Taxes

Taxes for new self-employed

Tax number

After filing the questionnaire to obtain a tax number, you will receive your tax number by letter. If the notification is submitted electronically via FinanzOnline, you can expect an answer rather soon (after 5-10 days). If you do not hear back within this timeframe, it is recommended to call your tax office and ask if they need more information. Naturally, if the form is submitted through normal mail, it will take longer, since physical mail needs to be scanned centrally and then distributed to the tax officer in charge. Please note that the physical form and the online form do not contain the same information and it’s possible that the full form (Verf 24) may have to be submitted in order to make sure that all relevant information is fully disclosed (e.g. other income from employment, which cannot be disclosed through the online form).


Tax declaration and paying taxes

In cases where the income comes only from self-employment, submission of tax declaration is necessary if you earn more than €11,000/year. However, there are certain circumstances when the tax office can request a tax declaration nevertheless. You can also check in your FinanzOnline account if, and which, tax declarations need to be submitted after the end of the year. Submission deadlines: By the end of June - online (Finanzonline); in 2020, this deadline is extended to the end of August for tax declarations for the year 2019. In cases of an official representation by a tax advisor, there are extended deadlines.


How to submit a tax declaration?

1. Via Finanzonline - log into your Finanzonline account then chose category “Eingaben” on the top and then “Erklärungen” 

2. Trough accounting software in xml format (some softwares automatically direct the declarations to Finanzonline) such as BMD/NTCS or Prosaldo


When does it make sense to hire a tax advisor?

When your business structure is more complicated, when there are complicated expenses, assets (special rules that apply to assets above 800€) , when you're not sure which expenses you can deduct ( there are special rules and options for example for car expenses deductions). Of course also when you do not have time to take care of it by yourself. 


Tax deductions
As a new self-employed you can deduct all expenses related to your business, here are some examples:
-  office costs, home office (this warrants further explanation),
- training costs,
- car & transportation, travel expenses
- communication expenses,
- office supplies,
- liability insurance,
- the SVS (only what you paid so far for the relevant year).


Deadlines for paying taxes
Income tax is paid one month after receiving the tax assessment from the tax office. When you register for income tax, you are asked to indicate your expected revenue and profit for the current and the following year. Based on this expectation, and other potential information (e.g. other income), the tax office will assess income tax prepayments. This is done through an annual advance tax payment notice. Additionally, you will also be notified a few weeks before each payment. The payments are due on February 15, May 15, August 16, and November 15 of each year. The interest rate for tax payments after October of the following year is currently 1.38%/year - the interest rate may change if the base of the interest rate changes. For example, starting on October 1, 2020, interest accrues on your tax payments for 2019. There is also a minimum amount of interest, which is 50€ per year. In other words, if the interest is less than 50€ no interest will be assessed. For more information about interest rates, click here: https://findok.bmf.gv.at/findok?execution=e100000s1&segmentId=cd283a5d-01fc-4266-b4c2-917bb55b104a ) If you don’t submit a tax declaration or don’t pay taxes on time, there will be letter reminders, but there are also late payment and late filing fines. Criminal charges apply in case of gross negligence or intentionally avoiding paying taxes.


VAT

The general tax number should not be mixed up with a VAT number. The Austrian VAT number is a separate number and will be assigned upon special request at the tax office (see below for more details). If you provide goods or services as a business on an ongoing basis, you are in principle subject to VAT. The general VAT rate in Austria is 20% and applies to most goods and services. There are lower rates of 10% and 13% for some goods, e.g., food and accommodation. In 2020, due to special Covid-19 regulations, some branches of business may only charge 5% VAT for a limited time until (e.g., restaurants, cafes, hotels, publishers, etc). There are also many exemptions from VAT - the most important one for the small entrepreneurs is: if your revenue does not exceed €35,000.00 per year (small business regulation according to Art. 6 para. 1 No. 27 Austrian VAT Act), you do not have to charge VAT on your services. You also cannot deduct any input VAT which you pay for goods and services received. It’s important to note that the threshold applies to a whole calendar year. If you exceed the revenue threshold at the end of the year, all fees for the whole year become subject to VAT. Depending on your previous year’s revenue or the expected revenue when you just started your business, you are required to file monthly or quarterly VAT returns. Here the threshold is 100,000€: If your previous year’s revenue is still under this limit, you may file and pay VAT quarterly. The filing deadlines are by the 15th day of the second following month, e.g., for May, it is July 15, or for the first quarter, it is May 15. Furthermore, it’s important to define at which place your goods and services are subject to VAT, especially when you provide services to other businesses outside of Austria. Here, in most cases, no VAT will be due (in Austria) when the customer is another business which can be identified through a VAT-ID. In this case, the VAT liability is shifted to the recipient of the service in the other country (reverse charge mechanism). Yet, such services still need to be reported in a so-called intra-community sales listing (this does not apply if the customer is a business with its place of business in a non-EU-country). Since the VAT system is rather complex, with many exemptions and special rules, it’s recommended to clarify VAT questions up-front with a tax advisor. Besides all that you should also keep in mind that VAT is a self-assessment tax, in that you need to calculate the tax yourself and pay into your tax account at the defined payment deadlines.



Hungry for more?

Learn how to register as new self-employed

Read about the social insurance for new self-employed.

Get our Guide that covers all topics related to new self-employment in Austria!


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