Expat Tax In Austria – Ultimate Tips You Need To Know

Expat Tax In Austria – Expat Living In Austria

The Republic of Austria consistently ranks as one of the richest countries in terms of GDP per capita. This is due to its highly industrialized and well-developed social market economy. Its main economic and business activities take place in its capital city, Vienna. Neighboring countries are Germany, the Czech Republic, Hungary, Slovakia, Slovenia, Italy, Switzerland, and Liechtenstein. Austria is a largely mountainous country because of its location in the Alps. You will find some of the best skiing in the world in the southern and western parts of the country. Read on to discover important tips on the US Expat Tax in Austria.

A quarter of Austria’s population lives in Vienna, and this is also where most expatriates live.

Here are the top 7 cities to live in Austria for ex-pats (in no particular order):

• Vienna
• Graz
• Linz
• Innsbruck
• Salzburg
• Bregenz
• Villach

About Austria

A great part of Austria’s prominence is due to its geographic position. It is at the center of European traffic between east and west along the great Danubian trade route and between north and south through the magnificent Alpine passes. Thus, it embeds the country within a variety of political and economic systems. 

Ethnic Austrians constitute the vast majority of the population. Small but significant groups of German-speaking Swiss and ethnic Germans also reside in the country. Serbs, Bosniaks (Muslims from Bosnia and Herzegovina; living mainly in the larger cities), Turks (living primarily in Vienna), Hungarians, Croats (living mainly in Burgenland), and Slovenes (living mainly in Kärnten) constitute the major ethnic minorities.

Weather conditions vary only slightly across the country. The lowland regions in the north and east have more continental-influenced conditions with colder winters and hotter summers, with moderate precipitation throughout the year. The southeastern areas of Austria have longer and warmer, almost Mediterranean-like summers. The diversity of topographical and climatic conditions results in a very versatile flora and fauna.

Guide To U.S. Expat Tax In Austria

The Tax Samaritan country guide to U.S. expat tax in Austria provides a general review of expat tax in Austria. It also informs how that will impact your U.S. expatriate tax return as a U.S. Expat In Austria.

As a U.S. taxpayer, all worldwide income is subject to taxation and reporting. For most expatriates, you have a requirement to file a U.S. tax return on an annual basis due on April 15 each year (June 15 if you are residing overseas on the April 15 deadline). The tax treatment for different classes of income can vary greatly from Austria and the U.S.

For example, certain benefits are tax-free in Austria. But, in the U.S., these benefits are likely to be benefits that are subject to inclusion as taxable income in the U.S. As such, there are a number of considerations related to the US expat tax in Austria. This brief article will address a few of those considerations.

Austria Expat Income Taxes

Who Is Liable For Income Taxes In Austria

Einkommensteuer is the Austrian term for income tax. The tax system is pay-as-you-earn and is subject to withholding throughout the year. Anyone who lives in Austria is liable to pay an unlimited tax liability. You are a tax resident if you have your residency in Austria. In addition, you also spend more than 180 days per year in the country.

Tax is paid directly from employer deductions made from your salary. However, those who are self-employed will need to file and pay either online or through the assistance of an accountant.

Tax submissions are due for all residents by the 30th of April, or by the 30th of June if filing electronically.

Those who have no residence but work in Austria are subject to limited tax liability. They are subject to tax only on the income earned in Austria. Similar to the U.S., taxation depends on the amount of your annual taxable income, which is subject to a fictitious income increase of EUR 10,888 (effectively leaving a tax-free basic amount of EUR 2,420 after accounting for the standard exemption). Rates are subject to yearly change, but for 2025, they vary progressively from 20% to 55%.

There is also a tax-free threshold (EUR 13,308 for 2025), and those who earn under the limit do not have to pay if they meet the requirements.

Tax Year In Austria And Tax Filing And Payment Rules

In Austria, there is a progressive rate of income tax ranging from 0% to 55%. The level of income tax depends on the taxable income received in a calendar year. The calendar year is the same as the tax year and comprises a period of twelve months from January 1 to December 31. Tax returns for individuals must generally be filed by April 30 of the following year if submitted in paper form, or by June 30 if filed electronically via FinanzOnline (extensions are possible with justification or if represented by a tax advisor). Assessed tax liability is payable within one month of the tax assessment notice. Quarterly prepayments on income tax are due on February 15, May 15, August 15, and November 15 for self-employed individuals.

It is possible to work under a freelance contract service (Freier Dienstvertrag) in Austria with a host institution, in which you are free to decide when and how you work. Though you work as a freelancer, your employer (the client) has an obligation to withhold and pay your social insurance contributions on your behalf, similar to an employee. However, you are responsible for filing an income tax declaration as this is treated as a form of self-employment income, subject to the progressive income tax rates. Freelancers must register for income tax and social security, and may also need to handle VAT if turnover exceeds €55,000 annually. Misclassification of a Freier Dienstvertrag as employment can lead to penalties, including back payments of taxes and contributions.

Corporate income tax is currently at a rate of 23% (reduced from 24% in 2023 and 25% prior to that). This tax applies to both income and capital gains that businesses have earned over the past year. Corporate tax returns must be filed electronically by June 30 of the following year (or between October and March of the subsequent year if represented by a tax advisor under the quota system), with quarterly prepayments due during the year.

Other relevant taxes that expats should be aware of include capital gains tax (generally 27.5% on securities, shares, and most financial assets acquired after 2010, with a 25% rate on certain bank deposit interest; real estate gains are taxed at 30% for properties acquired after March 31, 2002, or progressive rates otherwise), vehicle tax (based on engine size and emissions, payable annually), and turnover tax (VAT at 20% standard rate, with reduced rates of 10% or 13% for certain goods and services; monthly or quarterly returns due, with annual returns by June 30).

Expat Tax Withholding in Austria

As an expat living abroad, you get an automatic extension to file until June 15th of the following calendar year-end. You must, however, pay any tax that may be due by April 15th in order to avoid penalties and interest. You can get an extension until October 15th if properly requested.

Researchers have three options for employment: stipend/grant/scholarship, independent personal services, and employment. This is the determining factor in whether money earned is tax-free or taxable.

On a stipend, you would be tax-free, while with regular employment you would not, and your employer has to pay tax for you. With independent personal services you are working on a “Werkvertrag” which means you are self-employed, so you must declare your taxes after every tax year.

There is only one expatriate concession, which allows a lump-sum deduction of income-related expenses. This deduction can either be claimed in the annual income tax return or already upfront in the payroll.

Dividends paid to another Austrian company are exempt. Dividends paid to non-resident companies are subject to a 25% withholding tax unless there is a rate reduction under an applicable tax treaty or exempt under the EC parent-subsidiary directive.

What You Need To Know About U.S. Income Taxes

When dealing with U.S. expat tax in Austria, there are a number of preferential expat tax treatments that may benefit your U.S. expatriate tax return. In fact, for many U.S. expats, the Foreign Earned Income Exclusion (IRS Form 2555) and other deductions will reduce your U.S. taxes to zero.

Some of these preferential tax treatments or benefits for U.S. expat tax in Austria include:

• If you are a U.S. citizen or green card holder and you live in Austria, your U.S. expat tax in Austria is based on your worldwide income. As such, you must file a U.S. return for all the years that you are residing in Austria. However, as a U.S. expat, you may qualify to reduce your U.S. taxable income up to an amount of your foreign earnings that has an annual adjustment for inflation ($130,000 for 2025). In addition, you can exclude or deduct certain foreign housing amounts. This is known as the Foreign Earned Income Exclusion and the Foreign Housing exclusion.
• When it comes to your U.S. expat tax in Austria, most U.S. expatriates worry about “double taxation”. Paying taxes to two different countries – the U.S. and Austria. A U.S. taxpayer working overseas in Austria may be able to reduce U.S. taxable income and “double taxation” by claiming the Foreign Tax Credit on Form 1116. Should any foreign income not be fully offset by the foreign earned income exclusion, housing exclusion, or housing deduction, the foreign tax credit paid or accrued may be used as a deduction or credit on the U.S. tax return. Taxpayers can elect to either deduct the taxes as an itemized deduction on Schedule A or claim a credit against tax. In most cases, it is to your advantage to take foreign income taxes as a tax credit.

Don’t Make This Mistake

A common but dangerous mistake is the assumption that if there are zero taxes owing with these tax benefits, a US tax filing requirement is not applicable.

That is not true.

If you are working overseas, it is likely that you meet the filing requirements to file a tax return and must do so. It is important to note that the preferential tax treatments, such as the foreign earned income exclusion and foreign tax credit, do not apply to the outcome of your tax liability until a claim is made on a filed tax return.

When faced with U.S. expatriate tax in Austria, there are many tax considerations.

But the above are by far the most common benefits individuals can take advantage of.

If you can qualify for both of these benefits (the foreign earned income exclusion & foreign tax credit), an analysis should be done to determine a strategy with the goal of optimizing the outcome of the return as much as possible.

For example, those with young children may want to consider forgoing the foreign earned income exclusion and utilizing the foreign tax credit.

With top-notch experience and knowledgeable ex-pat tax preparation from Tax Samaritan, there is assurance that you are paying the minimal amount of U.S. taxes that you have an obligation for.

The decision to utilize the foreign earned income exclusion or the foreign tax credit can be complex & depends on various factors, so it is typically best to discuss with a tax professional if unsure which option is best or what you may qualify for.

Austria Foreign Bank Account Reporting – The FBAR (FinCen Form 114)

Another important tax deadline that frequently applies to U.S. expat tax in Austria is regarding the disclosure of foreign assets on the FBAR (Foreign Bank Account Report – Form 114).

The FBAR filing deadline is April 15th (or the preceding business day if April 15th falls on a weekend). Unfortunately, requesting an extension on your individual return does not extend the FBAR due date. There is no extension available for the FBAR deadline. Any reports filed after this date are delinquent FBARs. However, in recent years, an automatic extension until October 15th has been applied.

The FBAR must be filed with the Treasury Department (it is not filed with your federal income tax return) whenever you meet the FBAR filing requirements, which in a nutshell is whenever a U.S. person has a financial interest in, or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust or other type of foreign financial account (including an insurance policy with a cash value such as a whole life insurance policy) maintained with a financial institution, with an aggregate value of over $10,000 at any time during the calendar year based on the highest value of each foreign account during the tax year.

If you have bank accounts at Erste Group Bank, RZB Group, Unicredit Bank Austria AG, BAWAG P.S.K., Raiffeisen Bank International AG, or at another bank in Austria or any other foreign country, you may meet the filing requirement to disclose your foreign accounts on the FBAR. Please don’t hesitate to contact Tax Samaritan to learn more about your filing requirements.

U.S. – Austria Social Security Totalization Agreement

The US has entered into agreements, called Totalization Agreements, with several nations to avoid double taxation of income related to social security taxes.

These agreements must be taken into account when determining whether an individual is subject to U.S. Social Security/Medicare tax or whether the individual is subject to the equivalent social security taxes of a foreign country.

Effective November 1, 1991, the totalization agreement between the United States and Austria improves Social Security protection for people who work or have worked in both countries. Under the agreement, if you work as an employee in the United States, you normally will be subject to coverage by the United States, and you and your employer will pay Social Security taxes only to the United States. If you work as an employee in Austria, you will normally be subject to coverage by Austria, and you and your employer will pay Social Security taxes only to Austria.

The Austrian system covers self-employed individuals living and working in Austria. A certificate of coverage is required to claim benefits under the totalization agreement. A photocopy of this certificate must be attached to your U.S. individual tax return to exempt yourself properly. Tax Samaritan can help guide you through this process if you are unsure how to proceed.

U.S.- Austria Tax Treaty And Tax Relief For U.S. Expat Tax In Austria

The United States and Austria do have an income tax treaty in place. Many of the articles apply to non-resident aliens for U.S. tax purposes. But it can also extend certain benefits to U.S. citizens, residents, and green card holders (limited by the ‘Savings Clause’), so it is important to understand if you qualify for these benefits.