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Being self-employed in Austria: What you need to know

Being self-employed in Austria: What you need to know
Image: Kal Visuals on Unsplash
Ask any freelancer about setting up their business in Austria and they will probably say it was a complex process. Throw in a different language and a new culture and it can be overwhelming, writes Hayley Maguire.

In Austria there are three main areas of bureaucracy for freelancers to be aware of – registering a business, getting insurance and paying taxes. All of which comes with its fair share of paperwork.

And for international residents without strong German skills, it can be even more challenging. But not impossible.

Let’s take a look at what freelancers in Austria need to know.

Becoming self-employed in Austria

Identifying the right type of self-employment is the first step to becoming a freelancer in Austria, and there are four different categories:

  • New self-employed (Neue Selbständige)
  • Liberal professional (Freiberufler)
  • Self-employed with a free or regulated business licence (Freie/ Reglementierte Gewerbe)
  • Independent contractor (Freie Dienstnehmer)

This can be confusing, so here are some simple explanations for each category:

The new self-employed includes freelancers like writers, artists, lecturers, scientists and physiotherapists.

The liberal professional category covers occupations like architect, doctor, lawyer and accountant.

Self-employed business owners that require a licence include those working as builders, IT workers, masseurs, financial advisors and insurance brokers. 

Independent contractors are people that work for clients for a specified period of time (on a temporary basis)

Next, freelancers have to register as a business.

Registering a business at the WKO

The business registration process takes place at the Wirtschaftskammer Österreich (WKÖ), which is the Austrian Federal Economic Chamber.

In some places it’s possible to organise an appointment at the WKÖ with an English-speaking advisor. But keep in mind that Austria is a German-speaking country, so this can’t be guaranteed.

James Tibbles spent four years working as a freelance web developer when he first moved to Tyrol in Austria. Originally from the UK, he had limited German language skills at the time of registering his business.

“When I first arranged a meeting with the local WKO office I was reassured that the person I would be meeting could speak English,” he said. 

“This wasn't the case, so the entire process of starting a business was explained to me in a strong Tyrolean dialect, but fortunately my wife helped me to translate the important parts.”

To register a business with the WKÖ you will need to take a passport, birth certificate, proof of address, criminal record and marriage certification (if applicable).

There is also an annual WKÖ fee of €100, plus annual business fees and tourism tax to pay as a freelancer.

Insurance in Austria for freelancers

Everyone in Austria is required to have health and social insurance.

For most people, this is taken care of by their employer through the Österreichische Gesundheitskasse (ÖGK). This is the largest social health insurance company in Austria, with 82 per cent of people in the country insured through the ÖGK.

Freelancers have to organise insurance themselves though, which can be done through the SVS. This type of social security covers pension, health, accident and self-employment provisions.

The cost of insurance depends on how much money a person makes as a freelancer, which is then adjusted retrospectively based on the income tax return.

For freelancers from overseas, insurance can be a daunting part of the process, and James recommends seeking help from an advisor.

He said: “My tax advisor explained it all to me and picked out the correct one for my circumstances, so whenever I received a letter from them I just immediately passed it on to her.”

Then there are other types of insurance for self-employed people in Austria to consider.

Toni Krainz, a self-employed Business Development Engineer from Ireland, said: “As a freelancer, you’re not entitled to sick pay so I highly recommend getting income protection insurance.

“The fees are tax deductible and there are varying levels of cover available, so it doesn’t have to be expensive.”

The key thing to remember is that health and social insurance is compulsory in Austria. So make it a top priority.

Paying tax in Austria as a freelancer

The Austrian tax system is based on a progressive tax rate and the first €11,000 earned is tax-free. After that, the tax rate starts at 25 per cent and increases depending on how much you earn.

To make sure finances are properly taken care while working in Austria, many freelancers hire a tax advisor (Steuerberater).

James said: “While a tax advisor can be expensive, they always ensure everything is submitted and paid for on time and in the correct way, and if there is a problem somewhere they will know who to speak to.

“I have income from the UK as a landlord, so they helped me through the process of declaring my UK tax income with the Austrian authorities.”

Toni also has a tax advisor and recommends that other freelancers in Austria do the same.

Toni said: “A tax advisor can give you some smart tips about your entitlements as a business owner, which more than cover the cost of hiring a Steuerberater.”

For some self-employed people there is the option to register for VAT, but James advises new freelancers in Austria to think carefully before going down this route.

He said: “If you want to minimise the amount of time dealing with finances, you have global clients, your running costs are low and your income doesn't reach the threshold, then you probably don't need to be VAT registered.”

As in most countries, paying tax as a freelancer in Austria will depend on your personal situation, your business and how much money you make. But if you’re not sure where to start, speak to a Steuerberater about it.

Useful German terminology for freelancers

Tax advisor – Steuerberater

Income tax – Einkommensteuer

Social insurance – Sozialversicherung

Health insurance company – Gesundheitskasse

Austrian Federal Economic Chamber – Wirtschaftskammer Österreich (WKO)

Self-employed – Selbständig

Essential websites

Social insurance: sozialversicherung.at

ÖGK: gesundheitskasse.at

WKO: wko.at

Self-employed information in English: self-employed.at

SVS (for self-employed insurance): svs.at

 

 


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