As part of our service to our readers and members, we often answer questions on life in Austria via email when people get in touch with us.
When these have value to the greater Local Austria community, we put them together as an article, with ‘reader question’ in the headline.
Have you got a question, query, comment or issue to raise? Get in touch at [email protected].
I’m moving to Austria for my partner’s job, and I’d like to continue working for my current employer. They don’t have an office in Austria but they are happy for me to work remotely. Can I do this on a self-employed basis?
This is a situation many foreign residents may find themselves in, if you’re moving to Austria for a reason other than your own work, so we’ll look at a few scenarios.
The simplest case is if your employer is already established in Austria. In this case, it may well be possible for you to be employed by their Austrian entity, either through an internal transfer or by applying for a job there.
READ MORE: How to prepare for your Austrian tax return if you’re self-employed
Even if their Austrian branch is in a different city or region to the area you’re moving to, it would be possible for them to employ you from the perspective of Austrian employment law, so it’s just your company’s policy you’d need to look into.
If your employer is not established in Austria (ie. does not have its business registered there and does not pay taxes to Austria), things will be trickier.
The key issue is not whether your employer already does business with Austria-based clients, but whether the employer themselves is registered in Austria.
In that case, your employer cannot directly employ you if you are registered for tax purposes in Austria.
What if my employer is not registered in Austria?
Assuming that you are registered in Austria, that leaves you with two main options.
The first is to become self-employed. There are set processes for this in Austria, including getting a trade licence (Gewerbeschein) for some types of professions, and registering with social security (SVS) and the tax office (Finanzamt).
READ MORE: Everything you need to know about becoming a freelancer in Austria
If you are able to establish yourself as a self-employed worker in Austria, you could work for your former employer, but you’d need to ensure you met Austria’s strict conditions for true self-employment.
When you register, SVS will ask you questions about your work to determine which category of employment you fall into.
You and the company you work for cannot decide this; it’s up to SVS who use a range of criteria to assess the working relationship.
The reason for this is to avoid “bogus self-employment” where companies do not pay taxes in Austria but hire people under conditions that effectively amount to employment.
“Signs for an independent business are: having more than one client; not being dependent on the “employer”; having your own structure/not being part of a corporate work structure (in terms of workflows, reporting etc); having your own work materials; having the right to be substituted by someone else (to carry out the work set); issuing invoices after completing a project rather than issuing the same amount on a monthly basis,” explains Claudia Barton, a tax consultant who specialises in working with expat clients.
There’s no one criteria which will determine your employment status, so SVS will make an overall assessment.
This means that if you want to continue working for your former employer as a self-employed person, you would need to look over the contract very carefully and would most likely need to make some changes to your working relationship, including the workflow and work structure as explained by Claudia above.
Note also that taxes and especially social security contributions are quite high for self-employed workers in Austria. A rule of thumb commonly cited by self-employed people is to set aside 50 percent of your income to pay business-related fees.
Depending on which country you worked in before, this may mean that you need to charge your former employer higher rates; when you were an employee, in most countries it will be the case that they were paying social security contributions and taxes in addition to the fees you paid, whereas self-employed people shoulder all these payments and need to adjust their rates accordingly.
READ MORE: How to survive as a freelancer in Austria
Pros of this approach are the increased flexibility, and the opportunity to add new clients to your roster, but the downsides are that your role may not work on a self-employed basis of it was designed as an employee role.
If you’re new to self-employment in Austria, it is highly advisable to seek help from a tax advisor and/or other advice services such as the Expat Business Agency in Vienna if that’s where you’re based.
There is an alternative option which some expats choose to take: using an umbrella company or employer-of-record. In this scenario, you are officially employed by one company which hires you out to the company you want to work for.
The employer-of-record charges a fee to your ’employer’ to cover a salary which is paid out to you, the necessary employer taxes and social security contributions, and usually a fee.
As an example, the umbrella company Oyster HR has a salary calculator, which shows that to pay someone the equivalent of a €40,000 gross annual salary, the company would need to pay €4,992 each month.
This is the route which British national Tom Barron took after moving to Vienna in 2019. He initially worked for multiple clients on a self-employment basis, but slowly began to spend most of his time working for one company.
Telling The Local why he chose to go down this route, he explained: “Having had a mix of experiences, both employed and self-employed, I decided I would like to establish a consistent income. Also, I had learned from my self-employment experience that I needed to improve my German before doing my own taxes and paperwork again. I found it difficult to manage self-employment with my own German level and so then having an umbrella company do this, whilst little changes were made to my day to day work, made total sense.”
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His client spoke with the umbrella company (it’s usually the employer who needs to do this, rather than the person who will become their employee) and received a contract which his legal advisor reviewed.
He notes: “If you have various projects from various companies, self-employment will usually work just fine. If you plan on working for one foreign company, it’s safer to go through an umbrella company.”
Advantages of this option include the limited paperwork and administration compared to self-employment, and accessing the benefits that come with being an employee.
Useful links
Examples of umbrella companies operating in Austria: Deel, OysterHR, Remote
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If your previous job is in the European area, you can also keep your old employment and contract and ask your employer to fill the certificate S1 to transfer your social security from the country of employment to Austria. In this way, you pay your social security in the original country but this is transferred to Austria and you have access to public healthcare.
You also stop paying income taxes in the previous country and you declare and pay in Austria.