Do I need to pay taxes in Austria as a cross-border worker?

Austria borders eight countries (Germany, the Czech Republic, Slovakia, Hungary, Slovenia, Italy, Switzerland and Lichtenstein), and some of its main centres (notably Vienna) are just a short bus ride away from other cities abroad.

So, it's not a surprise that there are many people who travel daily to Austria for their jobs and, conversely, Austrians who commute to other countries for theirs.

Regarding taxes, it's always worth consulting with an advisor as the particulars of each situation vary. In general, however, it's essential to know that rules differ whether you are an inbound worker (those living in another country and working in Austria) or an outbound worker. 

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Cross-border workers

Austria defines cross-border workers as those who reside in one country and commute across a land border to work in another country. An example is someone living in Bavaria in Germany but working in Salzburg in Austria, or vice versa.

Income tax is charged concerning domestic income for “inbound” cross-border workers – people who travel into Austria to work but live in another country. This means that earnings from other countries are not taken into account.

Generally, you are a cross-border worker resident outside Austria and are subject to limited taxation in Austria; your income tax will be deducted directly by your Austrian employer as a wage tax and paid directly to the tax office. 

As a rule, the tax to be deducted in this way will be calculated using the same method as would be used for Austrian residents.

There are exceptions to this rule, though, mainly if a worker regularly stays overnight in Austria or if they spend more than six months of the year in the country. In this case, they are considered a resident of Austria and subject to unlimited taxation.

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Special regulations for Lichtenstein, Italy and Germany

At the same time, there are special considerations and double taxation rules for cross-border workers who live in Lichtenstein, Germany and Italy, especially for people who live and work close to the border. 

If a cross-border worker resides in Lichtenstein, Italy or Germany and commutes to Austria for work, the special provisions of double tax conventions (DTCs) concluded with these countries must be considered. The DTCs define cross-border workers as workers who commute across the border every (working) day and whose place of residence and work are in "close proximity" to the border. 

If an individual qualifies as a cross-border worker under the DTC, their earnings are taxed in their country of residence. Austria has no right to tax these individuals if they are not resident in Austria. 

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There are no such provisions in Austria's DTCs with other neighbouring countries (including the Czech Republic, Hungary, Slovakia, Slovenia and Switzerland). Accordingly, cross-border workers from these countries can generally be subjected to taxation in Austria on the basis that their income is earned within Austria. 

However, several measures to prevent double taxation also apply, so it's best to consult a tax advisor to understand your case.