Austria — Taxes

No landing pad: Austria has no newcomer tax regime

Much of Europe competes for wealthy and mobile residents with special tax deals. Italy offers a flat charge on foreign income. Portugal ran its non-habitual-resident scheme for a decade. Switzerland negotiates lump-sum forfait taxation with individual cantons. Greece, Spain, and Cyprus each market a version of the same idea. Austria does none of this.

There is no non-dom status, no remittance basis, no flat tax, and no multi-year holiday for new arrivals. A professional relocating from a zero-tax hub like Dubai, or from a country still running a favourable regime, meets the standard Austrian system in full: a progressive scale that reaches 55 % and worldwide taxation from the first day of residence.

The trade is genuine rather than rhetorical. In exchange for a heavy income-tax load, Austria levies no annual wealth tax and abolished inheritance and gift tax in 2008. The state takes a large slice of what you earn, then leaves your accumulated capital and your estate alone. Whether that is a good deal depends entirely on whether your wealth is in flows you still earn or in a stock you already hold.

Income tax: the progressive scale to 55 %

Austrian income tax (Einkommensteuer) is built on seven brackets, re-indexed for inflation each year since 2023 so that a nominal pay rise does not quietly push someone into a higher band. In the 2026 scale, the first slice of income is untaxed: nothing is due up to € 13,539 a year. Above that, the marginal rate steps up through 20, 30, 40, 48, and 50 %, before the top 55 % rate engages on income above € 1,000,000. That top rate is itself a temporary measure, legislated only through 2029, after which it is due to fall back to the bracket beneath it, absent a further extension.

These are marginal rates, not a single flat charge on the whole sum. Each rate applies only to the income that falls inside its band: the 20 % rate runs up to € 21,992, the 30 % band to € 36,458, the 40 % band to € 70,365, and the 48 % band to € 104,859. So a person earning a comfortable professional salary pays an effective rate well below their headline bracket, even though the marginal rate they feel on a raise can be steep.

Source: BMF (bmf.gv.at), Steuertarif und Steuerabsetzbeträge, Jahr 2026 table. Brackets below € 1,000,000 are inflation-indexed and republished each autumn for the following year; the € 1,000,000 top-band threshold itself is not indexed.

Residency is what pulls worldwide income into scope. You are an Austrian tax resident if you keep a home available to you in the country (a Wohnsitz, broadly any dwelling you can use at will) or if you have your habitual abode there, which the law reads as presence of more than 183 days. Either test is enough on its own. Once resident, your foreign salary, foreign rent, and foreign investment income are all assessable in Austria, subject to whatever double-tax relief a treaty provides.

One statutory carve-out is worth knowing before you assume a holiday flat makes you a resident. Under the Zweitwohnsitzverordnung, a documented Austrian secondary home does not by itself trigger unlimited tax liability if your centre of vital interests has been abroad for at least five calendar years and you keep a logbook-style record showing the dwelling is used no more than 70 days per calendar year. Miss either condition and the ordinary Wohnsitz test applies in full.

Source: BMF, EAS 2399 (Zweitwohnsitzverordnung, BGBl II Nr. 528/2003).

Two structural features soften the salaried picture slightly. Austria taxes employment income across fourteen payments a year, not twelve: the traditional thirteenth and fourteenth salaries (holiday and Christmas pay) are taxed at a heavily reduced rate. Family-related credits and deductions also exist. But none of this changes the core reality for a high earner: the marginal burden on additional income is among the heaviest in the European Union.

Capital, companies, and VAT: KESt, CIT, ImmoESt

Investment income is taxed far more flatly than salary. The capital-yields tax (Kapitalertragsteuer, KESt) is a flat 27.5 % on dividends and on most capital gains from securities. Bank interest sits slightly lower at 25 %. For listed shares and fund holdings the tax is usually withheld at source by the Austrian bank or broker, which makes compliance simple but offers no rate relief for long holding periods.

Private real-estate gains have their own regime. The property-gains tax (Immobilienertragsteuer, ImmoESt) is a flat 30 % on the profit from selling a property held privately. A primary-residence exemption removes the tax where you have lived in the home long enough, and there is a separate surcharge on gains driven by rezoning since mid-2025. Property is covered in detail in the dedicated chapter.

Companies and consumption

Corporate income tax (Korperschaftsteuer) is a flat 23 %, having stepped down from 25 % through 24 % to its current level in 2024. A minimum corporate tax applies to a GmbH even in loss years. Distributed company profits are then taxed again in the shareholder's hands at the 27.5 % KESt rate, the standard double layer on corporate earnings.

On the consumption side, value-added tax (Umsatzsteuer) is 20 % as the standard rate, with two reduced bands, 13 % and 10 %, covering categories such as books, rent, and cultural admissions. Everyday staple foods sit lower still, at a narrower 4.9 % rate under a dedicated schedule of the VAT Act: milk, bread, meat, eggs, fresh vegetables, and similar basics. For an ordinary resident this is the most visible tax of all, embedded in nearly every purchase.

Social security and the missing wealth and inheritance taxes

Income tax is only part of the deduction from a salary. Employees also pay social-security contributions of roughly 18.1 % of gross pay, covering pension, health, unemployment, and accident insurance, with a comparable employer contribution layered on top. These are not income tax, but they reduce take-home pay just as directly.

Contributions are capped. Above the 2026 monthly ceiling of € 6,930/mo (the Höchstbeitragsgrundlage, revised every 1 January), no further social-security contribution is due, so the marginal social-security cost falls to zero for high salaries even as income tax keeps climbing. The self-employed are insured through the SVS under separate rules and a separate contribution schedule.

What Austria does not tax

This is where the welfare-state bargain reveals its other side. Austria has no annual net-wealth tax: holding a large portfolio or a valuable home triggers no recurring levy on the asset itself. Inheritance tax and gift tax were both abolished in 2008 and have not returned, so passing assets to the next generation carries no federal death duty.

For someone whose wealth is a stock already accumulated, this matters a great deal: Austria will not erode it year on year, and will not tax its transfer at death. For someone whose wealth is a high salary still being earned, the absence of these taxes is cold comfort against a marginal rate that runs to 55 %. The system rewards holders over earners.

The one relief, plus exit tax and CFC rules

There is exactly one inbound concession, and it is narrow. Zuzugsbegunstigung (a relocation tax benefit) is available to scientists and researchers, and in limited cases to artists and sportspeople, whose move serves the public interest in science or research. One strand requires a minimum foreign-tax burden in the prior period; another grants a 30 % deduction allowance for up to five years. This is a regime for a recruited physicist, not for a relocating entrepreneur or investor.

Leaving can itself be taxed. Austria applies an exit tax on emigration: unrealised gains on certain assets, particularly substantial company shareholdings, can be assessed when you move your residence abroad, on the theory that Austria should capture the gain that accrued while you lived there. For moves within the EU or EEA the tax can usually be deferred and paid in instalments, which softens but does not remove it.

Anti-avoidance rules round out the picture. Austria has operated controlled-foreign-company (CFC) rules since 2019: passive income parked in a low-taxed foreign entity (broadly an effective rate at or below 12.5 %) can be attributed back to the Austrian controlling taxpayer and taxed here. The combined message is consistent: Austria expects to tax residents fully, taxes some of them on the way out, and does not leave obvious offshore gaps open.

Russian passport: the suspended double tax treaty

For readers with Russian tax exposure, one fact reshapes the calculation, though less totally than it first appears: since 7 December 2023 a defined set of articles in the Austria-Russia double tax treaty stands suspended, not the whole convention. Russia declared the suspension by Verbalnote on 8 August 2023, citing Decree 585 among a broader list of treaties; Austria then recognised specific articles as suspended and published that recognition via BGBl III Nr. 200/2023, rather than mounting an independent counter-suspension of its own. The suspended list is exhaustive: Articles 5 through 22, Article 24, and two Protocol sub-clauses tied to Article 26.

The practical consequence is real regardless of the mechanism. The suspended articles are exactly the ones that set the reduced withholding rates on dividends, interest, royalties, and business profits, so income flowing between the two countries can be taxed fully in both directions. A dividend, interest, or royalty stream from Russia to an Austrian resident faces Russian domestic withholding with no treaty cap, and is then assessable again under Austrian worldwide taxation.

Relief is more available than the suspended-articles list might suggest, though. Article 23, the treaty’s own relief provision (the exemption method plus a credit tied to the dividend and substantial-shareholding articles), is not on BMF’s suspended list and remains formally in force, even though it is operationally entangled with the withholding articles it depends on. Article 25, the mutual-agreement procedure, is not suspended either: only a Protocol supplement to it is. A taxpayer facing double taxation can in principle still invoke the mutual-agreement procedure, and can still fall back on Austria’s domestic unilateral credit where the treaty route falls short. None of this erases the real friction: the withholding-rate articles are suspended and no restoration date is set, so anyone with continuing Russian-source income should still price in double taxation as the working assumption. But the legal position is less bare than "no treaty mechanisms remain." Austria otherwise maintains an extensive network of roughly ninety treaties with other countries, so this gap is specific to the Russia relationship, not a general feature of the system.

Frequently asked

What is the top income tax rate in Austria?▾

The top marginal rate is 55 %, on annual income above € 1,000,000, in the 2026 brackets. Below it the scale climbs through 20, 30, 40, 48, and 50 %, with the first € 13,539 of income untaxed. These are marginal rates, so the effective rate on a normal salary is lower than the headline bracket. The 55 % top band is itself temporary, legislated only through 2029.

Does Austria have a non-dom or flat-tax regime for new residents?▾

No. Austria has no non-dom status, no remittance basis, no flat tax, and no lump-sum forfait of the kind Italy, Switzerland, Portugal, or Greece offer. The single inbound concession, Zuzugsbegunstigung, is reserved for scientists and researchers whose relocation serves the public interest, not for entrepreneurs or investors.

How are dividends and capital gains taxed in Austria?▾

Dividends and most securities capital gains are taxed at a flat 27.5 % under the KESt, usually withheld at source by the bank or broker. Bank interest is 25 %. Private real-estate gains fall under a separate 30 % ImmoESt. Investment income is therefore considerably flatter than employment income.

Does Austria tax worldwide income, and when do I become resident?▾

Residents are taxed on worldwide income. You become an Austrian tax resident either by keeping a home (Wohnsitz) available to you in the country or by having your habitual abode there, broadly presence of more than 183 days. Either test alone is sufficient, after which foreign salary, rent, and investment income are all assessable.

Does Austria have a wealth tax or inheritance tax?▾

No to both. There is no recurring net-wealth tax, and inheritance and gift tax were abolished in 2008 and have not returned. This is the structural counterweight to a heavy income tax: Austria taxes earnings hard but does not erode accumulated capital year on year or levy a death duty on transfers.

Can Russian residents of Austria still use the double tax treaty?▾

Only partially. Russia declared a partial suspension in August 2023 citing Decree 585; Austria’s response was to recognise specific suspended articles from 7 December 2023, not to counter-suspend independently. The suspended list covers the withholding-rate articles, so Russian-source dividends, interest, and royalties can still be taxed in full in both countries. But the treaty’s own relief article (Art. 23) and the mutual-agreement procedure (Art. 25) are not on the suspended list and remain formally available.

Related chapters

• 🏠PropertyBuying, owning, paying tax on a home
• 🏦BankingAccounts, SWIFT, residency rules
• 💶Cost of livingRent, groceries, services