Taxes in Austria in 2025: System, Rates, and Obligations for Entrepreneurs and the Self-Employed

05 May 2025

Overview of the Tax System in Austria

Income Tax (Einkommensteuer) for Individuals and Entrepreneurs

In 2025, Austria uses a progressive income tax scale based on annual earnings:

Annual Income: Up to €13,308
Tax Rate — 0 %
Annual Income: €13,308 — €21,617
Tax Rate — 20 %
Annual Income: €21,617 — €35,836
Tax Rate — 30 %
Annual Income: €35,836 — €69,166
Tax Rate — 40 %
Annual Income: €69,166 — €103,072
Tax Rate — 48 %
Annual Income: €103,072 — €1,000,000
Tax Rate — 50 %
Annual Income: Over €1,000,000
Tax Rate — 55 %

Entrepreneurs who do not operate through a corporation (e.g., GmbH or AG) are required to file an annual income tax declaration (Einkommensteuererklärung) via FinanzOnline, Austria’s digital tax portal. Tax is calculated based on net profit, factoring in business expenses and depreciation.

Value-Added Tax (VAT / Umsatzsteuer)

Anyone providing services or selling goods in Austria must deal with value-added tax (VAT or USt):

20% — Standard rate (e.g., consulting, services, advertising)
10% — Essentials (e.g., food, books, residential rent)
13% — Culture, tourism, flights

Small businesses (Kleinunternehmer) are exempt from VAT if their annual turnover does not exceed €55,000. However, they must still file an income tax return and contribute to SVS (social security for the self-employed).

Corporate Tax (Körperschaftsteuer)

For incorporated entities like a GmbH or AG, a corporate tax rate of 23% applies as of 2024. Corporations must follow double-entry accounting (Bilanzierung), and the support of a tax advisor or accountant is strongly recommended.

Additional Business-Related Taxes and Contributions

Running a business in Austria involves more than just income and VAT. Here are some mandatory contributions:

Kammerumlage — A mandatory contribution for membership in the Austrian Economic Chamber (WKO) upon registering a trade license.
Municipal Tax (Kommunalsteuer) — 3% of total gross wages paid to employees.
Family Burden Equalization Fund (FLAG) — 3.7% of the wage sum, paid for each employee.
Real Estate Tax (Grundsteuer) — Applies to businesses owning commercial property in Austria.
Under the New Business Promotion Act (Neugründungs-Förderungsgesetz), certain taxes may be reduced or waived for newly founded businesses.

Social Insurance for the Self-Employed (SVS)

The SVS (Sozialversicherung der Selbständigen) is the mandatory social insurance system for self-employed individuals in Austria. It applies to business owners, freelancers, creatives, consultants, therapists, and more.

SVS Coverage Includes:

Health Insurance — eCard access, doctor visits, prescriptions, sick leave
Pension Insurance — pension contributions and retirement benefits
Accident Insurance — coverage for workplace-related injuries

Minimum SVS Contributions in 2025:

Minimum contribution base per month is €551,39 from which 26,83% are payed to the SVS
Therefore the minimum quarterly payment amounts to €639,72
Contributions are adjusted annually based on your declared income.

Startup Benefits:

Austria supports new entrepreneurs with:

Reduced social contributions for the first two years
Flexible insurance start options

Key Points About Taxes and Insurance in Austria

Electronic filing through FinanzOnline is mandatory.
Bookkeeping platforms such as SevDesk, Lexoffice, BMD, and FreeFinance are highly recommended for freelancers and sole proprietors.
Business-related expenses are deductible if you have receipts and valid business justification (e.g., travel, client meals, equipment).
Mixing personal and business expenses can lead to penalties—clear separation is crucial.
All tax-related documents must be kept for a minimum of 7 years.

Final Thoughts

Whether you’re running a small business or working as a freelancer, understanding the Austrian tax and social insurance system is essential for managing your finances and avoiding legal issues. Regular consultations with a Steuerberater (tax advisor) and structured expense planning can help optimize your tax burden and ensure long-term success.