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TAXES

What’s likely to change with radio and TV fees in Austria?

After a court ruling, the Austrian government needs to make changes to the public broadcaster's ORF funding fee, the GIS. Here are the three things that could happen and how they will affect you.

Published: 31 January 2023 13:19 CET
TV remote
Austrian public broadcaster ORF has argued that the online availability of its programming means everyone should have to pay the TV licence fee. Photo by Chris DELMAS / AFP

In 2022, the Austrian Constitutional Court ruled that receiving TV programmes online and streaming them without paying so-called GIS fees is “unconstitutional”, as The Local reported.

Consequently, the court has asked the legislative powers (Austria’s National Council, Federal Council and Federal Assembly) to take action by “closing the streaming gap” by the end of 2023.

GIS is Austria’s TV and radio licence that can set people who have TV equipment at home back between €22.45 and €28.25, depending on the state, a month. Most of that money goes to the public broadcaster ORF and pays for in-house productions, broadcasting equipment, technical equipment, licenses and more.

READ ALSO: EXPLAINED: How to pay Austria’s TV and radio fee, or (legally) avoid it

Even people who don’t watch ORF programmes need to pay for GIS as long as they have a device capable of receiving the broadcast. However, those who don’t pay for it because they don’t have such devices can still stream the content online, which the court ruled unconstitutional.

By the end of 2023, Austria’s Parliament will have to decide on new rules not to exempt those who access ORF online from payment.

Experts have discussed different solutions, from extending payment to every household in Austria to creating a paywall for watching ORF content online. According to Austrian media, there are now three alternatives being considered.

A household taxation

In this alternative, a levy would be collected regardless of reception devices – so exemption due to not owning a radio or TV would no longer exist, according to news site Heute. Instead, every household in Austria would pay around €18 per month, similar to what currently happens in Germany. 

There would be exemptions for low-income households. 

In this scenario, ORF would receive more than 60,000 additional payers – and thus more revenue. 

READ ALSO: Austria set to make TV and radio fees mandatory for everyone

GIS for more devices

Currently, the fee can only be collected for stationary, operational broadcast reception devices (television, radio), according to GIS.

A new solution would be extending the GIS obligation to all devices suitable for broadcast reception or Internet access, such as computers and smartphones. Since practically every household owns such devices, this model would be a de facto household levy. 

However, GIS inspectors would have to continue to ask and check whether there are specific devices in the household.

Government financing

Another possibility discussed is financing ORF via general taxes, adding the broadcaster to the government’s budget. The financing would have to be indexed (adjusted automatically to inflation) with an amount legally fixed through National Council’s approval.

However, there is still concern that adding the ORF to the federal budget would expose the news channel to political influence.

READ ALSO: How Austria’s TV licence changes may affect you (even if you don’t watch TV)

Another alternative many users prefer would be a paywall for watching ORF content online. Many viewers consider this the only fair solution because, they say, one shouldn’t pay for a service not consumed. Logins and access keys may be easily abused, though. Besides, a paywall wouldn’t solve the corporation’s biggest issue, its decreasing revenues.

Which option will actually replace the GIS fee is currently the subject of intensive negotiations between politicians and ORF, Heute said. A decision is to be made by the end of March so that the broadcaster can put together its budget for 2024 in good time.

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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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