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TAXES

EXPLAINED: What can I deduct from my tax bill in Austria as a freelancer or business? 

Taxes are high in Austria and can be a burden even when we acknowledge the quality of life and public services in the country The good news is that there are some deductions you can make. Here's your guide to some common deductions.

Published: 7 May 2021 15:38 CEST
Updated: 4 March 2024 17:06 CET
A home office is one of the ways you can claim tax back as a freelancer (Photo by Ina FASSBENDER / AFP)
(Photo by Ina FASSBENDER / AFP)

Austria may be a great place to live and start a business but the more you earn, the more taxes you will have to pay.

So how can you get back some of your hard-earned money when completing a tax declaration as a freelancer in Austria?

The Local spoke to SEA – Services for self-employed and Tax Advisor Alexandra Kaspar to find out. 

What can you deduct?

First of all, there are many items you can deduct from your tax bill. If you are self-employed, you can deduct all expenses related to your business from your revenue.

For example :

  • office costs including costs for working from home
  • training costs
  • car and transportation, travel expenses
  • communication expenses
  • office supplies
  • liability insurance and other insurances, which are related to your business
  • social security contributions (SVS) (but only what you paid so far for the relevant year).

READ MORE: Everything you need to know about paying tax in Austria

For some of the items mentioned above especially working from home, training and car/transportation costs, there are special circumstances and regulations.

What about a flat tax deduction rate?

Many people decide rather than claiming back the tax for every individual item, they would rather apply a flat tax deduction rate. 

In this case, as long as your annual revenue does not exceed €220,000, you can apply a tax deduction rate (Betriebsausgabenpauschalierung) of 6 percent or 12 percent depending on your business or activity.

This saves you having to collect bills for all your expenses. 

After deducting the flat tax deduction rate, you can still subtract your social security (SVA) contributions.

READ MORE: Being self-employed in Austria: What you need to know

The Raiffeisen Bank in Austria  (Photo by ALEXANDER KLEIN / AFP)

Flat rate for small businesses

From 2020 onwards, another flat rate has been introduced for small businesses: up to an annual revenue of €35,000, the flat rate for expenses will be 20 percent for service providers and 45 percent for other businesses, for example trading businesses. 

Social security contributions can also be deducted in addition to the flat rate. 

From 2021 onwards, this rule is connected to VAT exemption for small businesses (this is also applicable even if the small business “opts to apply VAT”), and can therefore be applied up to a revenue of €42,000.  

There is an upper limit of €8,400 for expenses which can be deducted for businesses which provide services and an upper limit of €18,900 for other businesses. 

After the deduction of actual expenses or the flat rate and social security contributions, you come up with the amount of your actual profit. 

Additional tax free profit allowance

An additional 13 percent tax-free profit allowance (Grundfreibetrag) can then be deducted from the net amount for business with profit up to €30,000. 

If your profit before the 13 percent allowance amounts to more than €30,000, an additional 13 percent allowance may apply to the extra amount, if it is covered by certain investments into business assets (Gewinnfreibetrag). 

You can use this tax calculator to calculate your income tax

When does it make sense to claim individual expenses rather than the flat rate?

Tax Advisor Alexandra Kaspar says that sometimes it makes sense for service providers to claim for individual expenses instead of choosing a flat rate, especially when there are big costs related to materials, equipment and rent for an office. 

This could be the case for therapists or physiotherapists renting an office, artists with their own studio or film production companies for example.

Some companies have a big amount of expenses in the first year and this is when it’s more beneficial for them to collect bills rather than claim back the flat rate of tax.

What else can I deduct from tax?

If you are eligible to deduct expenses for an office in your private apartment (i.e. when working from home) you may deduct:

  • a part of the rent
  • a part of electricity and gas costs
  • a part of the costs of furnishing the room 
  • maintenance of the room and the furnishings
  • work equipment such as computers, fax machines, printers, etc (deductible even if they are set up in a room that doesn’t match the deduction requirements)

Further education

  • work equipment and work documents
  • transportation costs
  • accommodation costs
  • specialist literature (job-related literature or literature to improve job opportunities)
  • office and writing materials
  • part of the telephone and internet costs

Other deductibles:

  • consulting costs (e.g. from lawyers, tax consultants)
  • interest on debt (for liabilities related to your business)
  • contributions for compulsory memberships, for example the Chamber of Commerce (WKO)
  • advertising expenses

You can learn more about all the possibilities for deductibles at www.bmf.gv.at

SEA – Services for self-employed is designed to support self-employed individuals by delivering information in form of guidebooks and free articles in English. 

You can find out more in their guidebook on self-employment aimed at those who fall into the New self- employed (Neue Selbständige) working category.

Useful vocabulary

Tax – Steuer

Steuerberater/ Steuerberaterin – Male tax adviser/ Female tax adviser

Flat tax deduction rate – Betriebsausgabenpauschalierung

Tax-free profit allowance  – Grundfreibetrag

Business assets – Gewinnfreibetrag 

New self-employed – Neue Selbständige

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TAXES

Can you pay your Austrian taxes using a foreign bank account?

If you still use your old bank account in you home country - or an online bank with a non-Austrian IBAN number- as a resident in Austria, you can still pay your income tax without having to open a new account here. But it can be complicated.

Published: 8 April 2024 16:19 CEST
Can you pay your Austrian taxes using a foreign bank account?

It’s not uncommon for foreign residents in Austria to keep their old bank accounts abroad. With the rise in popularity of international online banks such as N26, Wise, and Revolut, even people who are from Austria can sometimes end up with an IBAN that does not start with AT. 

Does that mean once you need to deal with the government – for paying taxes, for example – you’ll need a brand new account created in an Austrian bank?

Usually, no. As we’ve written before, you can keep using your home country’s bank account as long as it is an EU bank or part of the Single Euro Payments Area (SEPA), which includes the European Union and several non-EU countries, such as Switzerland and the UK. 

Since international online banks also usually offer bank accounts based in the EU, you’ll also have no trouble keeping them instead of having to open a new account with an Austrian lender. 

However in practice, you might face a few challenges with something known as “IBAN discrimination”. This is when an employer or company refuses to accept your SEPA IBAN for euro payments or direct debits. This is illegal under the SEPA agreement but happens often.

READ ALSO: Why it’s worth filling in your annual tax return in Austria

It’s not uncommon to find stories of people who have tried to sign up for a service or utility, such as paying for a mobile plan, but were denied because their IBAN identification, though it was from a euro country, did not start with AT—it was not from Austria.

But does Austria’s government discriminate against foreign IBAN?

No. If you go on the official financial portal, FinanzOnline, you will see that you can add a SEPA IBAN to your account. This way, you can receive any social benefits (including payouts such as the Klimabonus or family benefits such as the Familienbeihilfe) directly in your bank account as long as this bank is located in a SEPA country. 

It gets a little bit more complicated when it comes to paying your taxes, which you have to transfer yourself if you are, for example, a self-employed worker whose income tax is not automatically deducted from your salary. 

In those cases, you fill out your tax income assessment and receive information on how much money you owe to the government. Austria has comparatively high taxes to support its social system, and you might have to pay anywhere from 20 to 55 percent of your income in taxes depending on how much you earn (those earning below a threshold which was € 11,693 in 2023 don’t have to pay taxes at all). 

Actually making the transfer is more complicated for those without an Austrian bank account. If you have a local bank account, the payment is made with a few simple buttons since the banks’ systems are integrated with FinanzOnline. If not, you have to do it yourself. 

Austria’s government suggests you use the payment system on the FinanzOnline website, but when you try to use the “electric payment” method online, it leads to the EPS system that will ask you to choose your bank name – and accept only Austrian banks.

READ ALSO: What foreign residents in Austria should know about taxes

How do I pay using my foreign bank account, then?

You will have to make a bank transfer directly to the government office, as The Local has confirmed with Finanzamt, the country’s financial authority.

Once you make your tax income declaration, you should receive a form called “Anspruchszinsenbescheid”. That will have all the information you need. On the bottom of each page, you will find the bank account to which you need to send the money (Bankverbindung). On the top right, you will find your Steuernummer and your tax number, which you must add as a reference when you transfer. 

It can still take a few days for the office to process your payment. After you log in with your account details, you can check if it has been processed on the homepage of FinanzOnline.

If you don’t see a payment confirmation a few days before the tax payment deadline, you can call Finanzamt from Monday to Thursday from 7:30 am to 3:30 pm and on Friday from 7:30 am to 12:00 pm on 050 233 233 for private individuals and 050 233 333 for businesspeople.

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