tax system in austria

Overview of the Tax System in Austria

Austria has a progressive tax system that funds a wide range of public services, including healthcare, education, and social security. The tax system is overseen by the Austrian Ministry of Finance (BMF).

Income Tax (Einkommensteuer)

• Income tax in Austria is progressive, with rates ranging from 0% to 55%, depending on income levels. The first €11,693 of annual income is tax-free. Higher income levels are taxed at increasing rates, with the top bracket applying to incomes above €1 million.
• Employees’ income tax is withheld by employers through the PAYE (Pay As You Earn) system.

Value Added Tax (VAT) (Mehrwertsteuer - MwSt)

• The standard VAT rate in Austria is 20%, with a reduced rate of 10% applicable to essentials like food, medicine, and books. A further reduced rate of 13% applies to certain goods and services, such as cultural events and accommodation.

Corporate Income Tax (Körperschaftsteuer)

• The corporate income tax rate in Austria is a flat 25% on profits. Austria also offers a group taxation system allowing companies to offset profits and losses within a group.

Social Security Contributions

• Both employees and employers contribute to social security, covering pensions, healthcare, and unemployment benefits. These contributions are a significant part of the overall tax burden on labor.

Other Taxes

• Austria also levies other taxes, including capital gains tax, inheritance tax (in limited cases), and real estate transfer tax.

Overall, Austria’s tax system is designed to be fair and progressive, ensuring that higher earners contribute more to the public finances.