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EXPLAINED: How Austria’s income tax brackets change in 2024

After a couple of years of economic turmoil, Austrian taxpayers will receive some relief in 2024.

Published: 12 December 2023 17:32 CET
Updated: 6 March 2024 17:38 CET

EXPLAINED: How Austria's income tax brackets change in 2024

The exterior of the Austrian Finance Ministry in Vienna. Photo: AFP / Alexander Klein

After a couple of years of economic turmoil as reported by The Local, Austrian taxpayers will receive some relief in 2024, as announced by Karl Nehammer’s government earlier this year.

Reform to the taxation system is coming in a few key areas. These reforms have been put in place in an attempt to offset surges and instability in the cost of living, following the corona pandemic.

Income Tax

Having announced that it would abolish the ‘cold progression’ approach to taxation in late 2022, Austria’s government has indicated that taxation will now be tied to inflation.

Consequently, the new tax brackets for 2024 have been published.

Those earning under €12,816 in Austria will not pay any tax on that amount – a raise from the previous threshold of €11,000.

Those earning between €12,816 and €20,818 per year will pay a tax rate of twenty percent.

If you earn between €20,819 and €34,513, it will be taxed at thirty percent.

Between €34,514 and €66,612, will be taxed at 40 percent.

From €66,613 to €99,266 will see a 48 percent tax rate.

Any earnings above that ceiling will be taxed at a flat 50 percent.

READ MORE: REVEALED: Austria to introduce new tax brackets from 2024

Overtime

The Austrian government is also now attempting to address the shortage in skilled workers by raising overtime taxation thresholds.

From €86, the tax-free overtime threshold will be raised to €120. Those working overtime on nights, Sundays or public holidays will see it raised to €400.

READ MORE: How Austria wants to reward overtime and later retirement

Benefits

In addition to the valorisation of child and family benefits (that is to say, their adjustment for inflation), Austria’s federal budget for 2024 is one of the biggest on record when it comes to family assistance.

Parents are likely to receive up to another €212 for any child under three years of age.

Perhaps the biggest bonus will be the allowance from the government available during those months when both parents are at home looking after a new baby. It will raise from €740 to €1,480.

READ MORE: Austrian government to hike benefits from 2024

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'Leerstandsabgabe': Everything about Austria's vacancy tax explained

Some experts argue that a vacancy tax forces owners to rent out or sell their properties and thus reintegrate them into the housing market, bringing down rental costs. It also makes speculation more difficult by discouraging investors from buying properties only to hold on to them as they hope for future price increases.

Finally, it helps prevent soil sealing since it encourages the utilisation of the existing stock and reduces the pressure to develop new areas.

Vienna had a vacancy tax in the early 1980s, but it was abolished later in the decade because the Constitutional Court found it was a matter for the federal government rather than the individual states. However, on April 24th this year, the Federal Council passed a constitutional amendment, transferring “the levying of public charges to prevent the non-utilisation or under-utilisation” to the states’ jurisdiction. In other words, the states now have more room for manoeuvre regarding taxing vacant properties.

READ ALSO: Why buying property in Austria remains unaffordable for most

How high is the vacancy tax?

As is often the case with regulations, the states show little uniformity: rates vary considerably.

In Styria, you pay a maximum of €10/m2 per month, while in Salzburg, the amount depends on how old the property is, and it ranges between €10 to 20/m2 per month for housing units built before and after 1953, respectively.

The law is even more specific in Tyrol, where the levy is determined based on the total usable floor area and the location of the property, as well as the housing pressure in the particular region. For example, if you own a flat smaller than 30 m2, you might have to pay €10-25/m2 per month. The amount doubles if your property is in a so-called “Vorbehaltsgemeinde”, where housing and building land are reserved for those who live there all year round.

In Vorarlberg, the rate is defined based on the proportion of vacancies in any given municipality. It’s between €8.20 and 18.50/m2 per month but cannot exceed €2,775 per year.

However, in these four states, where a vacancy tax is currently in effect, property owners aren’t in a hurry to register to pay despite fines that can be as high as €50,000.

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

In Tyrol, where the tax is payable if a property is left empty for longer than six months with no legitimate reason, authorities only received 900 vacancy notifications by the April 30th deadline – a relatively small number, given that there are roughly 7,000 flats in the state that weren’t registered either as a main or as a secondary residence for over half a year in 2023.

Municipalities in Tyrol and elsewhere are urging flat owners to sign up and pay, but regulations aren’t rigorously enforced, and many exceptions exist. For instance, in Salzburg and Styria, so-called investment apartments (“Vorsorgewohnungen”) intended for rental rather than personal use are exempt from taxation.

How effective is the vacancy tax?

In a fact sheet published in mid-April, Greenpeace estimated that there are around 230,000 empty flats and 567,000 rarely used secondary residences in Austria. The organisation calculated that the vacancy tax could generate annual revenues of up to €1.7 billion for the federal states if all nine of them were to impose it.

According to Momentum Institut, the rates in Styria, Salzburg, Tyrol, and Vorarlberg are much too low to have a significant impact. The Vienna-based think tank argues that property owners – whether they’re companies or individuals – will not choose to rent or sell their vacant flats unless the tax “hurts financially”. The institute recommends a levy of at least €200/m2 per month – a far cry from the current rates. (Only as the owner of a property in Tyrol that is bigger than 250 m2 do you have to pay so much.)

Regardless of the rates, the vacancy tax, much like any other tax, is a political instrument and, as such, a bone of contention.

READ ALSO: Germany or Austria: Where’s the best place for foreigners to buy property?

While it has been shown—in France, for example—to reduce the pressure on housing supply and address housing affordability, opponents say it violates the right of property ownership.

How effective it will be in Austria depends on regional circumstances and implementation. Should it fail to have the desired effect, the states where it is in force might even decide to abolish it. Conversely, if it turns out to be a success story, it may eventually become the law of the land.

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