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WORKING IN AUSTRIA

What are Austria’s ‘personal holiday’ rules?

In Austria, workers are entitled to a 'personal holiday', which bosses cannot dictate or deny. Why does this right exist, and how to use the day?

Published: 18 April 2024 15:56 CEST
People make their way in peddal boats on the Old Danube (Alte Donnau), a subsidiary of the Danube river, in Vienna, Austria.
Going on holiday is a common reason for taking time off work in Austria, but when else can you take a day off? (Photo by JOE KLAMAR / AFP)

Austria has a very particular “personal holiday” regulation which allows workers to, once a year, unilaterally determine when they want to take a day off. The day will be taken from the 30 (or 36, depending on the case) holiday days they are entitled to per year.

The difference to typical vacation days is that the employee can decide when to take it – though they must inform the employer in writing three months in advance.

Also, unlike a regular holiday application, the employer can’t refuse a personal holiday. They can ask the employee not to take it, but it will ultimately be the employee’s decision. This goes even for work that is considered essential for operational reasons.

If the worker agrees to work on the day of the personal holiday after the employer requests, they will be entitled to holiday pay. However, the employee is no longer allowed another personal holiday in the current vacation year but won’t lose any vacation days either.

READ ALSO: How do Austria’s public holidays stack up against the rest of Europe?

Why does the regulation exist?

The personal holiday was created after a judicial decision in Austria when a Viennese man sued for discrimination because certain groups (members of the Protestant and Old Catholic Church) were allowed to take Good Friday off as a religious holiday. 

In 2019, the Viennese demanded a holiday salary for his work on Good Friday. The case went all the way to the European Court of Justice, which ruled that having holidays only for a specific part of the population went against the European Union’s equal treatment directive.

Since then, workers in Austria have been allowed to take “personal holidays,” and Good Friday has stopped being a legal holiday in the country.

The issue has been debated ever since. In 2020, the Constitutional Court (VfGH) in Austria rejected the application of the Protestant and Old Catholic Churches, among others, to repeal the current regulation on Good Friday.

Several representatives of Churches have asked for Good Friday to be a holiday for all Austrians. “It’s about lifting unequal treatment, so we demand a holiday for everyone,” protestant superintendent Matthias Geist told broadcaster ORF. But there are no signs of changes in the near future.

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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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