The system of taxation of Ukrainians in Austria

Before considering the taxation system, it is important to understand who is subject to taxation in Austria.

By law, any individual resident in Austria is subject to Austrian income tax on their worldwide income, including income from a trade or business, professional activity, employment, investment, and property.

Non-residents are taxed in Austria mainly only on income received on the territory of Austria.

Austria has a progressive tax scale. And this means that the more you earn, the more you will pay in taxes.

For natural persons, including individual entrepreneurs, all incomes received during the tax year are added up.

From 2024, a new reformed progressive scale of taxation is in effect, consisting of 7 levels:

Income to 12,815 – 0%

Income from 12,816 to 20,818 euro – 20%

Income from 20,819 to 34,513 euro – 35%

Income from34,514 to 66,612 euro – 42%

Income from 66,613 to 99,266 euro – 48%

Income from 99,267 euros up to 1,000,000 – 50%

Income over EUR 1,000,000 – 55%

Income tax is collected through current advance payments, which are payable by February 15, May 15, August 15, and November 15 of each year.

Based on your tax return, a tax ruling is issued at the end of the tax year, ordering either a refund or an additional payment of the missing amount.

Both the supply of goods and the provision of services in Austria are subject to VAT. Entrepreneurs need to pay it to the tax authorities.

The VAT rate in Austria is 20%. But there are also reduced VAT rates of 13% and 10%.

VAT and small business

If an entrepreneur receives less than 35,000 euros of net profit per year, he belongs to the category of small business.

Such an entrepreneur does not have to charge VAT to customers.

Insurance contributions

There is a mandatory social insurance system for employees, which includes health insurance, pension insurance, and accident insurance. The self-employed must pay 27% of their gross earnings into Medicare before paying tax on the rest

Importantly! As soon as you register yourself as a self-employed person, you lose the opportunity to receive social benefits! You will have to notify the state authorities of the fact of registration, submit reports, and pay your insurance premiums yourself.

If you receive income only as an employee, you are not required to submit an income declaration.

But it is by filing such a declaration that you can get a partial tax refund if you have incurred deductible business expenses or have not had a regular salary for 12 months.

There is also the possibility of tax deductions if only one of the spouses has income in a family with a child.

Thus, the monthly amount of withheld tax is reduced by 46.25 euros, with two children it is reduced by 62.58 euros, and with three children by 83.25 euros. Such a tax discount is not provided for married couples without children.

To avoid problems with taxation, to understand and establish your tax residency, and to calculate the amount of taxes to be paid, we recommend that you consult the specialists of the Prikhodko and Partners law firm.