Favourite things
Austria is attractive to high-net-worth individuals, as it levies no inheritance, gift or wealth taxes. Less attractive is its income tax: Austria provides for a marginal income tax rate of up to 50 per cent (with a temporary super-rate of 55 per cent for income exceeding EUR1 million).1 However, a flat rate of 27.5 per cent exists for the most mobile of income categories, namely for investment income, such as interest on bonds, dividends, capital gains from financial instruments, income from derivatives, and income from investment funds.2 A flat rate of 30 per cent applies to capital gains from real estate.3
Tax residency
All individuals who have a domicile and/or their habitual abode in Austria are typically considered tax residents and are subject to Austrian income tax on their worldwide income.4 All individuals who have neither a domicile nor their habitual abode in Austria are considered non-residents and are subject to Austrian income tax on their Austrian source income only.5
Relocation incentives
Unlike countries such as Portugal and the UK, and certain cantons of Switzerland, Austria does not offer a tax-efficient impatriation regime available to those interested in relocating. Rather, only certain groups of individuals are offered tax incentives to relocate to Austria.
First, there are incentives for individuals whose relocation to Austria would serve the promotion of science, research, arts or sports, and would thus be in the public interest.6 A recently published decree stipulates that – on application of the taxpayer – the non-Austrian source income of such qualified individuals will, after relocation to Austria, be subject to a flat tax rate.7 This rate is calculated by dividing the individual’s non-Austrian taxes paid (in the three years prior to the relocation) by the individual’s non-Austrian income earned (in the same period of time), the minimum rate being 15 per cent. After ten years, the flat rate rises by two percentage points per year; the preferential regime ends once the tax rate reaches at least 48 per cent.
Applications should be made to the Austrian Minister of Finance prior to relocation, but, at the latest, can be made six months thereafter. When applying, a taxpayer must:
Please login to access this content
If you are not a member, find out more about joining STEP or subscribing to STEP articles.