What salary should I pay myself as an Austrian GmbH director?

Setting the right compensation structure as a GmbH director-shareholder in Austria is one of the most impactful tax planning decisions available.\n\nThe arm's length requirement\nAustrian tax law (§8 KStG and §22 EStG) requires that compensation paid to a director who is also a significant shareholder be at arm's length — i.e., comparable to what an unrelated third party would be paid for the same role. The Finanzamt scrutinises Geschäftsführer salaries, particularly in closely-held companies. If a salary is deemed excessive, the excess is reclassified as a verdeckte Gewinnausschüttung (hidden profit distribution) — not deductible for KSt and potentially triggering back-taxes.\n\nSVS versus ASVG — the critical classification\nThe social insurance classification depends on ownership:\n- >25% shareholding: the director is classified as self-employed (GSVG/SVS). They pay approximately 26.8% SVS on all income (salary + dividends). No employer ASVG applies — the company pays no employer share.\n- ≤25% shareholding: the director is classified as an employee (ASVG). Employer ASVG (~21%) applies on top of salary; employee ASVG (~18%) is deducted from salary. This is actually more costly for the company but gives the director employee social insurance benefits (unemployment insurance etc.).\n\nThe salary/dividend optimisation\nFor majority shareholders (>25%), the key structural advantage is that dividends are not subject to SVS — they attract only 27.5% Kapitalertragsteuer (KESt). This creates an optimisation opportunity:\n\n*Option A: High salary strategy*\nPay all compensation as salary. The full amount is deductible for KSt. The director pays ESt (up to 55%) + SVS (26.8%) on the salary. Simple but tax-inefficient at higher income levels.\n\n*Option B: Low salary + dividends strategy*\nPay a modest arm's length salary (the minimum a qualified external director would accept) and retain remaining profits in the GmbH, distributing as dividends in future years. The salary is deductible for KSt; dividends are subject to 27.5% KESt only (no SVS, no ESt). This is significantly more efficient for high earners.\n\n*Option C: No salary + retain all profits*\nSome founders take no salary in early years, paying only SVS minimums and retaining all profits. Profits accumulate in the GmbH at 23% KSt and are distributed as dividends later. This is effective during growth phases but requires the director to have personal liquidity from other sources.\n\nPractical salary benchmarks\nThe Finanzamt uses sector salary surveys and WKO data to assess arm's length. Typical GmbH director salaries accepted by the Finanzamt:\n- Early-stage company, single-product GmbH: €30,000–€50,000/year\n- Established SME with 2–10 employees: €60,000–€100,000/year\n- Larger company with significant management responsibility: €100,000–€200,000/year\n\nThese are rough guides — the arm's length assessment also considers the company's size, industry, profitability, and the director's qualifications and time commitment.\n\nSonderzahlungen (13th and 14th month)\nDirectors can receive the Austrian 13th month (Weihnachtsremuneration) and 14th month (Urlaubszuschuss) payments on the same tax-advantaged basis as employees (6% Lohnsteuer on the first €620 of each). These must be agreed in the Anstellungsvertrag. They are fully deductible for the GmbH at 23% KSt.\n\nSVS ceiling\nSVS contributions are capped at the Höchstbeitragsgrundlage (approximately €75,180/year in 2025). Income above this level is free from further SVS contributions — making very high salary levels progressively more attractive as the SVS ceiling is approached.