Introduction of reporting requirement for foreign employers who employ Austrian tax residents
From 1 January 2020 on, employers of individuals subject to unlimited taxation in Austria were required to withhold Austrian wage tax. However, due to the COVID-19 Tax Measures Act, this provision was retroactively revoked.
Consequently, foreign employers without a permanent establishment (PE) for wage tax purposes in Austria (contrary to the current legal situation and the statements made to date by the Austrian Ministry of Finance) will no longer be required to withhold income tax from the income of their employees with unlimited tax liability in Austria. The new legal provisions apply retroactively from 1 January 2020, i.e. the former law will be reversed from the beginning.
If the foreign employer has already fulfilled the current obligation to deduct wage tax in 2020, this wage tax deduction will be considered a voluntary wage tax deduction under the new regulation.
In the future, foreign employers without a PE for wage tax purposes in Austria will therefore have the following options:
- A voluntary payroll tax deduction is made. In this case, this income will be treated as income subject to wage tax. In the event of an audit, the employer is also required to grant access to the payroll accounting and other documents relevant to the wage tax audit and to provide information. In contrast to the obligatory wage tax deduction, however, the employer is not liable for wage tax. If an employer without an Austrian PE has not correctly carried out the voluntary wage tax deduction, the employee will be held directly liable and a compulsory assessment would have to be made.
- A voluntary wage tax deduction is not made. In this case, the foreign employer must submit a wage certificate (official form L17) to the tax office under the following conditions:
- The employee is subject to unlimited tax liability in Austria.
- The employee predominantly carries out one's activity in Austria for more than six months in the respective calendar year.
Tax relief for homeworking
On 25 March 2021 the Austrian National Council passed the 2nd COVID-19 Tax Measures Act, which includes tax relief for homeworking (so-called 'home office') activities. These measures will also affect employee tax assessments for the year 2020.
300 euros (EUR) as non-taxable flat rate expenses
Via the employer, it will be possible for employees to receive non-taxable flat rate expenses for homeworking in the years 2021 to 2023 in the amount of up to EUR 3 per home office day (i.e. any working day spent exclusively working from home), up to a maximum amount of EUR 300 per calendar year. If less than the maximum amount of flat rate expenses is paid out by the employer, employees will be able to claim the difference as income-related expenses in the employee tax assessments for the years 2021 to 2023 (maximum amount minus the flat rate granted by the employer).
This difference will not be offset against the general flat rate for income-related expenses of EUR 132.
Income-related expenses for ergonomic office furniture
Previously, it was only possible to deduct expenses for office furniture if the home office space was recognised for tax purposes. Under the new rules, it is possible to deduct expenses for ergonomic furniture for an office space in the private home (in particular, tables, swivel chairs, and desk lamps) as income-related expenses up to a maximum amount of EUR 300 per year if at least 26 days are spent working from home (home office days) in the calendar year.
Note: For the calendar year 2020, a different maximum amount of EUR 150 applies. For the calendar year 2021, the maximum amount will subsequently be capped at the difference between EUR 300 and the amount recognised in the year 2020. The maximum amount that can be deducted for the years 2020 and 2021 is therefore EUR 300.
The respective maximum amounts of EUR 300 or EUR 150 (in the year 2020) constitute a total amount to cover the acquisition or production costs of ergonomic furniture. The rules on depreciation do not apply. Excess amounts in the tax years 2020 to 2022 (acquisitions above EUR 300/150) can be recognised within the maximum amounts until the tax assessment for 2023 if the minimum number of home office days in these years is fulfilled.
This amount will also not be offset against the general flat rate for income-related expenses.
Existence of a home office recognised for tax purposes
If a home office recognised for tax purposes exists, it is possible, as an alternative, to make an additional deduction for income-related expenses in the tax assessment in line with the previous or existing regulations. In this case, the provisions on the simplified recognition of income-related expenses for ergonomic furniture and/or the recognition of the unclaimed amount of the homeworking flat rate as income-related expenses should not be applied.