Should self-employed people in Austria pay the minimum or full SVS contribution?

As a self-employed worker in Austria, one of the biggest costs you need to plan for is your social insurance.

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The decision depends on your other business expenses, how regular your income is, and personal preference. Photo: Bench Accounting/Unsplash

Anyone who earns more than €5,830.20 (in 2022) from their self-employment needs to pay contributions to SVS (Sozialversicherung der Selbständigen), the social insurance agency for self-employed people.

The way these contributions work is that when you first set up as self-employed, you register with SVS and tell them how much you expect to make in your first year.

Based on this, SVS will tell you how much you need to pay, which is about 27 percent of your income over the threshold (you can choose whether to pay through direct debits or through invoices, and whether you want to pay monthly or quarterly). At the end of the tax year, they have access to your tax return and will tell you if you need to pay extra or get a refund based on any difference between your predicted income and how much you actually ended up making.

The contributions are calculated as a percentage of your income, but for the first three years, you can choose to pay only a minimum amount. This allows startup businesses to maintain more liquidity in the first stages.

Claudia Barton, a tax consultant specialising in expat clients, lists the main benefits of paying the minimum contribution as follows: “Lower payments at the beginning of your business, more money to invest at the start of your business.”

This means it may be an attractive option for people whose businesses require other upfront costs, such as people who are making things and need to pay for materials, or those who are starting from scratch and don’t yet have guaranteed clients and income.

READ ALSO: What you need to know about being self-employed in Austria

On the other hand, Barton notes: “It is of greatest importance that freelancers in Austria bear in mind that SVS will charge them all contributions which they did not make in the first three years.”

In other words, there’s no getting away from paying the full amount you owe — you’ll end up paying it later even if you initially pay only the minimum, which can come as a shock when that invoice arrives. This even applies if you leave the country before the increased payments kick in during the fourth year of your business.

For that reason, some self-employed people may prefer to pay the full amount up front rather than needing to keep it to one side until the fourth year. That’s especially likely to be the case if you can count on regular, recurring income from early on so you don’t need to keep money aside.

Barton says the advantages of paying the full amount from day one are: “Keeping track of your expenses, no ‘bad surprise’ in the fourth year, and reduced income tax payment”.

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

So while some of the decision relates to personal preferences and what suits your business — do you prefer to have easily accessible cash in the uncertain first years of self-employment, or would you rather feel ‘up-to-date’ with your payments rather than need to save them for the fourth year — there is also a tax advantage to paying the full amount upfront.

Tax on self-employed income is calculated based on your profit, so SVS contributions (along with other business expenses) are deducted from your total income to create your taxable income, and the amount you need to pay in tax is calculated from that figure. That means that by paying less to SVS in the first years, you’ll actually end up with a higher tax bill.

If you’re not sure which option is right for your situation, it may make sense to get further professional advice, either from a tax advisor, a service such as Vienna’s Business Agency which offers free consulting to self-employed people, or from a network such as Self-Employed in Austria where you can ask people in a similar situation.

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Six official websites to know if you’re planning to work in Austria

If you are moving to Austria and planning to work once you're here, there are a few websites that you need to know.

Six official websites to know if you’re planning to work in Austria

Austria is certainly one of the best countries to work in, with strong labour laws that give employees access to public health insurance through their employers, a minimum five weeks of paid vacation and many rights for families.

The alpine country is also known for its high quality of living. Residents can enjoy cheap public transport, public schools and plenty of free or cheap cultural, sports and leisure options.

There are also many vacant jobs, and the country is aiming to make it easier for foreigners who have qualifications to come fill in those jobs – many in nursing and healthcare professions, but a lot in several other so-called “shortage occupations”.

READ ALSO: How Austria is making it easier for non-EU workers to get residence permits

If you are planning to work in Austria, here are a few government or government-linked websites to know.

It may not look very modern, but this website will have most of the things you’ll need if you want to move to Austria – especially coming from countries outside of the European Union.

This is where you will find the infamous “point calculator” to see if you get the minimum amount of points based on specific criteria (such as age, education, and language knowledge) to be able to apply for certain work-based residence permits.

There are also many pages explaining the different visas, permits, and many other issues with migration to Austria. The website has a very extensive and complete English version.

READ ALSO: EXPLAINED: The 2022 salary requirements for Austria’s EU Blue Card

ABA – Work in Austria

ABA – Work in Austria is a department of the Austrian Business Agency, which operates under the Federal Ministry for Digital and Economic Affairs in Austria.

The website has plenty of information – in English – about Austria, living and working in the country, and its job market. ABA – Work in Austria also offers services, including relocation and recognition of qualifications.

Vienna Business Agency

Another site aimed at expats and immigrants but connected to the City of Vienna. The website is entirely in English (there is a German version, too), and most of it will have tips and services for businesses and startups settling in the Austrian capital.

However, there is also an extensive advice area for foreigners. 

People moving to Vienna can also schedule in-person and free appointments to receive advice on anything from setting up a company to paying taxes.

READ ALSO: The downsides of Vienna you should be aware of before moving there

Portal der Arbeiterkammern

This is the Chamber of Labour website, which is an organisation that represents the interests of 3 million Austrian employees and consumers.

Even if you are not a member, it still has plenty of valuable information on Austria’s working and labour market. The website, however, is only in German.

Der Wirtschaftskammer

Also, a local website, WKO is the Austrian Chamber of Commerce, and even though it is only in German, it holds a lot of information, especially on labour laws in the country.

Furthermore, it is possible to schedule a free appointment with an English-speaking representative to answer questions on employment, self-employment, and more.

READ ALSO: Which are the best companies to work for in Austria?

Public Employment Service Austria (AMS)

This is Austria’s official provider of labour-market related services. The government agency offers placement assistance and vocational counselling.

It is also the point of contact for those looking to register as employees, hire people or seek many of the benefits (including unemployment payments) that they are entitled to. It also has a job-looking platform.

Even though a part of the website is in English, most of the pages are in German only. It is also challenging to find people willing to speak English at the AMS offices.

Bonus website: The Local

Besides our news website, with pieces that will help you learn more about life in Austria and be up to date on the latest and most important information, The Local also has a job search platform where you can look for open positions which require only the English language.

Check out our jobs platform here. 

Do you know any other government or government-linked websites that might be useful for people working in Austria? Let us know: [email protected]