The most important taxes are:
- income taxes: income tax (Einkommenssteuer) and corporate income tax (Körperschaftssteuer), capital gains tax (Kapitalertragssteuer)
- value-added tax (Umsatzsteuer)
- real property transfer tax (Grunderwerbsteuer)
Income tax (Einkommenssteuer)
Natural persons whose place of residence (Wohnsitz) or habitual place of residence (gewöhnlicher Aufenthalt) is in Austria are obliged to pay income tax. Basically, they are subject to income tax on their worldwide income. Non-resident taxpayers only need to pay income tax for their Austrian income. Generally, earnings are subject to income tax if they fall into one of the seven income categories under fiscal law, which are:
- income from agriculture and forest economy;
- income from independent services;
- income from trade and business;
- income from employment;
- income from capital investments;
- income from rent and leasing;
- other earnings.
In a first step, these seven items are added up. Once any special and extraordinary expenses have been subtracted, you have the basis for income tax calculation. Income tax is a progressive tax ranging from 0 to 55 percent.
Annual income of up to €11,000 does not require the payment of any income tax.
In Austria, employees receive 14 monthly salaries a year. The 13th and 14th salaries are subject to tax privileges.
Companies and income tax
Sole proprietors and partners in partnerships are likewise subject to income tax.
Taxation of partnerships:
The partnership itself is not subject to taxation. The profit is directly attributed to the partners and they are subject to income tax.
Corporate income tax (Körperschaftssteuer)
The profits of corporations are subject to corporate income tax. Corporate income tax is 25 percent (non-progressive).
Corporate income tax payers are required to pay a minimum tax amount regardless of whether the corporation makes a profit or not. Limited liability companies (GmbH) are required to pay € 1,750 a year. Newly set up companies are expected to pay € 500 a year over the first five years, € 1,000 a year over the subsequent five years and € 1,750 a year thereafter.
Joint stock corporations pay a minimum of € 3,500 in taxes.
Capital gains tax (Kapitalertragssteuer)
Capital gains tax is withheld for dividends paid and for interest on bank deposits as well as bonds. 27.5 percent are withheld at source so individuals are not obliged to pay capital gains tax themselves.
Value-added tax (Umsatzsteuer)
The VAT rate is 20 percent. In some special cases this rate has been reduced to 10 or 13 percent.
Real property transfer tax (Grunderwerbssteuer)
Land acquisition is subject to a 3.5% real property transfer tax on the purchase price.