Austria is popular among expats that mostly reside in Vienna. Austria is famous for its one of the highest standards of living in the world, excellent infrastructure and good healthcare system. There is a wide range of taxes that American expats Austria might be subject to: income tax, social security tax, real estate tax, VAT but there is no gift and inheritance tax. Due to a wide range of taxes levied on expats Austria, it is essential to determine the amount of Austrian income taxes. Moreover, US citizens and green card holders are required to file not only Austrian tax returns but also US expat tax returns.
We get a lot of questions from our clients in Austria. What are foreign income tax rates in Austria? Are all American expats Austria required to file a tax return? Do you provide US expatriate tax services to Americans expats Austria? The purpose of this article is to summarize the most common expat tax questions.
Expatriate Tax Rules for Expats Austria
The most important rule is that American expatriates are taxed on their worldwide income whether they live in San Francisco or Vienna. However, US citizens and green card holders should take advantage of three section 911 IRC provisions to avoid double taxation on foreign income.
- Foreign earned income exclusion. American expats Austria can exclude up to $101,300 in a tax year 2016 if they earned foreign income and meet either a physical presence test or bona fide residence test.
- Foreign housing exclusion. Additionally, expats Austria might deduct certain foreign housing expenses above the base amount.
- Foreign tax credit. American expats Austria can take a credit for foreign income taxes paid in Austria and minimize US expat tax liability.
Additionally, American expatriates might be required to file the FBARs with US expat tax returns to report foreign financial accounts.
Tax system in Austria – FAQ
I am an American expat residing in Austria. Is my worldwide income taxed in Austria?
American expats Austria who are considered residents are subject to unlimited tax liability on their worldwide income. Non-residents are taxed only on certain categories of income derived from Austrian sources.
Who is considered a tax resident in Austria?
An expatriate is considered a resident in the following scenarios:
– Taxpayer maintains an accommodation in Austria and the abode is not temporarily.
– Taxpayer has stayed in Austria for 183 days or more.
A taxpayer is considered a resident on the first day of his/her stay in Austria after six months have expired.
What is the tax year in Austria?
Austria has a calendar tax year. This is similar to the timeline for American tax returns.
What are income tax rates in Austria?
Income tax rate has a progressive scale with a maximum rate of 50% on income over EUR60,000.
Which income is taxable for expats Austria?
Generally, taxable income includes employment income, benefits in kind, widows’ and orphans’ allowances, pensions paid by an employer, income from independent personal services, dividends, interest, rent, royalties, annuities and capital gains. Taxpayers can deduct certain expenses related to the foreign income: compulsory social and pension insurance contributions, special work clothes and work equipment, technical literature, training costs, commuting expenses between residence and place of work and membership fees to certain work organizations like workers council and Chamber of Labor.
Can an American expat in Austria file an expatriate tax return with a spouse?
Joint returns are not allowed. The income of children is assessed separately too.
Is it a requirement to file a tax return in Austria and pay overseas taxes every year?
A tax return must be filed by April 30 if the earnings exceed EUR 11,000.
Does Austria have a tax treaty and social security agreement with the USA?
The USA and Austria signed a double taxation treaty agreement in 1996. Austria signed a totalization (social security agreement) with the USA in 1991. As a result of it, Americans working in Austria get social security retirement credits for the work performed in Austria. Austria might sign a FATCA agreement with the USA. American expats in Austria should contact an expatriate tax specialist to review double tax issues related to overseas taxes and social security.
This is an overview of major expatriate tax rules for Americans who plan to move and to live in Austria.
Americans expats Austria with additional questions about US expat taxes, FBARs, FATCA, foreign mutual funds or any other overseas tax issue, should seek help of an expatriate tax professional that provides international tax services. International tax experts at Artio Partners are pleased to provide CPA help to Americans abroad.