Taxes and finances in Austria: A guide for emigrants | KOCH Moving Logistics

Moving to Austria is an exciting adventure that offers many new opportunities and experiences. One essential aspect that emigrants must consider is taxes and finances in Austria. This article provides comprehensive information about the Austrian tax system, the best banks and tips for international money transfers for anyone wishing to emigrate to Austria.

The Austrian tax system is moderate and employee‑friendly by international comparison. Austria does not levy a wealth tax, and the tax burden is regulated centrally by the federal government.

Austria uses a progressive tax system – the higher your income, the higher the tax rate. Your worldwide income is taxed once you are tax‑resident in Austria (domicile or habitual residence). The tax rate levels are adjusted annually to mitigate bracket creep (cold progression).

In Austria, the standard VAT rate is 20%. A reduced rate of 10% applies to food, books, cultural services, rentals and other daily goods. Another reduced rate of 13% applies to animals, plants, fuels and wines, among other things. By comparison, the standard rate in Germany is 19%, and the reduced rate is 7%.

Employees in Austria do not have to file a tax return automatically. In most cases, voluntary employee assessment is possible, with which you can reclaim overpaid wage tax. The filing deadline for voluntary employee assessment is five years (retroactive). If you know in advance that you will have to file an assessment next year, you can apply to carry out the employee assessment in order to release your data for automatic assessment

The Austrian tax administration offers the FinanzOnline portal FinanzOnline for electronic tax returns. Here you can conveniently fill out and submit your tax return online. You will need a mobile phone signature or ID Austria (formerly citizen card) for this. If you do not yet have access, you can register with your responsible tax office.

 

A double taxation agreement (DTA) exists between Germany and Austria which prevents, which prevents your income from being taxed in both countries. The agreement applies to individuals who are tax‑resident in either Austria or Germany.

For individuals, tax residence is determined by habitual residence or domicile . If a person has a permanent home in both contracting states, they are considered tax‑resident in the state where they have the centre of their vital interests (personal and economic relations). If this is not clear, habitual residence is used; if that also does not yield a clear result, nationality decides . The DTA also containsspecial provisions for cross‑border commuters (who live in Germany and work in Austria). Nevertheless, it is advisable to seek tax advice in advance in order to make optimal use of the benefits of this agreement.

IMPORTANT NOTE FOR GERMAN IMMIGRANTS: Please note that the double taxation agreement generally only applies if you actually need to avoid double taxation. In most cases, after moving to Austria you will only be taxable there, as long as you no longer receive German income. Nevertheless, an income tax rate may be credited against your taxable income in Germany if you are taxable in both Austria and Germany.

Opening a bank account in Austria is strongly recommended, if not necessary, for most everyday financial transactions (rent, salary, payments). An international account (e.g., with a Swiss bank) may suffice for some purposes, but for everyday payment transactions in Austria, a domestic account is advantageous.

To open an account, you generally need:

 

– A valid passport or identity card (for identification)

– Proof of residence (e.g., registration confirmation from the municipality)

– Proof of first income (pay slip) is often helpful, but not always mandatory.

 

Options for opening an account:

 

– IN PERSON: The traditional method – you go to a bank and present the documents.

– ONLINE: Many Austrian banks also offer convenient online account opening.

 

Direct account opening with an Austrian bank is generally straightforward, even for foreign citizens with their primary residence in Austria.

International money transfers between Austria and Germany (as well as Switzerland and Germany) can be carried out easily and cost‑effectively. Here are some ways to minimise costs:

 

– CLASSIC BANK TRANSFERS (SEPA): For transfers within the SEPA area (Euro countries), classic bank transfers are generally low‑cost. The duration of a SEPA transfer is usually one banking day.

 

– ONLINE TRANSFER SEVICES (E.G., WISE, REVOLUT, CURRENCYFAIR): These services are generally cheaper than classic banks for international transfers outside the SEPA area, especially for currency conversions. They usually offer fast transfers with transparent fees.

 

– PAYPAL: Simple and fast, but often with higher fees than specialised services. Good for smaller amounts.

 

– CRYPTOCURRENCIES: An option for tech‑savvy users, but with exchange rate fluctuations and regulatory risks.

 

PRACTICAL TIP: If you need to transfer money regularly between Austria and a country outside the SEPA area, it is worth using an online specialist. You can compare different providers via comparison portals. For one‑off large transfers, it may also make sense to consult your main bank.

Planning for old age is an important aspect for emigrants working in Austria. Austria has a three‑pillar system:

 

– STATUTORY PENSION INSURANCE (1ST PILLAR): Compulsory insurance for employees, self‑employed persons and certain other groups. Contributions are based on your income and are borne roughly equally by employee and employer.

 

– COMPANY SEVERANCE PAY SYSTEM (2nd pillar): Employees receive severance pay (a lump‑sum payment) upon termination of employment. 

 

– VOLUNTARY PRIVATE PROVISION (3RD PILLAR): You can also make private provision, e.g., with fund savings plans, life insurance or your own private pension insurance. This provision is tax‑privileged.

 

IMPORTANT NOTE ON SEVERANCE PAY AND PROVISION: : If you are coming to Austria from Germany, you should check whether your German pension entitlements are preserved. The double taxation agreement also regulates social security. As a rule, periods of German pension insurance are credited towards the Austrian pension if you have insurance periods in both countries. It is advisable to seek advice from a specialised tax consultant or the Austrian Pension Insurance Institution (PVA).

As a German emigrant, you should also check whether you have the option of continuing to pay into the German pension insurance scheme (voluntary continued insurance) while in Austria. Advice from the German Pension Insurance (Deutsche Rentenversicherung Bund) and the Austrian Pension Insurance Institution (PVA) is essential here.

Moving to Austria requires careful planning and a good understanding of the tax and financial environment. Particularly positive for German emigrants: the tax system is very similar to the German one, family co‑insurance in health insurance is much simpler and free, and the public transport system is inexpensive.

We at KOCH Moving Logistics are by your side to make your dream of emigrating to Austria as smooth as possible.