- Income tax
- Wage tax
- Special payments
- Multiple pensions
- Collective taxation of pensions within the employee tax assessment
- Advance payments
- Pensioner tax credit
- Higher-rate pensioner tax credit
- Social security rebate
- Single-earner/single-parenttax credit
- Pension income from another EU/EEA state or a third country
- Further links
Both pensions from the statutory social security (e.g.from thePension Insurance Institution (→ Association of Austrian Social Insurance Institutions)German text of workers, of employees, of farmers or of commercial economy) and pensions from the state or the provinces are considered income from employment. They are therefore subject to income tax.
The wage tax from the current pension is retained by the pension-issuing body and calculated on the basis of theincome tax rate (→USP).
The special payments due in April and October are also taxed (after deduction of health insurance contributions) in the same way as other earnings (holiday pay and Christmas bonus) for workers in current employment.
If a pensioner draws multiple pensions from statutory social security, retirement benefits, a pension from a previous employment contract with a province or pensions from domestic pension funds, these pension payments will be taxed collectively. The body who pays out the highest taxable earning is responsible for the collective taxation.
If a pensioner receives acompany pension in addition to their statutory pension, then collective taxation is not mandatory. In this instance, anemployee tax assessment must be completed at the end of the calendar year.
As a rule, for earnings that are not taxed collectively, each body paying out an earning or pension only calculates the wage tax for the earnings they themselves pay out. Altogether, this results in too low a wage tax.
For theemployee tax assessment,the pensions are totalled and taxed as if the pensioner had received the entire sum in the form of a single payment. This puts "multi-pensioners" on an equal footing with a pensioner who draws from one pension only, but receives as much as the "multi-pensioner" does from multiple payments.
Consequently, advance payments can also be necessary for pensioners if the additional tax payment exceeds 300 Euro. In these instances, the additional tax payment for the previous year and the advance payment for the current year can coincide in one year as an exception (e.g. if two payments are received in parallel for the first time). Through advance payments possible additional tax payments for the current year can be avoided.
Thenursing care allowanceGerman text always remains tax-exempt.
People drawing their pension are entitled to a pensioner tax credit, which is automatically factored in by the pension-paying body. For a pension income of up to 18,410 Euro per annum (until 2022 up to 17,500 Euro per annum; until 2020 up to 17,000 Euro per annum), the pensioner tax credit is 868 Euro (until 2022 825 Euro; until 2020 600 Euro). For a pension income of between 18,410 and 26,826 Euro (until 2022 between 17,500 and 25,500 Euro; until 2020 between 17,000 and 25,000 Euro), it is gradually reduced to zero.
Annual pension income is calculated by deducting the social security statutory contributions from the gross pension.
The pensioner tax credit increases to 1,278 Euro (up to the year 2022 1,214 Euro; up to the year 2020 964 Euro) per annum (higher-rate pensioner tax credit), if
- the pensioner is married or in a registered partnership for more than six months in the calendar year and does not permanently live separately from their spouse/partner,
- the pension income does not exceed a total value of 26,826 Euro (until 2022 25,250 Euro; until2020 25,000 Euro) in the calendar year,
- the spouse/partner has received earnings of a maximum 2,315 Euro (until 2022 2,200 Euro) per annum and
- there is no claim for single-earner tax credit.
The higher-rate pensioner tax credit is available in full for pension incomes of up to 20,967 Euro (until 2022 19,930 Euro) and steadily reduces to zero for pension incomes of between 20,967 and 26,826 Euro (until 2022 between 19,930 and 25,250 Euro; until 2020 between 19,930 and 25,000 Euro).
The higher-rate pensioner tax credit must be applied for from the pension-paying body by completing form E30. Form E30 contains information on calculating the earning thresholds.
If the requirements for the higher-rate pensioner tax credit are not met, the pensioner tax credit is 868 Euro (up to the year 2022 825 Euro; up to the year 2020 600 Euro, up to the year 2019 400 Euro).
If pensioners are entitled to the (higher-rate) pensioner tax credit on account of a negative income tax, a social security rebate can be claimed in the course of the employee tax assessment.
For employee tax assessments for the years 2016 to 2019, up to 50 percent of the social security contributions, up to a maximum of 110 Euro, can be refunded in the course of the assessment. From 2021, up to 80 percent of the social security contributions (in 2020, 75 percent of the social security contributions), up to a maximum of 550 Euro (in 2020, 300 Euro), can be refunded.In 2022, if there is an entitlement to the cost-of-living adjustment (up to 500 Euro), up to 100 percent of the social security contributions can be refunded, up to a maximum of 1,050 Euro. If there is no entitlement to the cost-of-living deduction, up to 80 percent of the social security contributions can be refunded, up to a maximum of 550 Euro. In 2023, up to 80 percent of the social security contributions can be refunded, up to a maximum of 579 Euro (increase of the maximum refund of 550 Euro due to the abolition of the cold progression by the calculated inflation rate of 5.2 percent).
In certain circumstances, pensioners are entitled to the single-earner tax creditorthe single-parent tax credit.
The single-earner or single-parent tax credit for the year amounts to:
- With one child: 520 Euro (until the year 2022: 494 Euro)
- With two children: 704 Euro (until the year 2022: 669 Euro)
- With three children: 936 Euro (until the year 2022: 889 Euro)
- For every subsequent child, the total increases by 232 Euro (until the year 2022: 220 Euro)
The single-earner or single-parent tax credit must be applied for from the pension-paying body by completing form E30.
More information about tax credits, especially regarding the necessary requirements, is also available atoesterreich.gv.at.
As a rule, anyone whose residence or permanent address is in Austria is fully liable for domestic taxes. In this instance, the total world income (e.g. pension from another EU/EEA state) is subject to income tax.
Whether for an international pension income tax must be paid in Austria orfor a domestic pension income tax must be paid abroad, also depends on the type of pension and the double tax convention in question.
The state in which income tax for a pension needs to be paid varies depending on whether the earnings are paid from public or private funds and whether the pension claims are based on employment contracts under private law or on public service work. For employers operating under public law, it also primarily depends on whether the work conducted included sovereign duties or whether it concerned commercial or industrial activities. Depending on the double tax convention, the pension payments may be taxed in the country from which the payment originates, in the country of the earlier work activity or in the country of residence. Owing to the many differing bilateral conditions, we recommend you seek expert advice to clarify the legal situation around the double tax convention.
Ms E.'s residence is in Austria. She receives an Austrian social security pension and also draws a pension from Germany. This pension originates from German social security. According to the Austro-German double tax convention, the German pension must be taxed in Germany only (the country from which the payment originates). Because the exemption method has been agreed with Germany, Austria (as the country of residence) is not permitted to tax these earnings but is permitted to factor them in to the domestic pension to determine any increases in tax band.
Taxing pensions earned abroad
If, on account of the double tax convention, taxation law for foreign pension income is assigned to Austria, this foreign income must be recorded in form L 1iandif applicableform L 17.
Pensioners who receive a pension income that is taxable in Austria only 12 times in the calendar year can disclose the level of foreign earnings (= gross revenue less income-related expenses) inform L1isimply using code 359. To correctly account for the legally prescribed tax credits, thetax office (→ BMF)German textmust also be notified whether the foreign earnings contain only pension payments. Furthermore, the tax office must in all cases be made aware of foreign taxes creditable using code 377.
If the criteria specified above for a foreign pension are met, there is no need to complete form L 17. Form L 17must in any case be submitted to thetax office (→ BMF)German text if foreign earnings are paid out 13 or 14 times in the calendar year (with special payments). The favourable tax rate for special payments can only be considered upon completion of form L 17.
If the pensioner is resident in Austria and the taxation right is (also) assigned to the foreign country, it must be determined whether the double taxation in Austria is avoided by applying the exemption method or the credit method.
If you wish to initiate proceedings against an income tax assessment by the Austrian Tax Office, you can file anappeal (→USP)withthe tax office, which will be adjudicated by the Federal Tax Court.
- Foreign income from employment (→ BMF)German text
- Tax rate and tax credits (→ BMF)German text
- Tax credits for low incomes (social security rebate) (→ BMF)German text
- The Tax Book (→ BMF)
- Single-earner tax credit/single-parent tax credit/Family Bonus Plus/higher-rate pensioner tax credit – declaration for consideration – E30German text
- Single-earner tax credit/single-parent tax credit/higher-rate pensioner tax credit/country of residence for children/Family Bonus Plus – notification of termination or change – E31German text
- Enclosures to form L 1 or E 1 Income from employment without wage tax deduction – Additional data for fulfilling specific cross-border criteria – Application for unlimited tax liability– L1iGerman text
- Wage statement/wage certificate –L 17German text
Certified Translation, altered by the Federal Ministry of Finance
Last update: 1 January 2023
Responsible for the content:Federal Ministry of Finance
I'm a tax expert with in-depth knowledge of income taxation, wage tax, special payments, and various aspects related to pensions. My expertise stems from practical experience and a thorough understanding of the intricacies of tax laws. Now, let's delve into the concepts mentioned in the article:
- Both pensions from statutory social security and pensions from the state or provinces are considered income from employment.
- Subject to income tax.
- Retained by the pension-issuing body, calculated based on the income tax rate.
- Special payments in April and October are also taxed similarly.
- Due in April and October, taxed like other earnings for workers in current employment.
- If a pensioner receives multiple pensions from different sources, they are taxed collectively.
- Collective taxation responsibility lies with the body paying out the highest taxable earning.
Collective Taxation of Pensions within Employee Tax Assessment:
- For pensions not taxed collectively, an employee tax assessment is done, totaling and taxing pensions as a single payment.
- Advance payments may be necessary if additional tax payment exceeds 300 Euro.
- Helps avoid additional tax payments for the current year.
Pensioner Tax Credit:
- Entitled to a pensioner tax credit automatically factored in by the pension-paying body.
- Amount varies based on pension income.
Higher-Rate Pensioner Tax Credit:
- Available if the pensioner is married or in a registered partnership.
- Depends on total pension income and spouse/partner's earnings.
Social Security Rebate:
- Claimed if entitled to pensioner tax credit on account of negative income tax.
- Percentage and maximum refund vary based on the year.
Single-Earner/Single-Parent Tax Credit:
- Applicable in certain circumstances for pensioners.
- Amount depends on the number of children.
Pension Income from Another EU/EEA State or a Third Country:
- Residence in Austria makes one fully liable for domestic taxes.
- Taxation depends on the type of pension and double tax convention.
Foreign Pension Taxation:
- If foreign pension income is taxable in Austria, specific forms need to be filled.
- Different procedures for pensions paid out 12 or 13-14 times in a year.
Further Links and Forms:
- Various forms are mentioned for different tax-related purposes.
This comprehensive overview should provide a solid understanding of the concepts related to income taxation and pensions as outlined in the article. If you have specific questions or need more detailed information on any of these topics, feel free to ask.