Austria Taxes 2026: Income Tax, Corporate Tax, VAT, Deadlines and Tax Planning

The Austrian tax system at a glance

Austrian taxes are almost entirely levied by the federal government and administered by the Austrian Tax Office and the Tax Office for Large Enterprises. Provinces and municipalities receive their share through fiscal equalisation; their own levies are mainly municipal tax and property tax. According to Statistics Austria, the largest revenues come from wage and income tax, VAT and social security contributions.

On top of this come high payroll costs. For entrepreneurs, the overall burden of taxes and contributions matters more than any single rate. Comparisons with neighbouring countries are in our articles on taxes in Switzerland and taxes in Spain.

Income tax: 2026 rates

Anyone with a residence or habitual abode in Austria is fully taxable (section 26 BAO); a habitual abode exists at the latest after six months. Since 2023 the brackets have been adjusted annually for inflation – for 2026 only partially, because of budget consolidation.

The actual burden is reduced by tax credits such as the commuter credit, the sole earner and single parent credits and the Family Bonus Plus of up to EUR 2,000 per child per year. The 13th and 14th month salaries are taxed at favourable rates of 6% to 36% up to one sixth of annual pay.

Investment income: KESt

Dividends, gains on shares and funds and cryptocurrencies are taxed at a special rate of 27.5%. Interest on bank deposits is taxed at 25%. At Austrian banks the tax is withheld directly as a final tax. Income at foreign banks must be declared in the tax return. Austria receives this data through automatic exchange of information (CRS); from 2027 crypto data under CARF and DAC8 will be added.

Corporate tax and profit distributions

Companies with their seat or place of management in Austria pay corporate tax on their worldwide profit. As part of the eco-social tax reform, the rate was cut from 25% to 24% (2023) and 23% (since 2024).

• ✛Minimum tax: EUR 500 per year for a GmbH and FlexCo, even in a loss year; it is credited later. Newly formed companies pay less in their first quarters.
• ✛Minimum share capital: EUR 10,000 since 2024, of which at least EUR 5,000 paid in cash.
• ✛Loss carryforward: unlimited in time, but each year only up to 75% of total income can be offset.
• ✛Group taxation: profits and losses can be offset between companies linked by a financial interest of more than 50%, including losses of foreign subsidiaries in EU states and states with mutual assistance.
• ✛International participation exemption: dividends and capital gains from holdings of at least 10% in foreign companies, held for at least one year, are tax-exempt.

Overall burden on distribution

If the GmbH distributes its profit to an individual, a further 27.5% KESt applies. From EUR 100 profit, EUR 77 remain after 23% corporate tax; after KESt about EUR 55.8 remain. The overall burden is therefore about 44.2% – slightly less than the top rate for sole traders. How a GmbH can be used as a holding company is explained in our article on GmbH taxes.

Pillar Two

With the Minimum Taxation Act, Austria implemented the 15% global minimum tax from 2024, including a domestic top-up tax (QDMTT). Only groups with revenue of EUR 750m or more are affected. The Deloitte tax highlights give a compact overview of the implementation.

VAT

VAT is charged on almost all domestic supplies of goods and services. Businesses deduct input VAT from purchase invoices.

Intra-EU supplies are not a separate rate but exempt supplies with input VAT deduction. They require a valid VAT number of the customer and an EC sales list. For distance sales to consumers in other EU states, the One-Stop Shop (OSS) applies from EUR 10,000. The European Commission publishes comparative data on VAT burdens in the EU.

Small business exemption

Since 2025, businesses with annual turnover of no more than EUR 55,000 gross are exempt from VAT. If the threshold is exceeded by no more than 10%, the exemption still applies until the end of the year. Since 2025, small businesses can also use the exemption in other EU states through the EU SME scheme. The downside: no input VAT can be deducted. The exemption can be waived, which binds for five years.

Social security and payroll costs

Social security contributions are not taxes but shape the overall burden. They are levied up to a maximum contribution base that is adjusted annually.

Employers also pay payroll levies on total wages: the employer contribution to the family burden equalisation fund (3.7%), the surcharge on the employer contribution (about 0.3 to 0.4% depending on the province) and municipal tax (3%). Employers thus bear about 29 to 30% on top of gross pay.

The self-employed are insured with the social insurance institution for the self-employed (SVS) and pay about 27% of their income for health and pension insurance and self-employed provision, plus a fixed accident insurance contribution. Shareholder-managing directors with a stake of more than 25% are usually also insured with the SVS.

Tax planning for companies and the self-employed

Austrian tax law offers several statutory instruments that can significantly reduce the burden.

Partners in partnerships also receive the profit allowance. Switching from a sole proprietorship to a GmbH usually pays off from about EUR 80,000 to 100,000 annual profit, if part of the profit stays in the company. The basics of GmbH taxation are explained in our article on taxes for a GmbH.

Real estate: gains tax, transfer tax and property tax

Gains from the sale of real estate have been subject to real estate gains tax (ImmoESt) of 30% since April 2012. The notary usually calculates and pays it directly.

• ✛New assets (acquired from 1 April 2002): 30% on the gain, i.e. proceeds minus acquisition and construction costs.
• ✛Old assets (acquired before 1 April 2002): flat 4.2% of the sale price; 18% if rezoned after 1987.
• ✛Main residence exemption: tax-free if the home was used as the main residence continuously for at least two years from acquisition, or for at least five of the last ten years, and is given up.
• ✛Builder's exemption: for self-built buildings that were not let.

Real estate transfer tax

On a purchase, real estate transfer tax is 3.5% of the consideration, plus a 1.1% land register fee. For gratuitous transfers and within the family, a tiered rate applies to the property value: 0.5% up to EUR 250,000, 2% on the next EUR 150,000 and 3.5% above. Property tax is levied by municipalities on outdated assessed values and is usually low.

Inheritance, gifts and private foundations

Austria has not levied inheritance or gift tax since 1 August 2008. Gifts must, however, be reported to the tax office above certain limits: EUR 50,000 within one year between relatives, EUR 15,000 within five years between others. Failure to report can lead to a fine of up to 10% of the value.

• ✛Real estate transfer tax on transfers of property under the tiered rate
• ✛Foundation entry tax of 2.5% on contributions to private foundations; 25% if the foundation is not transparent or does not disclose documents
• ✛Interim tax of 23% on certain investment income of the private foundation, credited on later distribution

How asset structures in the EU are becoming transparent is shown in our article on the EU asset register.

Deadlines 2026

If a tax is not paid by the due date, a late payment surcharge of 2% applies, plus a further 1% each for continued delay. Interest on back payments and credits from assessments applies from October of the following year. SWICOR handles ongoing accounting and timely filing under accounting and tax.

FinanzOnline and digital processing

FinanzOnline is the portal of the Austrian tax administration. Businesses must file electronically where reasonable. FinanzOnline can be used, among other things, to:

1. 1file tax returns and VAT returns
2. 2access assessments and the tax account
3. 3apply for a tax number and VAT number
4. 4view payslips, prepayments and refunds
5. 5communicate with the tax office via the databox

For employees without other income, the tax office has carried out automatic employee assessments since 2017 when a refund results. Since 2016, a cash register obligation has applied from EUR 15,000 annual turnover, of which more than EUR 7,500 is in cash.

International aspects: treaties, emigration and transfer pricing

Austria has concluded around 90 double tax treaties, including with Germany, Switzerland, Liechtenstein and Spain. Business profits are generally taxed in the state of residence unless there is a permanent establishment in the other state. For dividends, interest and royalties, the treaties usually provide reduced withholding taxes.

Exit taxation

Moving away from Austria can trigger tax on hidden reserves even without a sale (section 27(6) and section 6 no. 6 EStG):

• ✛Capital assets such as shares, funds and GmbH shares: on a move to an EU or EEA state with comprehensive mutual assistance, tax is not assessed on application until an actual sale. On a move to a third country, including Switzerland, it is due immediately.
• ✛Business assets: on a transfer to the EU or EEA, the tax can be paid in five annual instalments on application.
• ✛Return: anyone who moves back within ten years can have the tax corrected.

The same logic applies in Germany with German exit taxation and the exit tax under section 6 AStG. What else to consider when moving abroad is covered in our article on emigrating.

Foreign companies and CFC rules

Since 2019, Austria has attributed passive income of low-taxed foreign subsidiaries (effective burden up to 12.5%) to the Austrian parent company (section 10a KStG). If a foreign company is actually managed from Austria, it is fully taxable here. How this works in practice is shown in our article on permanent representatives and CFC taxation.

Transfer pricing

Transactions between related parties must be at arm's length. Under the Transfer Pricing Documentation Act, groups with revenue of EUR 50m or more prepare a master file and local file, and groups of EUR 750m or more also a country-by-country report.

For international businesses, an account outside the EU can diversify the banking structure. A bank account in Georgia, for example, offers multi-currency accounts and fully remote processing. We compare jurisdictions for foreign companies in UK LLP vs Hong Kong vs EU and taxes in Malta.

Tax audits and appeals

The tax administration audits businesses through external audits and the joint audit of payroll taxes (PLB). Typical focal points are:

• ✛proper bookkeeping and cash register records
• ✛appropriateness of transfer prices and managing director remuneration
• ✛correct VAT, especially for intra-EU transactions
• ✛private use of vehicles and business assets
• ✛hidden profit distributions

An appeal against an assessment can be lodged with the tax office within one month. If the tax office issues a preliminary appeal decision, a request for referral to the Federal Fiscal Court (BFG) can be filed within one month. After that, appeals to the Supreme Administrative Court and the Constitutional Court are possible.

Current changes 2025 and 2026

• ✛Budget consolidation: the inflation adjustment of the brackets is smaller in 2026; the top rate of 55% was extended until 2029.
• ✛Climate bonus abolished: the compensation for CO₂ pricing was scrapped from 2025; CO₂ pricing itself moves into the EU ETS 2 in 2027.
• ✛Investment allowance doubled: 20% or 22% for purchases from November 2025 to the end of 2026.
• ✛Small business threshold: EUR 55,000 gross since 2025 with an EU-wide option.
• ✛Banking and energy sectors: higher stability levy and extended energy crisis contribution as part of budget consolidation.
• ✛Transparency: automatic exchange of account information; from 2026 data collection by crypto service providers under DAC8.

As of October 2026. Further adjustments are to be expected as budget consolidation continues.

Conclusion

Austrian taxes are high in 2026 but can be planned well. Knowing the brackets, the combined burden of GmbH and KESt, the profit allowance, the increased investment allowance and the deadlines allows the burden to be reduced significantly. International activity adds treaties, exit taxation and CFC rules.

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