
- Agriculture and Forestry: Special rules
- Vereine (Associations): Exempt from VAT if not engaged in commercial activities
- Non-profit Organisations: Exempt under certain conditions
Reporting and tax payment
- Umsatzsteuervoranmeldung (Preliminary VAT declaration): Monthly or quarterly
- Umsatzsteuererklärung (Annual VAT declaration): By June 30 of the following year
- Vorauszahlungen (Prepayments): Monthly or quarterly, depending on the volume of transactions
- Elektronische Abwicklung (Electronic Filing): Mandatory for most VAT payers
Social insurance contributions (Sozialversicherungsbeiträge)
- Sozialversicherungsbeiträge (Social Insurance Contributions): ~18.12% of salary (employer) + ~18.07% (employee)
- Arbeitslosenversicherung (Unemployment Insurance): 3% (employer) + 3% (employee)
- Krankenversicherung (Health Insurance): 3.78% (employer) + 3.78% (employee)
- Pensionsversicherung (Pension Insurance): 15.12% (employer) + 15.12% (employee)
- Accident insurance: 1.2% (employer)
At the same time, Austria has double taxation treaties with most countries in the world
The main provisions are:
- Freistellungsmethode (Exemption Method): Income taxed in one country is exempt from taxation in another
- Anrechnungsmethode (Offsetting method): Tax paid in one country is offset against tax paid in another
As for taxes on payments to non-residents, the Quellensteuer (Payment Tax) applies: 20% – 35% on dividends, interest, royalties.
However, there are Reduced rates: Under double taxation treaties.
Also important is the EU Interest Directive: 0% for payments within the EU.
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