HR in Austria
Austria’s progressive social programme is expressed in the process of “collective bargaining”. Collective bargaining is a mechanism which gives employees representation when negotiating fair conditions.
Collective bargaining impacts employee pay, as well as working conditions and is the key aspect of doing HR in Austria. One of the benefits of collective bargaining to employers is fewer strikes. Thanks to their legal framework for employer/employee relations, both parties can come to mutual understanding about fair wages and treatments without resorting to union action.
Austria also protects employees against discrimination based on race, age, gender, and sexual orientation. Anything over 40 hours a week or 8 hours a day must be paid as overtime, and overtime cannot exceed 10 hours a day or 50 a week, unless there are extenuating circumstances.
Payroll in Austria
There are no national minimum wage or wage growth requirements (unless hiring apprentices) in Austria. Instead, wages are determined by collective bargaining, and are based on the position and the experience the applicant has.
Ultimately, employers must follow the collective bargaining laws that were decided upon between the economic chambers and the unions at the time employee contracts are drawn up.
The tax assessment base equals the sum of income minus income-related expenses, special expenses, extraordinary burdens and tax free amounts. They are progressive based on the employee’s income.
Employees are taxed for income earned in Austria if living there for less than 6 months, and taxed on worldwide income if living there for more than 6 months. The corporate income tax rate is 25%, which makes it a competitive country to establish a payroll in.
Expatriate Tax Concession
An expatriate who meets certain conditions is entitled to deduct a lump sum for professional expenses up to 20% of taxable remuneration, capped at a maximum of EUR 10,000.
If the employee does not work in Austria for the whole year, the maximum amount is to be calculated on a pro rata basis. Months commenced are treated as full months.
The lump sum is meant to cover e.g. the following expenses (no proof required):
- Monthly rent and operating costs of the second household
- School fees
- Home leave and business trip expenses
- Moving expenses
Expatriates can deduct the lump sum for professional expenses if:
- they have not been resident in Austria during the past 10 years and;
- they work temporarily in Austria (maximum 5 years) and;
- they have been seconded by a foreign employer and have an employment relationship with a company/permanent establishment in Austria and;
- they keep a domicile in their home country and
- are subject to tax in Austria with their income from employment
The calculation basis for the flat rate deduction is the gross salary
- less special payments within the “Jahressechstel”
- less tax-free remuneration
and thereof 20% resp. max. EUR 10,000 p.a.
No proof of actual expenses is needed in this regard.
If the expatriate wishes to claim professional expenses that exceed the flat rate of 10,000 EUR (e.g. for the apartment in Austria or for trips home to visit family), these can be claimed in his or her tax declaration.