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TAXES

EXPLAINED: What is Austria’s church tax and how do I avoid paying it?

Members of the Protestant or Catholic churches need to pay a contribution in Austria, known as "church tax".

vienna skyline st stephan's cathedral rathaus
Vienna's St. Stephen's cathedral against the city's skyline. (Photo by Dimitry Anikin on Unsplash)

The church in Austria is allowed by law to require a financial contribution from its members, the Kirchenbeitrag, popularly known as church tax – though it is not technically a tax.

According to the Catholic Church in Austria, more than 75 per cent of its income in the country comes from this contribution, which is used to cover church material and personnel requirements. The institution says that the contribution will also provide services in pastoral care, social affairs, and monument preservation.

Last year, the Catholic Church in Austria reported a decline in membership, according to data published in January. The church said the number of registered Catholics in Austria fell by 1.6 percent in 2021, with more than 72,000 people formally leaving the institution in the year.

However, financial figures from the year before show a slight increase in income from Church contribution, which totalled € 484 million in 2020, compared to € 481 million in 2019.

Who needs to pay the church tax?

All adult Catholics who reside in Austria are subject to contributions, and similar rules also apply to Protestant churches.

READ ALSO: How to celebrate Easter like an Austrian

A Christian person is someone who has received one of the basic sacraments, so any baptised person would need to pay the church tax. That includes foreigners baptised abroad, even if they have not taken other sacraments, practised the religion, or were baptised in infancy.

The religious data is given to churches by the municipalities based on registration information.

Usually, the church will collect information when someone declares their religion on their Meldezettel (the residence registration form). However, the contribution offices may also use available public information, such as data from the parishes about baptisms, wedding ceremonies, or newspaper reports.

There are a few exceptions to the payment obligation, including for students, who need to inform the church contribution office yearly about their income situation. Other exceptions are people receiving social payments (childcare allowance or unemployment benefit, for example) or on civil or basic military service.

READ ALSO: EXPLAINED: How does Austria’s mandatory military service work?

The situation can get tricky in the case of married couples when only one of them has an income, or only one of them is a Catholic.

How much does it cost?

According to the Catholic Church, “being a Christian is not a private matter” and “requires solidarity with the Church” to cover the basic costs of pastoral care.

The institution says that no one would be asked for “anything unreasonable”.

The usual fee is less than 1.1% of the annual taxable income, considering each person’s income and financial burdens. The payments can be claimed for up to € 400 per person for tax purposes.

The contribution is usually due at the end of each quarter but can be paid monthly, semi-annually, or yearly. People subject to the grant will get a mailed letter with payment information, and there are discounts for early payments.

In some cases, they might be deducted directly from pay.

READ ALSO: Explained: How to understand your payslip in Austria

Since churches don’t have access to tax information, they will estimate contributions based on available data, including profession and marital status, unless you provide them with information about income and expenses.

In certain situations (single-parent households or families with children), it is possible to request discounts.

What is the legal basis for the church contribution?

The church mentions several regulations that allow it to ask its members for contributions, including centuries-old canons.

In Austria, the primary legal basis is in a 1939 law, the Church Contribution Act, amended in 1945 and incorporated into the country’s legal system, allowing for contributions.

The 1939 law removed a state subsidy to the church and instead created a church tax system with private payments to the religious institutions. According to the Vienna Archdiocese, the law was created by the Nazi regime to “make a devastating blow to the church in Austria” by removing its main source of funding, the state payments.

After the war, the old subsidies could not be reintroduced, mainly for budgetary issues, so the “church tax” was incorporated into the Austrian legal system in 1945.

What happens if I don’t pay the contribution?

People who don’t pay the contributions are also not allowed to use the services of the churches, including sacraments like baptism, wedding, first communion, and confirmation.

READ ALSO: EXPLAINED: What can I deduct from my tax bill in Austria?

The church can also claim amounts due, and the sums can accumulate. The institution will sue for the charges, so ignoring the payment slips is not advisable.

You can avoid payment if you fall into the exceptions, including being a student. But other than that, the only way to stop paying the mandatory contribution is by leaving the church.

Generally, you need to send a form (available with the institution) requesting to leave the church. However, the documents and processes can be slightly different depending on the situation, so it’s worth checking the website or calling the authorities currently billing you.

By leaving the church or deregistering with the church, you also are giving up the right to participate in sacraments. So you wouldn’t be allowed to be godparent in baptism, for example.

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

Useful vocabulary
Kirchenbeitrag – church contribution
Volljährig – of age
Wohnsitz – place of residence
Einkünfte – income

And the seven sacraments:
Taufe – baptism
Eucharistie – eucharist
Firmung – confirmation
Ehe – marriage
Buße – reconciliation
Weihe – holy orders
Krankensalbung – anointing of the sick

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TAXES

EXPLAINED: The main Austrian ‘tax traps’ foreigners should be aware of

Moving to a new country results in a series of adaptations, and getting used to a different tax system is definitely one of them. Here's what you need to know.

EXPLAINED: The main Austrian 'tax traps' foreigners should be aware of

When you move into a new country, there are many things to learn and get used to.

But, unfortunately, there are also many “traps”, those differences in systems and cultures that can catch a foreigner entirely off guard while seeming normal to all native or long-time residents of a country.

In Austria, there are many particularities, not only when it comes to culture – how many times are immigrants surprised with Freikörperkultur, for example? – but also with bureaucratic and day-to-day issues.

For example, foreigners are often surprised to learn that the alpine country has a mandatory public health system with several insurers, and each person is legally required to be insured by one of them.

Which one? It depends mainly on your profession.

READ ALSO: Everything foreigners need to know about the Austrian healthcare system

When it comes to taxes, several specificities could be confusing to non-Austrians or people who have recently moved to the country. The Local spoke with Dr Rainer Kratochwill, a tax adviser, owner and CEO of steuerexperten.at, to help foreigners avoid the typical “tax traps” one may find when moving to Austria.

Documentation is key

In some countries, it may be common practice to call tax authorities directly or send letters to them trying to explain or rectify issues they might have had.

“We sometimes have to overcome the expats’ desire to explain something to the tax office over the phone or appeal to common sense. In Austria, this will probably not work.”, says Dr Kratochwill.

Austria is a very formal country in many ways. Titles and official papers (literal papers, mailed and stamped, not emails) matter.

In many circumstances, expats end up needing to draw up a cover letter with the help of a tax advisor to follow specific Austrian standards.

READ ALSO: Will inflation force tax changes in Austria from 2023?

Documentation is also absolutely essential to support the origin of funds, Kratochwill highlights.

One thing many immigrants are surprised to learn is that large gifted sums or properties need to be registered with the tax office – and it is mandatory to provide the documentation of the origin of the funds from the giver.

“This point has to be further explained to expats because they often do not understand why the donor has to be verified and what documents can be provided”, he says.

So, don’t fall into the trap of taking a laissez-faire approach to Austrian authorities and documentation.

Taxes are high – but so is the standard of living

Kratochwill noted how many of their immigrant clients are used to paying fewer taxes in their home countries. That is another trap incomers might set up for themselves: “be prepared to pay high taxes in Austria”, he says.

“But for this, you have a lot: security, good public transport, good schools and universities and much more”, he added.

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

Austria works with a bracket system for income tax. So the higher you earn, the higher the taxes – up to 55 per cent for those making a whopping €1 million after expenses.

Up to €11,000 annual income, there is no income tax. However, whatever surpasses that falls into the next bracket (from €11,000 to €18,000) and is taxed at 20 per cent.

This means that if you earn, for example, €12,000 a year netto (after expenses and deductions), € 11,000 would be tax-free, and the remaining €1,000 would be taxed at 20 per cent – you’d pay € 200 income tax for the year.

The income tax is after other social contributions that pay for compulsory health insurance, social payments, and pension funds.

Many Austrians have tax advisors

A tax advisor is not the same as an accountant. For many people, the thought of paying someone to assist with their tax return may be strange – it might seem like something only millionaires do.

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

But it is relatively common practice in Austria, as advisors support their clients to pay according to the law, but no more than what they need to.

“An important rule is to consult in advance so that there is time to make adjustments. It is often too late, but even in these situations, we help reduce the tax burden a bit through, for example, tax refunds.” Kratochwill says.

Taxes can be filed in three years

And audited even later than that.

In Austria, you have from one to five years to file your income tax (even longer if you do it through a tax advisor or in exceptional cases like during the pandemic), depending on your case. However, Dr Kratochwill advises against taking advantage of the long filing periods.

“The main thing an expat should keep in mind is to do it the right way from the beginning on and not start thinking about it after three years”.

In a country with a complex tax system, knowing your earnings and expenses, having your finances documented, and storing those files is crucial. And because tax audits can happen up to ten years after the filing (tax advisors will tell you to keep your documents for at least that long), Austrians know to keep their files for a very long time.

READ ALSO: Five things you will find in (almost) every Austrian home

This is why you will often see shelves full of binders in your local friend’s house – they are storing that receipt for that English class they took five years ago.

Do as your Austrian friend and save yourself some trouble in future years by saving your papers now.

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