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WORKING IN AUSTRIA

Everything you need to know about becoming a freelancer in Austria

Struggling to get your head around Austrian bureaucracy? Here is a comprehensive guide to setting out on your own.

Published: 19 March 2021 12:45 CET
Updated: 5 January 2023 16:26 CET
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DIETER NAGL / AFP

Whether you’re in tech, media, an artist or musician or working in a creative industry, it’s becoming more and more common to work as a freelancer these days.

First things first, whether you’re from within or outside of the European Union, when you move to Austria you must register with the authorities. 

Registering

People who plan to become resident in Austria are required to register their place of residence within three days with the competent authority (municipal office or Municipal District Office). You can register (or de-register) here.

EU/EEA Citizens

EU/EEA citizens and their relatives who intend to stay in Austria for more than three months and settle are required to apply for a registration certificate (Anmeldebescheinigung).

Third country nationals

Third country nationals, for example people who are not EEA citizens or Swiss nationals, need a residence permit for Austria when they plan to stay longer than six months.

If you are seeking to live and work in Austria you need a Rot-Weiss-Rot (Red White Red) card, which is issued for a period of 24 months. 

The following groups are eligible for this card. 

  • Very highly qualified workers
  • Skilled workers in shortage occupations
  • Other key workers
  • Graduates of Austrian universities and colleges of higher education
  • Self-employed key workers
  • Start-up founders

General requirements for issuing residence permits

The authorities may only grant you a residence permit if you can prove you have a fixed and regular personal income enabling you to cover your living costs without resorting to welfare aid from local authorities, around €1,000 a month for a single person or €1,500 for a couple. 

If you plan to stay more than a year in Austria as a Rot-Weiss-Rot card holder, you will have to learn German up to A2 level within two years. For those hoping to get permanent leave to remain, including a permanent work permit (Daueraufenthalt),  most people will have to reach B1 level German.

READ MORE: Just how good does your German have to be to gain citizenship in Austria?

Health and social insurance

Health insurance is compulsory in Austria. Every person taking up work, whether employed or self-employed is automatically covered by health insurance and his/her dependants are covered by co-insurance under the health insurance scheme. 

In Austria, while working as a freelancer, once your income exceeds around  €5,710.32 annually you must also pay compulsory health and social insurance SVS (also known as SV or SVA). The SVS has access to your tax return and will send you a bill for any shortfall in contributions.

Paying tax

As a self-employed person you are subject to tax if you earn more than the basic tax-free allowance (Existenzminimum). The basic minimum tax allowance is € 11,693, but it may vary depending on your personal circumstances. 

Registering for tax with the tax office (Finanzamt) is a complicated process. First you need a tax identification number, in order to fill out your tax return. This involves filling out a questionnaire Verf24 via FinanzOnline.

Most people recommend you use a tax adviser to help you with this: it’s very easy to make mistakes, which could get you in trouble, especially if you are not a confident German speaker. 

The tax year in Austria starts in January, unlike in some other countries such as the UK, where it runs from 6 April.

VAT

If your business turns over more than €35,000 per year you may have to charge VAT. This is a separate number to the tax number and will be assigned upon special request at the tax office. 

What is tax deductible? 

While it is possible to save up receipts from work related expenses and offset them against tax, many freelancers find it easier to take advantage of a flat reduction in tax (Basispauschalierung), calculated according to income.

Office costs, training costs, travel expenses, communication expenses, office supplies, liability insurance and SVS payments can all be tax deductible. 

Becoming self-employed in Austria

Identifying the right type of self-employment is the first step to becoming a freelancer in Austria, and there are four different categories:

  • New self-employed (Neue Selbständige)

This includes artists, writers, journalists, lecturers, self-employed nurses, midwives, scientists, self-employed psychologists, psychotherapists  and physiotherapists. In these professions a trade licence (Gewerbeschein) is not required. 

  • Liberal professional (Freiberufler)

This group includes pharmacists, architects and engineering consultants, doctors, notaries, lawyers, veterinarians, accountants and dentists.

  • Self-employed with a free or regulated business licence (Freie/ Reglementierte Gewerbe)

This group includes professionals such as builders, IT workers, commercial agents, masseurs, carpenters, financial advisors, management consultants, insurance agents, insurance brokers and  translators.

  • Independent contractors (Freie Dienstnehmer).

Independent contractors are insured at the Austrian Health insurance (ÖGK) and do not have to worry about insurance payments as these will be covered by their employer.

However, as an independent contractor, you are subject to income tax and you have to also file a tax return every year. 

Business registration can be done at the Austrian Chamber of Commerce or Wirtschaftskammer Österreich (WKÖ).

This is also somewhere you may be able to get help with someone who speaks English.  There is an annual WKÖ fee of €100, plus annual business fees and tourism tax to pay as a freelancer.

Is it worth it?

Being a freelancer in most cases is quite tough in Austria.

Often you pay as much tax and social and health insurance contributions as an employee, but you are not eligible for holiday pay, sick pay or unemployment benefit, depending on which category you fall into.

However, since 1st January 2009, self-employed persons have been able to insure themselves against the risk of unemployment under an ‘opt-in’ model.

If you are an artist or musician, you may be able to find help at the Künstler-Sozialversicherungsfonds or the artists’ social insurance fund.

The KSVF pays subsidies for the social security contributions of the self-employed artists, and can pay subsidies in an emergency.

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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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