Contracting in Austria

How can an Umbrella Company Help with Contracting in Austria?

Most freelance workers aren’t superheroes who successfully tackle these issues all on their own. There are companies who specialise in helping workers make the most out of their contracts.

They’re called Umbrella Companies (or, contractor management companies).

Basically, an Umbrella Company acts as your full-time employer, even though you maintain your independence as a contractor. They collect and filter payments from your clients, filtering out the necessary social security and fees. You send them your timesheets, and they send you payments.

Because they act as your “employer,’ they can sponsor you and provide a single work permit for multiple contracts in Austria. Even better, most are experts in Austrian and expat tax law, meaning they’ll also help you optimise your earnings in Austria.

Although the Umbrella Company is technically your “employer,” you’re essentially freeing yourself to work even more independently. You still dictate your contracts, your hours, your schedule. The Umbrella Company simply filters out the time-consuming admin and immigration issues, allowing you to focus on your new contract.

Can I Organise My Taxes and Work Permit Myself?

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Generally, you need to have an employer sponsor in order to secure the appropriate work permit and work visa for Austria.

If you’re working independently, it can be difficult to find clients willing to sponsor you. Moreover, even if your client can do this, you’ll need a new sponsor each time you decide to take on a new contract. Of course, every new sponsor will mean more paperwork.

Also, are you familiar with the intricacies of the tax system in Austria, as well as your own country’s laws on overseas earnings? If so, good on you!

However, if you’re like the rest of us, figuring out (much less reducing) your tax liability in Austria and your home country can seem like full-time work in itself.

A Contractor’s Guide to Taxes in Austria

One of the most consistently challenging aspects of contracting in Austria is complying with the country’s tax system. As well as paying tax in Austria, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.

How do I calculate my taxable income in Austria

If you’re working in Austria under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Austria for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Austria, but contractors may not be offered this service because of their short stay with each employer.

Anybody who can’t pay their tax in Austria through PAYE is left with the prospect doing everything themselves.

Do you know much about Austrian Tax Law? Does Austria have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in Austria can range from 0 to 55 percent, and you need to be sure you are placed in the correct tax brackets.

Tax Filing as a Contractor in Austria

When Do You Need to Lodge Your Tax Return?April 30 (for paper filing); 30 June (for electronic filing)
Tax Filing DeadlineApril 30 (for paper filing); 30 June (for electronic filing)
Can you file it online?Yes, https://finanzonline.bmf.gv.at/fon/

How to File Taxes in Austria as a Contractor

Individuals for whom employment income is the only source of income, are not obligated to file income tax returns. However, you may do so to obtain a tax refund where you have incurred deductible business or special expenses.

You can file taxes online or by paper.

Step 1: Register for FinanzOnline

Register for the Federal Ministry of Finance’s (Bundesministerium Für Finanzen) online tax filing portal here(link is external). You will be required to fill in your personal details, and select a User ID (which must be 8-12 characters in length and contain at least 1 letter and 1 digit).

After successful registration, you will receive your personal ID, user ID, and PIN by registered mail.

If you have a Citizen Card, registration is not required.

Step 2: Login to FinanzOnline

Once you have registered for FinanzOnline, you can log in here(link is external). All tax forms can be accessed and completed online. Data from the previous year can be transferred automatically and notifications e.g. tax decisions can be viewed via the electronic Data Box.

Tax Figures in Austria

CurrencyEuro (EUR)
Tax-free Threshold in AustriaEUR11,000
Notes

Regular Payments and Special Payments
Austrian tax law distinguishes between ‘regular’ payments (which recur on a regular basis e.g. every month), and ‘special’ (non-recurring) payments. Special payments (not exceeding 1/6 of regular payments) are subject to special tax rates.

Amount (EUR) Special Tax Rate
0 – 620 0%
>620 – 25,000 6%
>25,000 – 50,000 27%
>50,000 – 83,333 35.75%
>83,333 Regular Tax Rate Up to 55%
Non-residents: For non-residents, an additional (hypothetical) EUR9,000 is added to their taxable income.

Deductions: The following deductions apply to income tax.

Traffic allowance EUR400
Deduction for pensioners EUR400
Deduction for sole wage earners in a family with a child (if the spouse derives taxable income not exceeding certain limits) EUR494 (EUR for sole wage earners with 2 children and an additional EUR220 for every additional child)
Commuter deduction EUR2 per km
Family and Child Allowances

Tax-free monthly transfer payments are granted for each child entitled to a child allowance (EUR58.40 for each child), and are paid with the family allowance.

Age of Child (Years) Monthly Family Allowance (EUR)
0-2 111.80
3-9 119.60
10-18 138.80
19+ 162.00
The total monthly amount increases with the number of children, at the following amounts:

2 children: EUR6.90 per child
3 children: EUR17 per child
4 children: EUR26 per child
5 children: EUR31.40 per child
6 children: EUR35 per child
7 or more children: EUR51 per child
An additional EUR100 is paid in September for children between 6 and 15.

Tax Residency in Austria

When do you become a tax resident in Austria

You become a tax resident in Austria when:

You become a tax resident in Austria when:

You establish a permanent place of abode in Austria; or
You stay in Austria for at least 183 days.

Does the 183 day rule apply in Austria

Yes

Am I taxed on my global income in Austria

Residents are taxed on their global income. Non-residents are taxed on their Austria-source income only.

Can you set up your own Limited Company in Austria?

How long does it take to set up21 days
How much does it costEUR2,032
Is it easy?Starting a Business Rank: 118/190 (Source: World Bank)

Tax Calculator in Austria

If you are a contractor and want a calculation on your tax and net retention in Austria, we can supply it to you free of charge.

Using an Umbrella Company for Income Tax in Austria

Contractors in Austria are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. An Austrian umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).

The companies are experts in Austrian taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Austrian tax office or tax department directly including processing your tax refund if you are eligible.

How We Can Help You with Tax in Austria

We work with numerous umbrella companies in Austria, many of whom are experts in tax and immigration laws. If you have any questions about tax in Austria, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Austrian work permit.

Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in Austria but without the overhead of directly dealing with the Austrian tax authorities. Get in touch with us today for some reliable advice on tax in Austria!

A Contractor’s Guide to Work Permits in Austria

Immigration is one of the primary concerns for any contractor hoping to start working in Austria. Permanent employees will find it easy to get their Austrian work permit because they’ll receive “sponsorship” for their entire stay from their prospective employer.

The Austrian work permit, known more commonly as the Red-White-Red Card, is dependent on this sponsorship because it confirms that you’ll be earning money during your stay in the country. Contracting in Austria is more difficult because the work permit is tied to one employer, so you have to change it to suit each new contract. Thankfully, umbrella companies provide a convenient and effective solution to this issue.

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How Does an Umbrella Company Work?

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Most people want to do their work, earn their money and enjoy their spare time without taking on loads of admin in a new country. That is why an umbrella company can help.

When you’re working through an Umbrella Company, you’ll essentially be outsourcing the admin and tax issues to specialists.

While the umbrella company will charge a fee, you’ll likely end up saving more money in the long run: you’ll be able to focus on your work, expertly reduce your tax liability, and comply with all laws and regulations in Austria (which means avoiding fees, fines, or even worse penalties).

How Can We Help You?

There’s a huge variety of Umbrella Companies with different specialities and advantages in Austria. How do you find the right one for your circumstances?

We work closely with Umbrella Companies all throughout Austria and match contractors with the right company for them. If you’ve already secured a contract in Austria, we can help you find your best match (for free). Or, we can simply give you feedback on your situation (for free).

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