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WORKING IN AUSTRIA

How Austria plans to cut the time it takes to get a work permit

Austria's Labour Minister has announced the government intends to significantly increase the number of 'Red-White-Red' work permits, over the next few years.

Published: 18 March 2024 15:45 CET
How Austria plans to cut the time it takes to get a work permit
A chef is seen through a window of Demel restaurant as she prepares famous desert dish Wiener Kaiserschmarrn on a rainy day in Vienna, Austria on March 31, 2022. (Photo by JOE KLAMAR / AFP)

In order to counter the shortage of skilled workers, ÖVP Minister for Economic Affairs and Labour Martin Kocher wants to significantly increase the number of Red-White-Red (RWR) Cards issued in the coming years, as he announced earlier this Monday.

The minister said that over the next four years the aim is to double the number of cards issued from 8,079 in 2023 to around 16,000.

He said that within a year, the government plans to half the time it takes to receive the permit.

Currently, it takes 25 days (from 28 days on average in 2022). He expected the shortened processing time to increase the attractiveness of the Red-White-Red Card and thus contribute to more cards being issued.

Less time, less bureaucracy

The medium—to long-term plans for the permit that allows skilled workers to immigrate to Austria include changes that will allow applicants to submit an RWR application online.

Chancellor Karl Nehammer had already stated that he intends to cut the time it takes to issue a card down to 72 hours. 

READ ALSO: How entrepreneurs can get Austria‘s ‘Red-White-Red’ card for skilled non-EU workers

As part of the reforms in how the RWR cards are issued, it has also become “easier” to get the permit, which is issued to workers who already have job proposals in Austria and can reach a minimum number of points in a point-based immigration system. 

For example, skilled workers in shortage occupations (a list of such professions is published yearly by the federal and state governments) were only able to get points for language if they spoke German or English. However, they can now get points if they speak other languages. A B1 level of French, Spanish, Bosnian, Croatian or Serbian now grants them 5 points each.

A worker who speaks fluent Spanish and English and basic (A1) German can get 20 points – and would need to score only 35 points in other eligibility criteria such as qualification, work experience and age to be able to apply for the RWR.

The same is true for highly qualified persons, who also benefit if they have concluded their studies in Austria.

The maximum age at which points are awarded has also been increased. Now workers aged up to 50 will grant can be granted 5 points, if they apply as a ‘skilled worker in a shortage occupation’, for instance. Perviously the focus was on younger workers.

It’s relevant to note, though, that the points system works so that older workers are also allowed to apply, but the younger you are, the more points you are granted. 

Who are the skilled workers coming to Austria?

Last year, most permits were issued to applicants who can cook, as The Local reported.

The statistics show 156 permits were issued for chefs, most for Upper Austria – the fewest in Burgenland (3).

IT and business technicians followed in second place. The number of approved permit requests was 118—most of them in Vienna (21). Other permits were issued for people in healthcare professions (80), technicians, gardeners, sports professionals, hotel and guest industries, and office jobs.

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WORKING IN AUSTRIA

Why are people in Austria paying more taxes despite federal reforms?

Workers in Austria are still among those with the highest tax burdens in the world, with the taxes and contributions taking more than 40 percent of wages even as the country introduced sweeping tax reforms.

Published: 26 April 2024 12:21 CEST
Why are people in Austria paying more taxes despite federal reforms?

It’s often said that Austria is a country with high quality of living and high taxes, but a new OECD study shows just how high the tax burden is here compared to other OECD countries.

According to the report, Austria has the third-highest tax burden on workers and the so-called “tax wedge”, how much of a worker’s wage is taken by the government,  increased as well.

According to the OECD, in most countries, the increase in labour taxation was primarily driven by increases in personal income tax.

This is because nominal wages increased in 37 out of 38 OECD countries as inflation remained above historic levels. However, since most of these countries do not have automatic indexation of tax systems, high inflation tends to increase workers’ tax liabilities by pushing them into higher tax brackets. 

However, Austria’s federal tax reforms removed this in the country in 2023. This means that once inflation rises, the tax brackets that define how much taxes you will pay on your income will also rise – and they have risen in 2023 and in 2024 since the change. 

The measure was known as the “end of the cold progression” in Austria and should have protected workers’ incomes from inflation losses.

READ ALSO: The tax benefits that parents and families receive in Austria

What is the tax ‘wedge’?

The OECD defines a tax wedge as “income tax plus employee and employer social security contributions, minus cash benefits.” 

In other words, if an employer has a labour cost of €100, how much will they actually see in their pockets, and how much of this goes to the state? According to the organisation, the percentage is the tax wedge.

In Austria, €100 earned by a single employee without children was taxed at an average of €47.2 last year. The amount was only smaller than in Germany (47.9 percent) and Belgium (52.7 percent) and it rose compared to the previous year when it was still at 46.9 percent.

The average of the 38 OECD countries was 34.8 percent.

Married single-earner couples with two children also have high tax burdens, with a tax wedge of 32.8 percent (OECD average: 25.7 percent), which is the eleventh-highest tax and contribution burden within the OECD for this group (2022: 13th place). For married dual-earner couples, the wedge was 40.6 percent.

The tax wedge for individuals or households with children is generally lower than those without children, as many OECD countries grant households with children a tax advantage or cash benefits.

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

Why is Austria’s tax burden higher this year?

Despite the tax reform presented by the government, Austria’s tax wedge has increased compared to the year before. 

The reason is the relief granted in Austria in 2022 in the form of one-off state payments. With the rising cost of living, the federal government released several temporary measures to help people in the country cushion the effects, including the popular €500 Klimabonus payment every person who had been a resident of Austria for at least six months was entitled to. 

These payments and increases in family allowances reduced the tax burden in 2022 – but they no longer exist or were drastically cut in 2023. Because of that, the tax burden is rising again. 

“The abolition of cold progression and the other measures have merely prevented the tax burden from rising more sharply,” Wifo economist Margit Schratzenstaller told Der Standard.

The report said the increased tax issues show that there is still a need for action. Compared to other industrialised countries, Austria’s tax burden on work for a single person without children is ten percentage points higher. Of course, the expert noted, the fact that many industrialised countries have a different social system with fewer publicly funded benefits also plays a role here. However, labour is also expensive in Austria compared to the EU average.

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

“The fact that the tax burden on the middle classes has increased is due to the government’s failure. Instead of structural relief, there have been one-off payments that have evaporated,” said Lukas Sustala, head of Neos-Lab, the think tank of the liberal opposition party.

NEOS representatives have urgently called for a ‘comprehensive tax reform’ to alleviate the heavy labour burden, with a significant reduction in non-wage labour costs, according to an ORF report.

In addition, NEOS proposes the creation of ‘tax incentives for full-time work’ – including a full-time bonus and tax exemption for overtime pay. Simultaneously, NEOS aims to eliminate ‘part-time incentives of any kind’, offering a potential boost to the economy and workers’ incomes.

Economist Schratzenstaller also recommends action: She suggests reducing social insurance contributions, for example, for health insurance companies. However, it’s important to note that intervening in this area could affect the largely autonomous financing of Austria’s healthcare system, which is funded mainly through workers’ and companies’ payments via social insurance contributions. 

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