Expenses incurred in ‘acquiring, securing, and maintaining’ income are deductible from the taxable income of the particular source of income concerned. All employees are entitled to a standard allowance of EUR 132. Expenses in excess of this amount will be allowed if supported by receipts (e.g. office in home, continuing education).
Employee portions of mandatory contributions to Austrian and/or foreign social security are tax deductible.
In computing income from employment, expenses related to the production and collection of income is generally tax deductible. These expenses include the following:
- Membership fees to certain organisations (e.g. Chamber of Labour, workers council).
- Compulsory social and pension insurance contributions.
- Commuting expenses between residence and place of work where a standard deduction can be claimed per month; the deductible amount depends on the distance and the possibility of using public transport.
- Work equipment and special work clothes.
- Business related travel expenses and per diems.
- Technical literature.
- Training costs.
Certain relief allowances are available against taxable income if the annual income does not exceed EUR 60,000. These allowances include:
- Sickness, life, and accident insurance premiums*.
- Voluntary contributions to employer pension plans and/or state social security.
- Expenses for the construction of a new house/apartment or renovation of housing space in Austria*.
Church tax is deductible up to EUR 400, and charitable contributions to certain institutions are deductible up to 10% of the current year’s taxable income. Austrian tax adviser fees are fully deductible.
Individuals who incur extraordinary expenses can obtain some tax relief. This relief applies to resident individuals who are subject to unlimited tax liability who incur unavoidable expenses (e.g. funeral costs, medical expenses for special treatments not reimbursed by health insurance). Depending on income and family status, the taxpayer may be able to deduct an amount that exceeds a certain percentage of one's income. The retention rates are as follows:
|Annual income (EUR)||Retention rate (%)|
The percentage is reduced by 1% for an individual:
- who is eligible for a sole earner tax credit or a single parent tax credit, or
- who is not eligible for a sole earner or a single parent tax credit but the individual is married more than six months during the calendar year or living more than six months in a registered partnership and is not permanently separated from one's married/registered partner whose income is less than EUR 6,000 per year,
- as well as for every additional child if the taxpayer receives for more than six months the child tax-free amount or the alimony tax credit.
Certain expenses (e.g. damage due to disaster) are generally fully tax deductible.
Child care deduction amount (no longer available from 2019)
Costs for the care of children are deductible up to a maximum amount of EUR 2,300 per child and year (last year deductible via the tax return is 2018). The taxpayer can benefit only for children up to the age of ten years. Child care has to take place in private or public child care institutions (e.g. kindergarten, crèche, part-time or full-time boarding school) or has to be looked after by a pedagogically qualified person.
Child tax-free amount in 2018 (no longer available from 2019)
A child tax-free amount is available but subject to several conditions. An individual is eligible to receive the child tax-free amount if the taxpayer (or one's partner) is entitled to the child tax credit (Kinderabsetzbetrag) for that child for more than six months in the respective calendar year.
An annual child tax-free amount of EUR 440 per child (which reduces the individual’s taxable income) may be claimed if the conditions are fulfilled. If both parents claim the tax-free amount, both taxpayers are entitled to 60% of the tax-free amount, which amounts to an annual EUR 300 for each taxpayer.
If the child does not permanently live outside of Austria and the taxpayer is entitled to receive the child alimony tax credit, the tax-free amount is EUR 300.
If the child tax-free amount is claimed, the child’s social security number has to be indicated in the annual tax return.
Family bonus plus (from 2019)
From 2019, the child care deduction and the child tax-free amount are replaced through the family bonus plus.
The family bonus plus is a tax credit, which reduces the amount of tax paid. The annual tax credit of EUR 1,500 per child can be claimed for children up to the age of 18 years, who live in Austria, and are entitled to family allowance. If both parents claim the family bonus plus, both taxpayers are entitled to 50% of the tax-free amount (EUR 750 per annum for each taxpayer).
For children between 19 and 24 (in some cases until 25), the family bonus plus can be granted up to an amount of EUR 500 per annum.
The family bonus plus can be taken into account in the payroll during 2019 or in the tax return for 2019 in 2020.
* Please notice that due to the Austrian tax reform 2015/16 these allowances are only available against taxable income if the contract with the insurance company in connection with the payments was closed before 1 January 2016 and only for the duration of five years (until 2020).
For these types of expenses, a standard allowance of EUR 60 per year is granted, unless higher payments have been made. In the latter case, the deductible amount is limited to 25% of expenses up to EUR 2,920 per year for single taxpayers and 25% of expenses up to EUR 5,840 are tax deductible under the following conditions:
- the individual is eligible for a sole earner or a single parent tax credit, or
- the individual is not eligible for a sole earner or a single parent tax credit but the individual is married more than six months during the calendar year or living more than six months in a registered partnership and is not permanently separated from one's married/registered partner whose income is less than EUR 6,000 per year.
For taxpayers who earn between EUR 36,400 and EUR 60,000 per year, the maximum deductible amount is reduced step-by-step on a ratable basis. The standard deduction of EUR 60 remains in any case tax deductible.
Generally, personal allowances take the form of tax credits, i.e. deductions from tax payable. By contrast, family allowances are paid to the taxpayer in cash. See the Other tax credits and incentives section for more information.
Business losses or rental losses can be offset with other categories of income. Business losses can be forwarded in following years in case assessed by adequate and orderly accounting.
Rental losses cannot be carried forward.
For a discussion of capital losses, see Capital gains in the Income determination section.