Austria is a country rich with history, spectacular landscapes and views, and is often considered the winter sports capital of Europe. It attracts a large number of American expats, so we have outlined the most important things you need to know about expatriate taxes in both your home and host country.
1. US Expatriate Taxes in Austria
Americans living in Austria, or in any other country, continue to have US tax filing requirements. You must file a US tax return each year and include all worldwide income on your US return, including any income that is also subject to tax in Austria. While you are taxed on your worldwide income, the US has created plenty of exclusions and deductions to help offset your Austrian income tax. To avoid dual-taxation (paying taxes in two countries) you may qualify for these important credits and exclusions:
If you meet certain requirements of the FEIE, you can exclude up to $105,900 of your 2019 foreign earnings on your US expatriate taxes. In addition to the FEIE, you may also be able to deduct some of your housing expenses, especially if you live in an area with a high cost of living.
Like most US tax credits, the Foreign Tax Credit reduces your US tax. One dollar of credit reduces US tax by one dollar. Your Foreign Tax Credit will be limited to only those Austrian taxes derived from Austrian earnings, which are subject to US tax. That means that any Austrian tax on your excluded Austrian earnings (excluded by the FEIE, the Foreign Housing Exclusion, or because of Austrian tax rules) will not be included in the calculation of your US Foreign Tax Credit.
2. Who is a Resident of Austria?
After you have lived in Austria for 6 months, you are considered a resident. Residents and non-residents pay the same rate of tax on their Austrian employment income. If you have resided in Austria for less than 6 months, you are not considered a tax resident.
3. Is Foreign Income Taxed Within Austria?
For non-residents, only revenue earned within Austria is subject to Austrian tax. Once you are considered a resident, you must pay tax on your worldwide income.
4. Austrian Income Tax Rates
Austrian income tax is charged at progressive rates (i.e., the more you earn, the higher the tax rate).
|Tax Rates on Fixed Salaries of Residents of Austria|
|Income Range||Tax Rate (%)|
|Up to €11,000||0%|
|€11,000 – €18,000||25%|
|€18,001 – €31,000||35%|
|€31,001 – €60,000||42%|
|€60,001 – €90,000||48%|
|€90,001 – €100,000||50%|
5. US-Austria Tax Treaty
The US and Austria have an income tax treaty, so you will avoid dual taxation.
6. Austrian Tax Due Date
If you work for an Austrian employer, they deduct taxes from your paycheck and remit to the tax authorities on your behalf. You may need to file a return by April 30 if you earn over a minimum amount from sources other than your employment or you are employed by two or more employers at once.
7. Social Security in Austria
Employees need to have Social Security when working in Austria. Austrian Social Security covers health insurance, accident insurance, unemployment benefits, and public pension payments. Generally, both employer and employee are mandated to pay into Social Security. Employees pay approximately 18.12% into the system, while employers contribute 21.38%. For special payments (such as bonuses), the employer contributes 20.73% and the employee contributes 17.12%.
The US and Austria do have a Totalization Agreement in place, so you will only pay Social Security taxes to one country or the other.
8. Other Taxes in Austria
Taxable capital gains for properties sold (assuming the property was held for less than 10 years) will be charged at the same rates as income tax.
As a general rule, goods and services in Austria (with only a few exceptions) are subject to sales tax, at the rate of 10% on food, books, theatrical and cultural events, artistic activity, domestic passenger transportation, rentals for private residential use (including hotel rooms), etc., and at 20% for everything else.
Have Expatriate Tax Questions Related to Living in Austria?
Greenback is here for you. Our team of dedicated CPAs and IRS Enrolled Agents will help you navigate the often-confusing nature of expatriate taxes to make it a more hassle-free process – contact us today!
Originally published in 2014; updated February 17, 2020.