Comprehensive Guide to Austria Taxes for US Expats

Living as an Expat in Austria 

With idyllic waterside cities like Vienna and views of the Alps from cities like Salzburg, Austria is a beautiful place to call home — even if you’re from the US. With great access to public transportation, health care, and education, many US expats live abroad in this East Central European country. If you’re one of them, learning about your Austria taxes for US expats is important.

Understanding your tax responsibilities can feel overwhelming, especially while living abroad. The good news is the US has a tax treaty with Austria, which can save you money by helping you avoid double taxation.

Austria at a Glance

US Expat Taxes in Austria

Living as a US expat in Austria can be a wonderful experience, but it also comes with its own set of tax obligations. If you are a US citizen or permanent resident living in Austria, you may be subject to both US and Austrian tax laws. It’s important to understand your tax obligations and ensure that you are complying with both sets of regulations. 

One of the most important things to know is that as a US citizen or resident, you are required to file a tax return with the Internal Revenue Service (IRS) every year, regardless of where you live in the world. This means that even if you are paying taxes in Austria, you must still file a US tax return and report your worldwide income. 

Who Has to File Taxes in Austria?

In Austria, tax laws require anyone who earns income in the country to file a tax return. This applies to both residents and non-residents, including foreign nationals. However, the tax filing requirements may vary depending on individual circumstances such as income level, marital status, and type of income earned.  

Both residents and non-residents of Austria are subject to income tax, which the country calls Einkommensteuer. The county operates on a pay-as-you-go model and residents and non-residents both pay income tax. Residents have an unlimited tax liability, while non-residents have a limited tax liability.

Determining Tax Residency in Austria

Determining your tax residency status in Austria is important as it affects your tax obligations and the amount of taxes you are required to pay. In general, you are considered a tax resident in Austria if you have a permanent home in the country or if you spend more than 183 days in Austria during a calendar year. 

If you are unsure of your tax residency status, it’s important to seek guidance from a tax professional. You may also need to provide documentation such as proof of residence, work permits, and other relevant documents to determine your tax residency status. 

Here’s how to know what your residency status is if you’re a US expat living in Austria.

Austria Resident Qualifications 

You’re considered a resident of Austria if:

• You live in Austria for six months or more within a given tax year; these days do not have to be consecutive as long as they fall in the same 12-month period.
• You applied for and received residency.

If either of the above is true, you’re likely an Austrian resident.

Non-resident Qualifications in Austria 

If you’ve been living in Austria for less than six months, then you’ll likely qualify as a non-resident of Austria. In this case, you’ll only be taxed on your income from Austrian sources.

To qualify as a non-resident for tax purposes in Austria, you must spend less than 183 days in the country during a calendar year and not have a permanent home in Austria. Non-residents are only required to file a tax return on income earned in Austria. If you are unsure of your tax residency status or have questions about your tax obligations in Austria, it’s important to seek guidance from a tax professional. 

Income tax in Austria

Residents are taxed on a progressive scale, paying between 0% and 55%, depending on how much income they earn. Non-residents are only taxed on income earned in Austria, but not foreign income.

The deadline for filing income tax in Austria varies depending on how you file. Paper tax returns are due by April 30, but tax returns filed online have an extended deadline of June 30.

Income tax rates in Austria

Here are the income tax rates for residents and non-residents living in Austria for the 2023 tax year.

Other Tax Situations in Austria 

Self-employment Tax

If you earn self-employment income, you must register with the Social Insurance Institution for the Self-Employed if their gross annual income exceeds €5,830.20. Self-employed individuals are also subject to income tax in Austria.

Corporate Tax

Businesses in Austria must pay a flat corporate tax rate of 25%.

Value-added Tax (VAT)

This tax is paid by Austrian consumers when they buy goods or services. In Austria, the VAT tax is 20% for most items. Some items, like books, food, some transportation, and certain events, have lower tax rates ranging between 10% and 13%.

Wealth Tax

There is no wealth tax in Austria.

Inheritance Tax

There is no inheritance tax in Austria.

Property Tax

The property tax rate in Austria is typically 3.5%. There is also a real estate tax of 0.1% to 0.2% of the assessed value of the property.

Social Security

Austria does have Social Security contributions. Employees pay 18.12% of their wages into Social Security, while employers pay 21.23% into the social benefits system. 

Does the US Have a Tax Treaty with Austria? 

Yes, Austria does have a tax treaty with the United States. This agreement helps prevent US expats from paying double taxes.

The treaty helps to ensure that taxpayers are not taxed twice on the same income by allowing them to claim a foreign tax credit for taxes paid in the other country. 

Under the treaty, the US and Austria provide tax relief for a wide range of income types, including dividends, interest, royalties, and capital gains. The treaty also includes provisions for resolving disputes between the two countries and for exchanging information to enforce tax laws. 

While the tax treaty can help to simplify the tax obligations of individuals and businesses operating in both the US and Austria, it can still be complex to navigate. 

Does Austria Have a Totalization Agreement with the US? 

Yes, Austria does have a totalization agreement with the United States. This agreement helps detail a US expat’s obligations to contribute to Social Security programs.

Similar to the tax treaty, this agreement helps prevent US expats from duplicating Social Security contributions to each country. The purpose of the agreement is to ensure that individuals who work in both countries are not subject to double Social Security taxation and can continue to qualify for benefits in both countries. 

Under the agreement, individuals who work in the US and Austria may be exempt from paying Social Security taxes in one or both countries, depending on their individual circumstances. In addition, the agreement provides for the coordination of Social Security benefits between the two countries, allowing individuals to combine their periods of coverage in both countries to qualify for benefits. 

While the totalization agreement can help to simplify Social Security obligations for individuals working in both the US and Austria, it can still be complex to navigate. It’s always a good idea to work with a professional who has experience working with international tax and Social Security law and can help ensure compliance with both US and Austrian regulations. 

What Tax Forms Do US Expats in Austria Need to File?

Americans living abroad in Austria will need to file their income tax returns either online or by mail.

You can file your Austrian tax return online at the Federal Ministry of the Republic of Austria’s Finance website. Electronic tax returns are due by the end of June.

If you’d prefer to file by mail, you can find and print the relevant income tax form here and submit it before the end of April.

Furthermore, US citizens living in Austria are required to complete Form 1040 and Form 2555, among other forms. Form 1040 is the standard tax form for US citizens and residents, and it must be filed by US expats irrespective of their location. Form 2555 is used to claim the foreign earned income exclusion, which allows expats to exclude a portion of their income from US taxes.

Moreover, US expats in Austria may be eligible for specific tax benefits and deductions, such as the foreign tax credit, which can help lower their overall tax liability.

Navigating Tax Compliance for US Expats in Austria

Navigating tax compliance as a US expat in Austria can seem daunting, but with the right information and guidance, it doesn’t have to be. As an expat, it’s important to stay up to date on your tax obligations both in the US and in Austria to avoid any legal issues and ensure that you’re taking advantage of any available tax benefits.

Contact us, and one of our customer champions will gladly help. If you need very specific advice on your specific tax situation, you can also click below to get a consultation with one of our expat tax experts.