What is Einkommensteuer (Austrian Personal Income Tax)?
Austrian progressive personal income tax for sole traders, GmbH directors, and individuals. Rates: 0% up to €12,816, rising progressively to 55% above €1 million. The 55% rate (Spitzensteuersatz) applies as a temporary surtax on the highest earners.
Current Rate (Steuerjahr 2025)
0–55% progressive; 55% above €1m (temporary surtax); 48% up to €99,266
Example
An Austrian sole trader with €70,000 taxable income falls into the 40% band on income above €66,612. Their overall average effective rate is approximately 27%, significantly higher than the 23% KSt a GmbH would pay on the same profit.
How Einkommensteuer (Austrian Personal Income Tax) works in Austria
Einkommensteuer (ESt) is levied on the worldwide income of Austrian tax residents under the EStG (Einkommensteuergesetz). It applies to seven income categories, but for business owners the most relevant are: Einkünfte aus Gewerbebetrieb (commercial business income for sole traders), Einkünfte aus selbständiger Arbeit (freelance/professional income), and Einkünfte aus nichtselbständiger Arbeit (employment income for GmbH directors paid a salary).\n\n**2025 tax brackets**\n- €0 to €12,816: 0% (Grundfreibetrag)\n- €12,816 to €20,818: 20%\n- €20,818 to €34,513: 30%\n- €34,513 to €66,612: 40%\n- €66,612 to €99,266: 48%\n- €99,266 to €1,000,000: 50%\n- Above €1,000,000: 55% (Spitzensteuersatz — temporary surcharge extended annually)\n\n**Why this matters for GmbH decisions**\nThe comparison between sole trader ESt and GmbH KSt is central to Austrian tax planning. At around €50,000–€60,000 profit, a GmbH typically starts to look more tax-efficient, paying 23% KSt versus the sole trader's 40–48% ESt band. However, extracting profits from the GmbH as salary restores the ESt burden, so the benefit applies primarily to retained profits reinvested in the business.\n\n**Sonderausgaben and Werbungskosten**\nSole traders can deduct Betriebsausgaben (business expenses) to arrive at taxable income. Additionally, individuals can claim Sonderausgaben (special personal deductions) for pension contributions, church tax, and donations, as well as the standard Werbungskostenpauschale (flat €132/year for employees) or actual documented work expenses.\n\n**SVS contributions for self-employed**\nSole traders and GmbH majority shareholders additionally pay SVS contributions (~26.8% on net income) on top of ESt. Unlike employment income where social contributions are shared with the employer, self-employed individuals bear the full SVS burden. This means the effective marginal cost of income for a self-employed person in the 40% band is approximately 40% + 26.8% = 66.8% — until the SVS ceiling is reached.\n\n**Advance payments and filing**\nThe Einkommensteuererklärung is filed via FinanzOnline. Deadline: 30 June (electronic); with a Steuerberater, 31 March of the following year. Quarterly ESt Vorauszahlungen are due in February, May, August, and November based on prior year liability.
Related terms
Austria's corporate income tax at a flat 23% rate (reduced from 25% in 2024) on the taxable profits of GmbHs and AGs. A minimum tax (Mindestkörperschaftsteuer) of €500/year applies to GmbHs regardless of profit.
Austrian social insurance for self-employed individuals and GmbH shareholders owning more than 25% of shares. SVS contributions are approximately 26.8% of net income (covering health, pension, and accident insurance). The minimum contribution is around €180/month.
Austria's main private limited company structure. Requires €35,000 minimum share capital (€17,500 paid up at formation). Shareholders have limited liability. Must be formed by notarial deed and registered in the Firmenbuch (Austrian commercial register).
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