Taxes and payrolls: the peculiarities of the Austrian labour market
Each labour market has some peculiarities. It may be tricky for foreigners to understand fully the payment methods, the taxes and other benefits related. In TalentUp we are starting a series of different blog articles, one for each country. This article analyses the Austrian labour market.
General data about the Austrian labour market
| Minimum wage | 1,700€ |
| Payment basis | Monthly |
| Payment | Must be paid by the last working day of each month |
| Maximum working hours a week | 40h |
| Maximum overtime hours a week | 48h |
| Working hours compensation | Paid at rate 150% or as time off in lieu at a ratio of 1 to 1.5 days. |
Payroll taxes in Austria
Social security contributions are made by the employer and the employee and are used for funding unemployment, pension, maternity/paternity leave, and sickness or injury.
| Contingencies | Employer % | Employee % |
| Health Insurance | 3.78% | 3.87% |
| Accident Insurance | 1.1% | |
| Old-Age Pension Insurance | 12.55% | 10.25% |
| Unemployment Insurance | 3% | 3% |
| Insolvency Guarantee Funds Contribution | 0.55% | |
| Family Burdens Equalization Levy | 3.9% | |
| Municipal tax | 3% | |
| Chamber of Commerce | 0.34% to 0.42% (varies by province) | |
| Austrian law contribution to the mandatory employee pension fund | 1.53% | |
| Total | 29.75% – 29.83% | 17.12% |
Once contributions are paid, employees need to pay an income tax that varies depending on their earnings.
| Earnings | Income tax |
| Up to 11,693.00€ | 0% |
| 11,693 – 19,134€ | 20% |
| 19,134 – 32,075€ | 30% |
| 32,076 – 62,080€ | 40% |
| 62,081 – 93,120€ | 48% |
| 93,121 – 1,000,000€ | 50% |
| 1,000,001€ and over | 55% |
Contingencies from self-employees
Self-employed workers have a tax-free basic income of €11,000. If you earn between €11,001 and €18,000, you’ll pay 25% tax, and if you earn between €18,001 and €31,000, you’ll pay a hefty 32.5%.
Example of net salary in Austria
As a reference, we use the average salary of a software engineer. In Austria, on average, software engineers earn annually 65,800€.
| Employer | Employee | |||
| % | € | % | € | |
| Gross salary (annually) | 65,800 | |||
| Health Insurance | 3.78% | 2,487.24 | 3.87% | 2,546.46 |
| Accident Insurance | 1.1% | 723.8 | ||
| Old-Age Pension Insurance | 12.55% | 8,257.9 | 10.25% | 6,744.5 |
| Unemployment Insurance | 3% | 1,974 | 3% | 1,974 |
| Insolvency Guarantee Funds Contribution | 0.55% | 361.9 | ||
| Family Burdens Equalization Levy | 3.9% | 2,566.2 | ||
| Municipal tax | 3% | 1,974 | ||
| Chamber of Commerce | 0.34% to 0.42% (varies by province) | 223.72 – 276.36 | ||
| Austrian law contribution to the mandatory employee pension fund | 1.53% | 1,006.74 | ||
| Total | 29.75% – 29.83% | 19,575.5 – 19,628.14 | 17.12% | 11,264.96 |
| Income tax | 14,354.12 | |||
| Net salary (annually) | 40,189.92 |
The employer contributes from 19,575.5 to 19,628.14€ to social security and the employee 11,264.96€.
After paying the income tax, the employee has a net salary of 40,189.92€ from a gross salary of 65,800€.
Austrian unemployment regulation
The notice period varies based on the length of employment:
| Time worked | Notice period |
| Less tha 2 years | 6 weeks |
| 2-5 years | 2 months |
| 5-15 years | 3 months |
| 15-25 years | 4 months |
| More than 25 years | 5 months |
The notice period can be increased by up to six months subject to a contractual agreement or collective bargaining agreement.
probation period must not exceed one month, but for apprenticeships, it lasts three months.
Different kinds of leaves in Austria
In Austria, employees have 25 working days of holidays every year. Once they have worked 25 or more years for the same employer, it increases to 30 working days of holidays. There are 11 public holidays.
Sick leave entitlement depends on employment duration:
- 1 year: 6 weeks full pay + 4 weeks half pay, from employer
- 2-15 years: 8 weeks full pay + 4 weeks half pay, from employer
- 16-25 years: 10 weeks full pay + 4 weeks half pay, from employer
- 26+ years: 12 weeks full pay + 4 weeks half pay, from employer
Excess covered by social security. Medical certificate required.
There are various additional leave periods to which employees are entitled:
- Two weeks of paid leave to care for a sick child under the age of 12
- An employee can also request up to six months of unpaid leave to care for an immediate family member
- One to three days paid leave for marriage or bereavement
Paid parental leave
Maternity leave in Austria is 16 weeks. Working is restricted to eight weeks before and after childbirth (12 weeks for Caesarean or high-risk delivery). Weekly pay is via Social Security, calculated from the last 3 months average earnings. After 16 weeks, unpaid leave is possible until the child is 2, with childcare pay as per the Child Care Payment Act.
Fathers get up to 1 month of unpaid paternity leave within 2 years of the child’s birth (often referred to as “Daddy Month”). Notice required 3 months prior.
Starts after maternity leave in Austria. Up to child’s 24 months. Payment via Child Care Payment Act from social security.
Dads can share leave, switching twice, 2+ months apart. Both can’t take leave together.
Other common benefits in Austria
| Benefit | % of companies with this benefit |
| Work-life balance | 24.6 |
| Flexible working hours | 15.9 |
| Cutting edge technology | 5.8 |
| Disability leave | 5.8 |
| Health insurance | 5.8 |
How to employ an Austrian worker
To employ an Austrian worker, companies in the EEA or in Switzerland should:
- Report to the Central Coordinating Agency
- Transmit it to the Public Employment Service
- Issue an EU posting confirmation
Companies for countries other than these require a posting permit in addition to the previous steps.
Some platforms (Papaya Global among them) offer the Employer of Record (EoR) service helping companies hire countries where they do not have any office.
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