F. Miscellaneous remunerations
What are miscellaneous remunerations?
Miscellaneous remunerations are payments that are received on a one-off basis or at major intervals, in addition to the current wages. The most important types of miscellaneous remunerations are holiday pay and Christmas allowance (13th and 14th monthly salary).
Further examples of miscellaneous remunerations include the following:
- Severance payments
- Balance-sheet allowances
- Bonuses
- Anniversary bonuses
- Profit sharing plans
Holiday pay and Christmas allowance
How are holiday pay and Christmas allowance taxed?
If employees receive a 13th and 14th salary from their employer, these remunerations are tax-exempt up to an amount of €620 per year. The remaining amount is taxed at flat tax rates.
The wage tax for miscellaneous remunerations within the one-sixth of the year is:
| Amount | Tax rate |
|---|---|
| for the first €620 | 0.00% |
| for the next €24,380 | 6.00% |
| for the next €25,000 | 27.00% |
| for the next €33,333 | 35.75% |
From a current annual income of €500,000 or more, further remuneration is taxed at the marginal tax rate in accordance with the tax scale.
Miscellaneous remunerations are, however, taxed only up to a certain ceiling, the so-called "one-sixth of the year", at a flat tax rate. The "one-sixth of the year" is calculated as follows:
(Regular gross remunerations accruing in a calendar year / number of calendar months expired since the beginning of the year) × 2
If the remunerations remain the same, the "one-sixth of the year" thus corresponds to two monthly remunerations, which is precisely the 13th and 14th monthly salary. The employer must ensure that no more than one-sixth of the current remunerations actually received in the calendar year is taxed at a preferential rate. The amount of the miscellaneous remunerations exceeding the "one-sixth of the year" is not taxed at the preferential tax rate but together with the regular salary paid in that particular month.
In case of low miscellaneous remunerations (generally up to a monthly gross salary of approximately €1,223) an amount of up to €2,447 is tax-exempt in 2024. In 2025 the tax-exempt amount is €2,570. For a monthly gross salary of up to approximately €1,285, no wage tax is applied to miscellaneous remunerations.
The social security contributions due on miscellaneous remunerations are deducted before applying the flat tax rate.
Severance payments
The provisions of the "Austrian Company Staff Pension Act" (Betriebliches Mitarbeitervorsorgegesetz) have been in force since 2003. When assessing the tax due on severance payments, one must distinguish whether the employee has a severance payment claim under the "old" or already under the "new" severance payment system.
What must be remembered for employment contracts beginning in 2003 or later?
As a rule, the "new" severance payment system must be applied to employees entering into an employment relationship in 2003 or later. In this case, the employer must contribute 1.53% of the gross remuneration to a company pension fund. These employees cannot claim a flat tax rate of 6% for their collective-agreement or voluntary severance payment.
What must be remembered for employment contracts beginning before 2003?
If an employee stays within the "old" severance payment system, there are no changes. If employer and employee agree on a transition to the "new" system, there are the following options:
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Freezing the "old" severance-pay claims up to the transition date and paying 1.53% of the gross remuneration as of the transition date: In this case, the "old" provisions continue to apply unchanged to the frozen amounts.
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Transfer of the full amount of the "old" severance payment claims to a company pension fund: In this case, all statutory severance payment claims up to the transition date are transferred to a company pension fund. With regard to the statutory severance payment, the new provisions apply exclusively. Neither can a collective-agreement severance payment be taxed at the flat tax rate of 6%. However, the provisions regarding voluntary severance payments continue to apply unchanged.
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Partial transfer of the "old" severance payment claims to a company pension fund: Here, the part of the claims up to the transition date is frozen, and the other part is transferred to a company pension fund. The provisions regarding statutory and voluntary severance payments continue to apply to the frozen part.
How are statutory and collective-agreement severance payments taxed?
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Taxation under the "old" system: Those statutory and collective-agreement severance payment entitlements that are paid by the employer because the employee — with an employment relationship dating back to before 2003 — would not switch to the "new" system, or because claims were frozen at a specific point in time, must as a rule be taxed at the flat tax rate of 6%. A lower rate may be applied to lower remunerations.
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Taxation under the "new" system: Severance payment claims that are paid to employees from a company pension fund are subject to the flat tax rate of 6%. If claims are transferred to a provident scheme (e.g. a pension fund), the full amount is tax-exempt. The subsequent annuity payments by the insurance company or the pension fund are likewise tax-exempt. Severance payment claims under collective agreements, which arise after the date of transfer to the new system, no longer benefit from taxation at the flat tax rate of 6%.
How are voluntary severance payments taxed?
Voluntary severance payments which accrue upon or after terminating an employment contract and amount to three monthly incomes are taxed at the flat tax rate of 6% (possibly plus increases on the basis of established service periods, unless statutory severance payment claims accrue for these service periods), but maximally to the ninefold amount of the maximum contribution basis under the Austrian General Social Security Act. All remunerations beyond this level are taxed at the current tax rate. If there are qualifying periods under a business assessment fund (new severance payment system), the remunerations are taxed at the current rate.
Other miscellaneous remunerations
Are there other miscellaneous remunerations for which tax benefits are granted?
Special rules apply to the following other miscellaneous remunerations:
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Subsequent payments, dismissal compensations and settlement awards are taxed according to the tax scale. After subtraction of the social security contributions that are due on these amounts, one-fifth of the remuneration (not exceeding the ninefold amount of the Austrian Social Security Number maximum contribution basis) remains tax-free in order to mitigate the effect on the progression scale and to take account of tax-exempt supplements. If the employee has transferred all of his/her severance payment claims to the "new" system and if a settlement award is paid, the latter may be taxed at the flat tax rate of 6% up to an amount of €7,500. This benefit is not available to employees who have remained in the "old" system completely, or whose claims were fully or partly frozen at a certain key date.
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Compensation payments for non-consumed holiday periods are divided up. If they relate to current remunerations, they must be taxed according to the tax scale. If they relate to miscellaneous remunerations, they are taxed at the flat tax rate of 6%.
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Pension settlements are to be taxed at half the tax rate only if their cash value in 2024 does not exceed €15,600. If the pension compensation is higher, the full amount is taxed according to tax scale in the calendar month in which it is paid. The employer may also transfer the cash value of a pension compensation to a pension fund (not taxable), in order to avoid taxation.
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Social-plan payments up to an amount of €22,000 benefit from half of the applicable tax rate.