A. Personal liability to pay tax
Who is liable to pay tax in Austria? Rz 1 ff
Persons with unlimited tax liability are those whose place of residence or regular domicile is in Austria. Persons have a place of residence in Austria if a domicile on Austrian Federal territory is at their disposal that they (will) obviously use on a longer-term basis. The domicile need not be the principal place of residence. It is sufficient if the domicile can be used for personal residential purposes at any time. The domicile need not be used on a permanent, but at least on a recurrent basis, in order to qualify as a place of residence.
Persons will have their regular domicile in Austria if they (are going to) stay on Austrian Federal territory not on a merely temporary basis (holiday, business trip, visit, etc.) but obviously for a longer period. In any event, persons have an unlimited tax liability after they have stayed in Austria for six months, with retroactive effect. Nationality is irrelevant in this context.
Unlimited tax liability means that all domestic and foreign incomes are taxable in Austria.
Limited liability to pay taxes applies to persons who realise income in Austria (e.g. as employees) or from Austria ( e.g. social-security pensions) but who have no place of residence, nor their habitual abode in Austria.
Employees with limited liability to pay tax can also be required to complete an employee tax assessment or can apply for a voluntary assessment of wage tax due on their income, claiming deductions for income-related expenses and special expenses incurred in Austria (see page 146). Rz 1178 ff
Please bear in mind that an amount of € 10,486 is added to the tax assessment base of persons with limited liability to pay tax. This amount is not considered in standard payroll accounting.
The reason is that the tax-exempt subsistence minimum must as a rule be considered by the country of residence. On the basis of a tax-exempt threshold of € 12,816 (see page 26) pursuant to the tax scale, taxpayers thus have a tax-exempt basic income of € 2,330.
Note on the information exchange in the EU
The EU tax authorities have agreed on a cooperation in order to collect the taxes of their taxpayers properly. The pivotal legislation in this field is Directive 2011/16/EU of the Council on administrative cooperation in the field of taxation. This Directive provides for the automatic exchange of information on the following categories of income and capital:
- Income from employment
- Remunerations for activity in supervisory or administrative boards
- Life insurance products not covered by other Directives
- Retirement pays and pensions
- Ownership of immovable property and income from such assets
- Licence fees
Accordingly, the Austrian tax administration is aware of these foreign incomes. Please use the tax return forms L 1i or E 1, respectively, for exact disclosure of the income and any income-related expenses related thereto (see Chapter V).
EU/EEA citizens of countries with which Austria has a double taxation agreement with non-discrimination clause, who do not have a place of residence in Austria but realise their income mainly in this country (90% of the income is realised in Austria, or the total income realised abroad is less than € 12,816) can opt for unlimited tax liability when filing their return for employee tax assessment. In the year of declaration 2024, in addition to incomes in Austria, all foreign incomes must also be declared. The foreign incomes themselves are not taxed, but these incomes increase the tax rate applied to tax the incomes in Austria. In this case, the amount of € 10,486 need not be added for the tax assessment. Moreover, individual tax deductions (Family Bonus Plus, single-parent or single-earner tax credit, support money deduction) and extraordinary burdens may be asserted. Rz 7 ff
Double taxation agreements prevent that taxes must be paid more than once on a single income if an individual has places of residence or receives income in more than one country (see page 146).
Special provisions apply to cross-border employees Rz 6, i.e. persons residing in Austria but working in Germany, Italy or Liechtenstein and commuting every day or working in close proximity to the border. As a rule, their incomes are taxed in Austria. Please see page 140 for more information concerning employees with incomes from which no wage tax has previously been deducted, or persons receiving income abroad.
Foreign employees Rz 4 are treated as subject to unlimited tax liability from the first day of their stay in Austria. This requires a work permit for at least six months or an employment contract for a minimum period of six months.
For seasonal workers Rz 5, unlimited tax liability generally arises when their stay in Austria exceeds six months. In this case, the unlimited tax liability commences on the first day.