For many, being self-employed means autonomy, flexibility, and control over your working life. Sounds great, doesn’t it? But it can also mean long hours, working through holidays, and at times feeling less financially stable than your 'regularly' employed counterparts.
Austria offers both a challenging and rewarding environment for foreigners seeking a self-employed life in the heart of Europe, and while it presents an array of opportunities, it is essential to understand the ins and outs of life as a new self-employed worker (Neue/r Selbständige/r).
READ ALSO: Everything you need to know about becoming a freelancer in Austria
Who are the 'new self-employed'?
New self-employed workers are essentially those who earn income from self-employment without needing a trade licence to do so.
As the Austrian Chamber of Commerce (WKO) requires that certain professions obtain a licence in order to operate legally, your first step is to find out whether you need one for your new business venture.
Don’t be caught out by assuming you don’t require one; it’s necessary, for example, to have a licence for jobs like translation and proofreading – professions you wouldn’t immediately associate with licensing.
READ ALSO: What is a regulated business licence in Austria and who needs one?
Dealing with bureaucracy
Once you have determined that you are indeed new self-employed, it’s time to prepare yourself for some form filling. From the day you start to work, you have four weeks to contact and register with the Finanzamt (Tax Office) and SVS (an insurance institution for the self-employed).
This process can seem daunting at first, especially if you're unfamiliar with Austria's administrative procedures. While some staff at the Finanzamt and SVS are happy to switch to English, if you think your German skills aren’t up to the task, you may want to bring a German-speaking friend to help you at your appointments.
Payments to SVS are typically around 27 percent of the income declared in your tax assessment. This can come as a shock to expats, who often assume that this amount goes solely towards health insurance.
In reality, your monthly contribution (Beitrag) pays for your health, pension, and accident insurance, so when you eventually retire from what has hopefully been many years of rewarding and lucrative work, you will see some of that money returned to you as part of your pension.
READ ALSO: How freelancers in Austria can pay four times less in social insurance
Navigating tax declarations
Tax season can be an overwhelming period for the self-employed. While new self-employed workers certainly have an enviable level of drive and commitment, these virtues may not carry over into scrupulous record-keeping and navigating complex tax regulations. There are, however, ways to make this process more manageable and less stressful.
One option is to enlist the services of a qualified accountant. While certainly not cheap, they can be invaluable in simplifying the tax declaration process.
They have an in-depth knowledge of Austrian tax law, can – and often do – help you identify potential deductions, and ensure that you comply with all the relevant regulations. The money saved through these tax advantages often outweighs the accountant's fees, making it a move you may wish to consider.
Austria’s tax rates are some of the highest in Europe, and after losing so much of your income to SVS contributions, you might feel a little deflated when having to pay your tax.
It is important to note that your taxable income is only the amount you have earned after your SVS payments have been deducted. As of 2023, the tax brackets have also been altered in order to combat growing inflation rates. You can find more information HERE.
READ ALSO: How to prepare your Austrian tax return if you're self-employed
You are not alone
Becoming new self-employed is a challenging process that requires commitment and no small amount of research in order to do things correctly.
Regardless, there is a growing community of 7,000 new self-employed who are able to find most of the information they need via Self-Employed in Austria. This company, founded by a team of individuals, comprises legal and tax consultants, offers forums, advice, articles, and a much-loved 228-page book: The Complete Guide to Self- employment in Austria. The book is updated each year and provides a comprehensive guide for your journey towards self-employment.
Do you have any advice about being self-employed in Austria that you'd like to share with our readers? Leave a comment below or email us at news@thelocal.at
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