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How to prepare for your Austrian tax return if you’re self-employed

For self-employed people in Austria, preparing for a tax return can be a daunting process, but a little preparation can help to bring the stress levels down.

It's time to get out the calculator and your expense receipts... and/or hire a tax advisor. Photo: Scott Graham/Unsplash

Filing a tax return is a necessary part of self-employment and it’s no different in Austria.

Trying to understand the Austrian tax system can be complicated though, and even more so for those without strong German language skills.

To find out more, The Local spoke to Claudia Barton, a bilingual (German and English) tax advisor based in Vienna. 

Start early

Austria’s tax year runs from January to December so self-employed people should start preparing their accounts now to ensure they are ready to be filed in January.

Claudia told The Local: “The best way to prepare for the tax return is to gather all documents in advance, such as invoices that have been charged to clients and expense receipts.

“People should also go through their bank statements to make sure everything in the tax return is recorded, including any charitable donations or medical bills, although adding medical bills to a tax return will depend on the overall income.”

FOR MEMBERS: EXPLAINED: What can I deduct from my tax bill in Austria?

Examples of expenses that can be included in a tax return are office materials, stationary, internet, phone, hardware, software, books, rent (eg. an office or business premises) and even German language lessons.

Other eligible expenses include travel costs for business trips (car mileage and other forms of transportation), ergonomic office furniture up to €150 and costs associated with working from home, although the rules surrounding the latter can be difficult to understand.

Claudia said: “It’s a grey area. For example, electricity costs in your apartment can only be claimed if that is the central area of your business – where the work takes place.”

This means a self-employed writer or a business coach that works from home can claim a percentage of electricity costs as an expense. But a self-employed language teacher that works at a school probably can’t claim home electricity bills as an expense.

Also, SVS payments (social insurance for self-employed people) are tax deductible and Claudia advises that all outstanding SVS bills are paid before the end of the year.

The most common mistakes when filing a tax return

One of the most common mistakes that people make before submitting a tax return is not checking whether it is more favourable to select a lump sum expense deduction or to claim back the amount for every individual expense.

A lump sum deduction (Betriebsausgabenpauschalierung) is a flat rate amount of 6 percent or 12 percent, as long as the annual revenue does not exceed €220,000. SVS contributions can still be deducted on top of the flat rate.

Additionally, since 2020, it has been possible for service providers to apply a 20 percent flat tax rate for expenses, or 45 percent for other businesses. This applies to businesses with an annual revenue up to €35,000.

READ MORE: Everything you need to know about paying tax in Austria

At the beginning of 2021, this rule was then connected to the VAT exemption for small businesses (this is also applicable even if the small business “opts to apply VAT”), and can therefore be applied up to a revenue of €42,000.  

There is an upper limit of €8,400 for expenses which can be deducted for businesses which provide services and an upper limit of €18,900 for other businesses. 

Alternatively, you can go down the traditional expenses route which is to collect all receipts for expenses throughout the year, then subtract the total expense amount from the annual revenue to get your actual profit.

And if all of this makes your head spin, then consider hiring a tax advisor.

How much does it cost to hire a tax advisor for a tax return?

Rates for hiring a tax advisor vary from person to person and mostly depend on the amount of work required to complete and file the tax return.

Claudia said: “For a one-person business, the average cost of hiring a tax accountant for a tax return is between €400 and €900, but the actual cost will depend on the complexity.

“And don’t forget, the cost of hiring an accountant is tax deductible and can be included in your expenses the following year.”

For example, hiring an accountant for the 2021 tax return can be included in expenses for the 2022 tax return because the work will be carried out in 2022.

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Are there any specific new tax laws to consider?

If the topic of tax wasn’t complicated enough already, most years there are also new laws to understand as well.

Thankfully, this year isn’t one of them with most changes related to Covid-19 subsidies for businesses.

Claudia said: “In 2021, changes to tax law were almost non-existent due to Covid regulations but I would still advise people to check if they are eligible for subsidies because some are still open for applications.  

“Most of these applications must be filed by a tax advisor and the subsidies can be hard to understand, so I advise people to seek help from a tax advisor.

“Austrian tax laws are hard to understand and you can’t properly file a tax return without fully understanding the system.”

However, for anyone that does want to file a tax return themselves, this can be done via the FinanzOnline platform.

Useful vocabulary

Tax – Steuer

Steuerberater/ Steuerberaterin – Male tax adviser/ Female tax adviser

Flat tax deduction rate – Betriebsausgabenpauschalierung

Tax-free profit allowance  – Grundfreibetrag

Business assets – Gewinnfreibetrag 

New self-employed – Neue Selbständige

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When are the next public holidays in Austria?

Planning vacations around public holidays is an easy way to maximise time off work in Austria. To help you get started, here are the next dates for your diary.

When are the next public holidays in Austria?

We might be heading towards the final season of the year, but there are still several national public holidays to enjoy in Austria before 2022 is over.

Here’s what you need to know.

Austrian National Day

The next big public holiday in Austria is the country’s National Day on Wednesday October 26th. 

It was on this day in 1955 that Austria signed its so-called Declaration of Perpetual Neutrality, although the date has only been a public holiday since 1965.

FOR MEMBERS: Why everything in Austria is closed on Sundays – and what to do instead

The Declaration marked the end of the Allied occupation in Austria by British, American, French and Soviet Union forces, who had controlled the country since the end of World War II in 1945.

On Austrian National Day, the Federal President usually addresses the nation on TV, as well as honouring the victims of the war resistance and laying a wreath at the Tomb of the Unknown Soldier. This is also the day when new recruits of the Austrian Armed Forces are sworn in. 

Additionally, military celebrations typically take place at Vienna’s Heldenplatz and many museums offer free or discounted entry on the holiday.

All Saints’ Day

This religious holiday falls on Tuesday November 1st. It is a celebration of all saints of the Catholic Church and is also recognised in many other countries across Europe.

On the eve of All Saints’ Day (also known as Halloween), it is customary for lanterns to be left at Austrian graveyards. Church bells then ring at noon on the actual holiday. This signifies a release of the souls of the dead, according to the beliefs surrounding this day.

Many Austrians visit cemeteries on this public holiday and decorate the graves of loved ones with autumn flowers, like marigolds and chrysanthemums.

READ ALSO: From inflation to Covid: What to expect from Austria’s winter season

Feast of the Immaculate Conception

On Thursday December 8th, the country shuts down once again for another religious holiday, known as Mariä Empfängnis (Mary’s Conception).

This roots of this public holiday is a celebration of the life of the Virgin Mary as Catholics believe Mary was immaculately conceived on this day. Mary’s mother, Anne, is known as the patron saint of pregnant women.

During the Nazi era, the Feast of the Immaculate Conception was no longer allowed to be a public holiday in Austria. But it was brought back in the 1955 following a public referendum on the issue.

One extra bonus for Austrian residents on Mariä Empfängnis is that shops are allowed to open as the holiday falls during the busiest shopping period of the year. On all other public holidays in Austria, shops are closed.

People stand outside of the traditional annual Christmas Market in front of Vienna’s city hall in Vienna, Austria on November 15, 2021. (Photo by JOE KLAMAR / AFP)

Christmas Day

This year, Christmas Day (December 25th) falls on a Sunday.

Today, Christmas is a celebration of food, culture and gift giving, but the holiday has its roots firmly in Christianity as it marks the birth of Jesus.

In Austria, Christmas is mostly celebrated on the evening of December 24th – known as Christmas Eve elsewhere – and usually involves a meal with family followed by gifts. 

But as Christmas is on a Sunday in 2022, it means the holiday is technically lost. When public holidays fall on a weekend in Austria they are not replaced with another day off, like in some other countries.

READ ALSO: Reader question: What happens in Austria when a holiday falls on a weekend?

St. Stephen’s Day

St. Stephen’s Day in Austria is on December 26th, a holiday that is known as Boxing Day in places like the UK, Australia, New Zealand and Canada. In the US, December 26th is more commonly known as a shopping holiday.

In Christianity, St. Stephen is regarded as one of the first martyrs and it is believed he dedicated his life to helping the poor and needy. In Austria, the day is commemorated by visiting a Christmas market, going to church or attending a special festival.

As with most other public holidays in Austria, shops are closed on St. Stephen’s Day.

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Making the most of public holidays in Austria

Austria has a generous public holiday allowance with 13 days every year.

So if employees plan to take vacations during the public holidays, they can really maximise their time off. 

For example, if a public holiday falls on a Wednesday, then it’s possible to take almost a week off work by only using vacation days for Thursday and Friday. But be sure to get any requests in quick as some people plan their vacation days for the entire year in January.

If you are a freelancer, then it’s always a good idea to be aware of public holidays in Austria – especially when working with clients in other countries that have different public holidays.

This way you can make sure you’re not the only one in your household working on a holiday. Or you can at least stock up on groceries before everything shuts down for a day.