C. Earnings, income

What is wage tax or income tax to be paid on?

The subject of the income tax is the income. It is the sum total of all incomes. The Austrian Income Tax Act ( Einkommensteuergesetz) lists all the types of income that are subject to income tax. Only those incomes that are listed by the Income Tax Act under any of the types of income are therefore taxable. Gambling and lottery wins, for example, are not taxable; nor are the childcare benefits or the nursing care allowances.

The Austrian Income Tax Act (Einkommensteuergesetz) specifies seven types of income:

1. Income from agriculture and forestry
2. Income from self-employment
3. Income from commercial operation
4. Income from employment
5. Income from capital assets
6. Income from rentals and leasing
7. Other income

= Total amount of income
– Special expenses
– Extraordinary burdens
– Tax allowances
= Income
(= Tax assessment base)

Incomes of categories 1 to 3 are known as “business income” or “income from profit”. Incomes of categories 4 to 7 are referred to as “income from receipts over expenditures” or “non-business income”. The income is therefore the sum total of all earnings minus special expenses, extraordinary burdens and tax allowances.

At what level of income does liability to pay tax commence?

A certain basic income (subsistence minimum) remains tax-exempt for each person with unlimited tax liability. The tax-exempt basic income amounts to at least € 18,782 annually in the calendar year 2024 for employees.

The tax-exempt basic income is to be distinguished from the marginal income threshold under social security insurance law. In 2024, this amounts to € 518.44 per month.

The declaration in detail:

1. Income from agriculture and forestry is obtained e.g. by farmers or gardeners.
2. Income from self-employment is realised, for example, by doctors, lawyers, tax advisors, architects or journalists, and by shareholders/managing directors with an interest of 25% or higher in corporations (e.g. a limited company under Austrian law—GmbH). Rz 670
3. Income from commercial operation are profits from commercial enterprises (e.g. trading companies, craft companies, industrial companies). Legal entities (such as a limited company under Austrian law—GmbH) do not pay income tax but corporate income tax.
4. Income from employment is realised by employees and pensioners.
5. Income from capital assets includes private interest income from savings, securities, dividends and other distributions from shares in corporations or investment funds, and capital yields from the sale of private investments (e.g. equities, cryptocurrencies). Such income is subject, as domestic income, to the capital gains tax of 25% or 27.5% and is thereby usually finally taxed, i.e., no further income tax is collected. If such investment income or capital yields are received from abroad (e.g. interest from foreign savings, dividends or capital gains from stock sales without domestic safekeeping), they are as a rule also taxed by way of income tax assessment at 25% or 27.5%, respectively.
6. Income from rentals and leasing is realised, e.g., when an apartment or a house is rented out.
7. Miscellaneous incomes include income from private sales of real estate (taxation at a flat rate of 30%, as a rule collected by way of real estate gains tax—Immobilienertragsteuer, ImmoEst), from speculative transactions (sales transactions of other private assets, such as gold and silver, within one year of acquisition), income from occasional performances (e.g. unique agency commissions), certain continuously accumulating pensions and functionary remunerations (payment for functionaries/officials of public bodies, provided that they are not employees).