How Austria wants to reward overtime and later retirement
The Austrian federal government is raising overtime tax allowances in an effort to combat the labour shortage by making it more profitable for people to work longer hours - as part of new tax measures. It's also looking to incentivise people to delay retirement.
Despite recent skilled immigration reforms, Austria still has an estimated shortage of over 200,000 skilled workers.
To help try and alleviate some of that burden on companies, the Austrian People's Party (ÖVP) and Green governing coalition is planning to raise overtime tax allowances - as part of a new tax package announced Tuesday. This refers to the amount of money that workers can keep tax-free - if that money was earned during overtime hours.
Essentially, any money someone earns under the overtime threshold is taxed at the normal full rate. Once someone begins logging overtime hours, a certain amount of the money they earn for those hours is completely tax-free - making it easier to bank proportionately more by working longer.
READ ALSO: Everything you need to know about filing taxes in Austria
How much is the government going to raise this by?
Right now, the first €86 a month a person earns from overtime hours isn’t taxed at all. The government is raising the standard amount to €120.
People who work Sundays, nights, or on public holidays though - will see their monthly tax-free allowances for overtime go up to considerably more than that - €400 earned from working hours then will be tax-free per month.
READ ALSO: How high is the tax burden in Austria compared to other countries?
What else is the government doing?
Chancellor Karl Nehammer's coalition is also undertaking a few other initiatives to try and incentivise existing employees to work more.
One of these is by making it a legal requirement that all part-time employees of a company to be specifically informed straightaway if the company has a full-time position become available. Companies that don't do this risk fines.
The government is also going to make it easier for people of retirement age to take partial retirement, while maintaining their pension entitlements. At the moment, anyone who works alongside receiving their pension could lose their entitlements. In the future, people in Austria at retirement age will be able to work between one and four days a week, while still maintaining their entitlements and getting proportional pension payments.
Furthermore, those who continue to work beyond the statutory retirement age can normally draw a bonus of 4.2 percent extra on their pension per year they delay taking it out. This bonus amount will go up under the government's plans, to 5.2 percent.
EXPLAINED: Five things you need to know about the Austrian pension system
Comments
See Also
Despite recent skilled immigration reforms, Austria still has an estimated shortage of over 200,000 skilled workers.
To help try and alleviate some of that burden on companies, the Austrian People's Party (ÖVP) and Green governing coalition is planning to raise overtime tax allowances - as part of a new tax package announced Tuesday. This refers to the amount of money that workers can keep tax-free - if that money was earned during overtime hours.
Essentially, any money someone earns under the overtime threshold is taxed at the normal full rate. Once someone begins logging overtime hours, a certain amount of the money they earn for those hours is completely tax-free - making it easier to bank proportionately more by working longer.
READ ALSO: Everything you need to know about filing taxes in Austria
How much is the government going to raise this by?
Right now, the first €86 a month a person earns from overtime hours isn’t taxed at all. The government is raising the standard amount to €120.
People who work Sundays, nights, or on public holidays though - will see their monthly tax-free allowances for overtime go up to considerably more than that - €400 earned from working hours then will be tax-free per month.
READ ALSO: How high is the tax burden in Austria compared to other countries?
What else is the government doing?
Chancellor Karl Nehammer's coalition is also undertaking a few other initiatives to try and incentivise existing employees to work more.
One of these is by making it a legal requirement that all part-time employees of a company to be specifically informed straightaway if the company has a full-time position become available. Companies that don't do this risk fines.
The government is also going to make it easier for people of retirement age to take partial retirement, while maintaining their pension entitlements. At the moment, anyone who works alongside receiving their pension could lose their entitlements. In the future, people in Austria at retirement age will be able to work between one and four days a week, while still maintaining their entitlements and getting proportional pension payments.
Furthermore, those who continue to work beyond the statutory retirement age can normally draw a bonus of 4.2 percent extra on their pension per year they delay taking it out. This bonus amount will go up under the government's plans, to 5.2 percent.
EXPLAINED: Five things you need to know about the Austrian pension system
Join the conversation in our comments section below. Share your own views and experience and if you have a question or suggestion for our journalists then email us at [email protected].
Please keep comments civil, constructive and on topic – and make sure to read our terms of use before getting involved.
Please log in here to leave a comment.