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Payroll & Tax in Austria

Austria payroll & taxation

In 2015, the Austrian Council of Ministers announced few key elements of the upcoming tax reform. In particular, the progressive income tax scale shall lead to overall tax relief of approximately €5 billion. Moreover, the reform will increase the withholding tax on capital income, including dividends and capital gains, from 25% to 27.5%. An exception to this increase applies to interest income from bank deposits.

Your Payroll Options in Austria

Remote Payroll

A remote payroll system is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Austria. Under Austrian Law, companies registered in other countries are allowed to obtain a license to do business and have employees in the country.

Local Payroll Administration

In some cases, a company will register their business in Austria under one of the forms available: Limited liability companies; Public Companies; Partnerships; Foreign branches

but prefer to have another company administering its payroll.  This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.

Internal Payroll

Larger companies with a commitment to Austria may wish to run their own local payroll for all employees, foreign and local.  In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff.  There will be a need for in country human resources personnel who have the background needed to manage an Austrian payroll, and can fulfil all tax, withholding, and payroll requirements.

This approach carries significant cost and requires some knowledge of local employment and payroll regulations.  The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Austrian employment laws.

Fully Outsourced Payroll & Employment

Companies can outsource the employment and payroll of their staff in Austrian to a GEO, like Shield GEO. This is possible for both foreign workers and Austrian nationals. This is the easiest, fastest and safest way to payroll staff in Austria.

Shield GEO manages all aspects of payroll for workers in Austria, including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client.

Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips.

Read more about outsourced payroll and employment through Shield GEO.

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Setting up payroll in Austria

Information Explanation
Currency ?

EURO

Tax Figures

Information Explanation
Corporate Income Tax ?

25% on taxable profits

Income Tax Rate ?
Grossed income Tax Rate (%)
1-11,000 0
11,001-25,000 36.5
25,001-60,000 43.21
60,001 and over 50

Income tax is charged at progressive rates and entitles to a basic tax-free allowance and deductions (which may vary depending on personal circumstances).

The employer deducts tax from your salary and remits it to the tax authorities on behalf of employees.

Tax returns are due by 30 April — but you only need to file one if you earn over a minimum amount from sources other than your employment or you are employed by 2 or more employers at once.

Sales Tax ?

VAT: 20%

Withholding Tax ?

Dividends 25%;

Interests 0%/25%;

Royalties 20%.

Employer Social Security (ER SS)

21.76% calculated on gross salary

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