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Taxes & Income in Austria

As explained in detail in the other chapters, the Austrian government as well as other institutions offer plenty of financial support under certain circumstances. This support includes commuter allowance, free travels for students, support for further training, as well as family and childcare allowance.


Tax rates

In stores, the price indicated for products is the final price. In other words, price tags indicate gross prices which already include sales tax: There is generally a 20% sales tax in Austria.

Nevertheless, there are exemptions under which a preferential sales tax rate of 10% is paid (e.g. for food, medication, books, newspapers, apartment rentals, cultural events, public transport, heating). The price of some larger purchases (investment goods) might also be indicated in net prices. In this case, the sales tax must be added.


Banks

Bank accounts (checking accounts)

Money transactions, such as the payment of the salary or bills, are generally made cash-free. This also means that a person needs to open a checking account for the processing of cash-free payments. The low interest rates on these accounts make this an unprofitable investment. Interest rate levels vary from bank to bank.

To open a bank account, usually a valid photo identification is required, along with a residence registration in some cases. Depending on the selected account type, an overdraft is provided. This means that the account holder may have a negative balance by overdrawing it, for which the bank charges an overdraft fee. An account with an overdraft often requires a salary statement.

www.durchblicker.at > Finanzen > Girokonto is a tool to compare fees of different institutes.


Insurance

Everyone should decide for themselves which insurance fits best. There are insurances for all walks of life and situations, such as burglary insurance or hail insurance. Some are legally required, others recommended or voluntary.

As there is great variation in the insurance rates, it is advisable to compare different insurance types and companies first under www.durchblicker.at > Versicherungen


Income tax system

Income tax deducted by the employer

Employers in Austria deduct the income tax and transfer it directly to the internal revenue office every month. This also applies to foreign employers with sites based in Austria, who also have to pay income tax. Provided the employee does not have any other sources of income, it is generally not required to file an income tax return.

When it comes to the annual tax assessment and tax allowances, there are some differing regulations between persons with limited tax liability and those with unlimited tax liability.


Annual tax assessment

Within the scope of an annual tax assessment (known as 'Arbeitnehmerveranlagung'), the income tax which was deducted by the employer is recalculated. This may turn out to be a benefit for employees whose employment started during the year. Due to the annual income tax system, they might have paid too much tax. This is because the tax assessment base rests on the assumption that the monthly income is received over the entire year.

Some business expenses and also some private expenses are deductible.