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Austria: Living There - Tax Issues

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Living There

INDIVIDUAL TAXATION

Austrian residents are subject to unlimited tax liability, where their world-wide income will be subject to Austrian taxation (of course in deference to tax treaties). Married couples are taxed separately.

INCOME TAX

The income of residents are taxed at progressive rates and the taxable income is generally computed by deducting income-generating expenses from the gross income.

Residents are entitled to deductions such as employee deduction, solitary earner consideration and traveling allowance (for employees traveling between the employment site and residence). Residents can also deduct special allowances (Sonderausgaben) such as fees for tax advice or losses which have been incurred in the preceding years, extraordinary expenses (außergewöhnliche Belastungen) e.g. children’s tuition away from home or expenses from natural catastrophes, and special deductions (Freibetrag).

Residents are also entitled to the following tax credits:

• €364 (as head of household credit) for a married taxpayer whose spouse’s income is less than €2,200. The limit for the spouse’s income increases to €6,600 if the household has at least one child.
• €364 for single parents whose income is less than €6,600
• Child tax credit:
  • €494 for one child
  • €669 for two children
  • €220 for each additional child

Residents earning employment income can claim the €54 employment tax credit and the €291 traffic tax credit (which covers general commuting expenses).

Retirees can claim the €400 retiree tax credit, except if their pension income is between €17,000 and €25,000.

Rental Income Tax

Taxable rental income is the excess of receipts over income-related expenses (werbungskoten). Expenses such as maintenance and repairs, depreciation, administrative expenses (including professional tax advice), interest payments and real estate tax are deductible.

CAPITAL GAINS TAX

Capital gains realized from the sale of real estate held for more than 10 years are exempt from taxation. But properties sold within 10 years of acquisition are taxable, except if the property has served as the owner’s primary residence for the past two years or if the owner have erected or have the building erected himself.

Taxable capital gains for properties sold within the 10 years retention period will be considered as speculative (exemption stated above) and will be charged at the same rates as income tax. The acquisition cost will be deducted from the selling price to arrive at the taxable amount.

PROPERTY TAXES

Real Estate Tax

Property taxes in Austria are levied on the assessed value of real property, which is generally less than the prevailing market value. It is levied at a basic federal rate, multiplied by a municipal coefficient. The basic federal rate is usually 0.2% and the municipal coefficients range up to 500%.

CORPORATE TAXATION

Income Tax

The standard corporate income tax rate is 25%. This rate applies to companies incorporated in Austria or foreign companies doing business there. The same rate applies for income derived from the sale of real estate by corporations (capital gains).

Starting 2006, net rental income by non-resident individuals of Austria will also be taxed as business income at the tax rate of 25% if the property is part of his business abroad.

Austria - more data and information

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