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All events in Linz

INCOME RELATED-EXPENSES

An employee can claim income-related expenses from work related expenses or expenditures directly related to an employee’s job. If requirements are met, these expenses include the costs of maintaining two households, the costs for home leave, the cost of work-related travel, and mandatory social security payments in the home country.

 

SPECIAL EXPENCES

The law lists special expenses in detail and can be deducted – partly depending on the amount of income – from the total amount of income. These expenses are not related to earnings, but are rather part of personal living costs.

 

Examples of special expenses include:

  • Insurance premiums for life insurance policies, accident or supplementary health insurance policies, insurance premiums forsupplementary pension insurance policies
  • Expenses for housing and renovation
  • Expenses to purchase profit-sharing certificates and for the initial purchase of new shares
  • Annuities and regular burdens due to special obligations Contributions to recognized confessional and religious organizations
  • Costs of tax consulting services
  • Donations to certain research institutions, as well as to umbrella organizations promoting handicapped sports
  • Donations to humanitarian organizations (charitable organizations, development and aid or catastrophe relief organizations)

 

EXTRAORDINARY BURDENS

The deduction of expenses due to extraordinary burdens is permitted under the following conditions:

  • The expenses must constitute a final burden on the taxpayer thus reducing the amount of personal resources.
  • The burden must be extraordinary, i.e., the taxpayer must incur greater expenses than most other taxpayers with similar income levels and family status.
  • The extraordinary burden must be inevitable. The condition of being inevitable is given provided the taxpayer is, in fact, unable toavoid the burden due to current, legal or moral reasons.

 

  • The expenses must considerably burden the economic viability of the taxpayer. This shall be deemed the case provided the expenses exceed a certain percentage of income (= reasonable additional burden).
  • These expenses do not apply to expenses for business operations, income-related expenses or special expenses.

 

Examples include the costs of illness, higher expenses associated with handicaps, fixing damage caused by natural disasters and the cost of educating children attending schools abroad. As of 2009, the costs for child care up  to a certain amount per child/per year can be considered as an extraordinary burden. See details below.

 

CHILD CARE COSTS & ALLOWANCES

An employer’s child care costs (for children no older than 10 years of age) is tax free for up to € 500/year. However, the employee is also able to claim child care expenses up to € 2300/year (to the end of the calendar year when the child completes the age of ten) as an extraordinary burden providing certain preconditions are met.

 

The employee can claim a child allowance (tax allowance) of € 220 (or € 132 per parent per year and child if both are receiving allowance benefits). By special application, a transfer  payment will apply to children (»Familienbeihilfe« and »Kinderabsetzbetrag«).

 

More information

TAX CREDITS

The rules pertaining to taxation rates grant tax deductions (tax reliefs) to certain groups of persons. If the requirements are met, the following tax deductions apply:

 

  • Tax credit for sole income earners
  • Tax credit for single parents
  • Tax credit for support payments
  • Tax credit for travel expenses
  • Tax credit for employees
  • Tax credit for cross-border commuters
  • Tax credit for aging pensioners

 

The tax credit for sole income earners is available under certain conditions (providing the spouse does not earn more than € 2200/year without children or € 6000 per year with children).

 

The so-called »credit for dependent children« is not deducted but is paid out by the Tax Office – upon request – together with the family allowance benefits.

 

TAX RATES (2010)

The first € 11,000 of earned income per year is tax free. There are four tax brackets in which the marginal rate for those at the top of the bracket is 0 percent at € 11,000; 20.44 percent at € 25,000; 33.73 percent at € 60,000 and 50 percent at amounts above € 60,000.

 

The formulas used to calculate the tax amounts can be found the BMF homepage.

 

SPECIAL REGULATIONS WITH REGARD TO EMPLOYMENT INCOME

The following lists a few special regulations in regard to taxing employment income in Austria. This is not a complete list, but rather a general overview and subject to certain preconditions.


Salaries in Austria are general paid in 14 regular installments: 12 monthly salary payments, plus an additional remuneration usually in June (»holiday pay«) and in November (»Christmas pay«). Salary payment in this way is a precondition to apply for a reduced fixed rate of 6 percent for additional payments, thus the 13th and 14th month of  salary will be taxed favorably (and not at progressive rates up to 50 percent).

 

If salaries are paid in a different scheme (no additional payments in addition to 12 monthly installments), the more favorable rate will not
be available.

SPECIAL REGULATIONS WITH REGARD TO EMPLOYMENT INCOME

The following lists a few special regulations in regard to taxing employment income in Austria. This is not a complete list, but rather a general overview and subject to certain preconditions.


Salaries in Austria are general paid in 14 regular installments: 12 monthly salary payments, plus an additional remuneration usually in June (»holiday pay«) and in November (»Christmas pay«). Salary payment in this way is a precondition to apply for a reduced fixed rate of 6 percent for additional payments, thus the 13th and 14th month of salary will be taxed favorably (and not at  progressive rates up to 50 percent).

 

If salaries are paid in a different scheme (no additional payments in addition to 12 monthly installments), the more favorable rate will not be available.

 

Due to the principle of causality, payments or similar work-related pay by another country (for work outside of Austria) is usually taxable in that country or has to be split between the countries.

 

Relocation Costs paid by the employer – costs to move household goods, transportation and travel expenses to and from the location of assignment, plus rent paid on behalf of the employee on the former home (up to a certain extent) – are not considered as taxable income for the assignee. A lump sum paid by the employer to reimburse other expenses in connection with relocation within the group – so-called »Umzugskostenvergütung« – is not considered taxable income as far as the lump sum does not exceed a certain amount.

 

Housing (apartment or house) provided by the employer free of charge is considered a fringe benefit and is considered taxable income. If the employer is the tenant, tax settings are possible. If the employee rents the accommodation directly and is reimbursed by the employer, a 100 percent of the amount will be added to the taxable income amount. If the
employee needs to establish a second residence for business purposes (and  maintains primary residence in his/her home country), expenses for the second residence could be claimed as an income related expense.

The rent and operating costs, as well as furnishing items may be deducted (double household deduction), in an extension that  provides for reasonable accommodation in the host country.

 

Costs for personal travel reimbursed by the employer are generally considered taxable income whereas cost for work-related business trips are tax exempt. A mileage allowance (Euro 0.42/km in 2010) is available under certain conditions. Expenses for home travel/trips may be claimed as a commuting allowance (»Pendlerpauschale«) up to a maximum amount of € 3,372 per year (2010).

 

Per diem rates for business trips may be tax free provided special requirements are met. There are limitations in regards to the duration (either 5, 15 or 183 days) and the amount per day (depending the duration of the trip and the country).

 

If an employee’s c ompany car is also used for personal purposes, taxable benefits apply. The advantage treating a company car as a noncash benefit is that the taxable amount is restricted to € 600/month in comparison to cash-reimbursements in which the entire  amount is taxable up to a progressive rate of 50 percent.

 

School fees borne by the employer is considered taxable income but tax deductible (within restrictions) provided the employee’s children or the expatriate require attending a private school for language reasons, for example, or due to the distance between home and the school/university.

 

Mandatory (Austrian or foreign) employer’s insurance payments are not taxable, mandatory employee’s payments are considered an employee expense.

 

Personal Insurance Payments (aside from mandatory social security payments) paid by the employer for the employees are considered taxable income. If the advantage is granted to all employees or a group of employees, only amounts exceeding € 300 per year are considered taxable income.

 

A tax deferral is possible by depositing payments in to a so-called »Pensionskasse« (pension fund) or by committing a pension promise.


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