Simple Tax Guide for Americans in Austria
US Expat Taxes - Austria
At Taxes for Expats we have been preparing U.S. tax returns for U.S. Citizens and green card holders working in Austria for over 8 years. Our clients hail from all parts of the country - Vienna and Graz, Linz and Salzburg, Innsbruck and Klagenfurt.
As a U.S. Citizen or green card holder you are legally required to file a U.S. tax return each year regardless of whether you already pay taxes in your residence country. The expatriate Foreign Earned Income Exclusion can only be claimed if you file your tax return on a timely basis. It is not automatic if you fail to file and can even be lost. We have many clients living in Austria and know how to integrate your U.S. taxes into the local income taxes you pay. Any Austrian income tax you already pay can be claimed as against the tax liability on your U.S. return on the same income.
As an expat living abroad you get an automatic extension to file until June 15th following the calendar year end. (You cannot file using the calendar year as is standard in Austria for U.S. tax purposes). You must, however, pay any tax that may be due by April 15th in order to avoid penalties and interest. You can get an extension to file (if you request it) until October 15th.
There are other forms which must be filed if you have foreign bank or financial accounts; foreign investment company; or own 10% or more of a foreign corporation or foreign partnership. If you do not file these form or file them late, the IRS can impose penalties of $10,000 or more per form. These penalties are due regardless of whether you owe income taxes or not.
We have helped hundreds of expats around the world catch up with their past U.S. taxes because they have failed to file U.S. tax returns for many years. This is, in fact, our specialty and we offer a 10% discount to clients to wish to file multiple tax returns at once and get in full compliance with the IRS.
Work with a recognized expert to help you prepare your American tax return. We can also provide tax planning and advice with other expatriate tax; we look forward to working with you.
Personal Income Tax Rates in Austria
Below we include information on the Austrian Tax System for the American Expatriates.
Income tax rates in Austria increase in progressive steps up to 55% for income exceeding‚ 1,000,000. Income tax table for Austria is as follows:
|Taxable Income||Tax rate %|
|0 - 11,000||0%|
|11,001 to 18,000||25%|
|18,001 to 31,000||35%|
|31,001 to 60,000||42%|
|60,001 to 90,000||48%|
|90,001 to 1,000,000||50%|
The tax-free bracket for low income in Austria is raised from 10,000 to 11,000 in 2009.
Basis Austrian resident individuals are taxed on their worldwide income. Nonresidents are taxed only on Austrian source income.
Residence An individual is resident if he/she is domiciled or has a habitual abode in Austria. A habitual abode is always presumed if an individual stays in Austria for more than 6 months.
Filing status Each taxpayer must file a return; joint filing is not permitted.
Taxable income Taxable income is the sum of income from all sources, including income from employment, the carrying on of a business or profession and income from investments.
Capital gains A capital gains tax is imposed at a rate of one-half of the taxpayer's average tax rate, up to a maximum of 27.5%.
Deductions and allowances Deductions from income are available for various losses, special and exceptional expenses, disabled individuals, and to farm and forestry workers.
Allowances based on a taxpayer's personal circumstances are replaced by tax credits (for sole earners, sole educators and employees).
Rates Rates are progressive up to 55%.
Other taxes on individuals:
Capital duty No
Stamp duty Stamp duty of between 0.8% and 1.5% is levied on mortgages and loans, as well as on various other transactions (e.g. assignment of receivables, rent and lease contracts).
Capital acquisitions tax No
Real property tax Municipalities impose an annual real estate tax of up to 2% of the assessed property value.
Inheritance/estate tax No (however, there is a statutory notification requirement for gifts).
Net wealth/net worth tax No
Social security Employed and self employed individuals are required to make pay-related social security contributions in an amount determined based on the individual's salary.
Filing and payment Tax on employment income is withheld by the employer. Certain types of investment income are not included in the computation of the taxpayer's income but are taxed at a special 25% withholding tax rate. Other income is self-assessed; the taxpayer must pay advance income tax in 4 instalments. The tax return must be filed by 31 July in the year following the assessment year.
Tax Year: Tax year in Austria is the calendar year.
Austria Corporate Tax
Austria corporate tax rate is 25%.
Public and private limited companies and certain other entities, such as cooperative purchasing societies and mutual insurance companies, are subject to corporate income tax at 25%.
Companies incurring a tax loss or earning small profits must pay a minimum tax of EUR 1,750, EUR 3,500 or EUR 5,452 depending on the legal status of the company and the industry. Non-resident companies are not subject to a minimum tax.
Minimum tax may be credited against corporate tax payable in the following years.
Resident companies are subject to tax on their worldwide income. Nonresident companies are taxed on income attributable to an Austrian permanent establishment, immovable property located in Austria, deposits with Austrian banks, income from silent partnerships in Austria, income from leasing or renting certain property in Austria and income from commercial or industrial consulting or providing labour for domestic use. Companies are deemed to be resident if they are incorporated in Austria (i.e. the registered office is in Austria) or have their place of effective management in Austria.
The fiscal year usually runs from 1 January to 31 December, although a company can choose a different fiscal year under certain circumstances. Corporate income tax is assessed on an annual basis. However, quarterly advance payments have to be made.
Residence A corporation is resident if it is incorporated in Austria or managed and controlled in Austria.
Basis Residents are taxed on worldwide income; nonresidents are taxed only on Austrian-source income. Branches are taxed the same as subsidiaries.
Taxable income Corporation tax is imposed on a company's profits, which consist of business/trading income, passive income and capital gains. Normal business expenses may be deducted in computing taxable income.
Taxation of dividends Dividends received by (1) an Austrian resident company; (2) a foreign company listed in the EC parentsubsidiary directive; or (3) a foreign company comparable to an Austrian company resident in certain EEA countries are exempt from corporate tax (domestic/EC/EEA participation exemption). Dividends received from a foreign company that does not fulfil the above criteria are tax exempt if the following criteria are fulfilled (international participation exemption): (1) the foreign company is a company comparable to an Austrian company; (2) the parent company holds directly or indirectly at least 10% of the equity capital of the subsidiary; and (3) the minimum 10% shareholding is held continuously for at least 1 year.
Capital gains Capital gains are generally taxed at the same rate as ordinary income.
However, under the international participation exemption, gains from the sale of a participation in a nonresident company are tax exempt unless the resident company has exercised an option to have capital gains treated as taxable income.
Losses Losses may be carried forward indefinitely. The carryback of losses is not permitted.
Alternative minimum tax No
Foreign tax credit Foreign tax paid may be credited against Austrian tax, but the credit is limited to the amount of Austrian tax payable on the foreign income.
Participation exemption Intercompany dividends are exempt under the domestic/EC/EEA and the international participation exemptions. Under the international participation exemption, capital gains on the sale of such participations also are tax exempt. The EC/EEA participation exemption does not apply if the foreign company (1) is not subject to a direct or indirect tax comparable to the Austrian corporate income tax; or (2) is subject to a tax comparable to the Austrian corporate income tax at a tax rate of less than 15%; or (3) is tax exempt in its state of residence. The international participation exemption (either for dividends or capital gains) does not apply if the foreign company generates passive income and pays tax at a rate of less than 15%.
Incentives Various incentive programs are available, such as a 25%-35% allowance for qualifying R&D expenditure. Alternatively, an entity may apply for an 8% cash premium on certain R&D expenses.
Dividends Dividends paid to another Austrian company are exempt. Dividends paid to nonresident companies are subject to a 25% withholding tax unless the rate is reduced under an applicable tax treaty or exempt under the EC parent-subsidiary directive.
Interest No withholding tax is levied on interest unless the loan is secured against Austrian real estate or various other Austrian rights (the rate may be reduced or exempt under an applicable tax treaty).
Royalties Royalties are subject to a 20% withholding tax, but may be reduced or exempt under an applicable tax treaty or the EC interest and royalties directive.
Branch remittance tax No
Other taxes on corporations
Capital duty Capital tax of 1% is levied on compulsory shareholder contributions and on voluntary direct and hidden capital contributions to Austrian corporations if effected by the direct shareholder.
Partnerships in which a corporation is an unlimited partner are deemed to be corporations.
Payroll tax Municipalities levy a general payroll tax of 3% on total salaries, wages and social contributions paid monthly by permanent establishments based in Austria.
Real property tax Municipalities impose an annual real estate tax of up to 2% of the assessed value of property.
Social security Employers are required to make pay-related social insurance contributions. Generally, the employer's contribution ranges from 21.70% to 21.90% of an employee's salary. The employee's corresponding contribution of 17.8% to 18.2% must be withheld by the employer and remitted to the tax authorities.
Stamp duty Stamp duty is levied at a rate ranging from 0.8% to 1.5% on mortgages and loans, as well as on various other transactions (e.g. assignment of receivables, rent and lease contracts).
Transfer tax Transfers of real estate are subject to an acquisition tax of 3.5% (plus a 1% registration fee).
Austria Value Added Tax (V.A.T)
The standard rate of Value Added Tax in Austria is 20%.
VAT is generally imposed on the delivery of goods and the rendering of other services within Austria by entrepreneurs within the scope of their business and on imports into Austrian customs territory.
The standard VAT rate is 20%. There is also a reduced tax rate of 10% which is applicable, amongst others, to food, rent and books. As of 1 January 2016, the VAT rate for artistic activities is 13% (previously 10%). It is important to note that artists cannot always charge 13% VAT automatically, but that different tax rates apply depending on their activity.
Some transactions such as exports are zero-rated. A number of transactions are exempt from VAT. VAT is generally assessed on a calendar year basis. Monthly or quarterly preliminary returns have to be filed.