Taxes for Founders in Austria – The Most Important Topics at a Glance

Profit determination, VAT, corporate income tax and SVS: a plain-language guide to Austrian taxes for founders – with practical answers for GmbH, UG and sole traders. Consulting in English and German.

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Austrian taxes at a glance

Austrian tax law distinguishes between taxes on income, taxes on consumption and social contributions. For founders, the relevant items are usually: income tax (Einkommensteuer) for sole traders, corporate income tax (Körperschaftsteuer) for companies such as GmbH and UG, value added tax (Umsatzsteuer) on sales, and social insurance contributions for the self-employed (SVS).

Tax administration in Austria is digital: most declarations and applications are filed online via the FinanzOnline portal of the tax office (Finanzamt). After registering your business, you receive a tax number (Steuernummer) and, on request, a VAT identification number (UID) for cross-border trade within the EU.

This page explains the essentials in plain English. It provides general information and does not constitute tax advice – for your individual situation, we recommend a certified tax adviser (Steuerberater), to whom we are happy to introduce you.

Profit determination: cash-basis accounting vs. double-entry bookkeeping

Every business must determine its profit (Gewinn) – the tax base for income or corporate income tax. Austrian law offers two paths: sole traders may use cash-basis accounting (Einnahmen-Ausgaben-Rechnung) as long as annual turnover does not exceed €700,000. Profit is simply the difference between income received and expenses paid in the year – no balance sheet, no inventory, no complex accounting software.

Above this threshold, or for companies such as GmbH and UG, double-entry bookkeeping (doppelte Buchhaltung) with annual financial statements (Jahresabschluss) is mandatory. This is one reason why many founders start as sole traders and switch to a limited company once the business has grown. The decision between the two systems influences your administrative burden from day one – and is worth discussing before you start.

Value Added Tax (VAT)

VAT (Umsatzsteuer) is charged on most goods and services in Austria. The standard rate is 20%; reduced rates of 10% (e.g. food, books, public transport) and 13% (e.g. accommodation) apply to specific goods and services. As a business, you charge VAT on your invoices and may deduct the VAT you paid on your own purchases – the difference is settled with the tax office through periodic VAT returns.

Depending on turnover, VAT prepayment returns (VAT returns) are filed monthly, quarterly or annually. For business with EU partners, you need a VAT identification number (UID), which is issued by the tax office on request. Founders with very low turnover may qualify for the small-business exemption (Kleinunternehmerregelung) and invoice without VAT – the applicable thresholds are adjusted regularly, so verify the currently valid limit with your tax adviser.

Corporate income tax and income tax

GmbH and UG pay corporate income tax (Körperschaftsteuer) at a flat rate of 23% on their profit. Distributions to shareholders are additionally subject to capital gains tax (Kapitalertragsteuer) of 27.5%, unless a lower rate applies under an international tax treaty.

Sole traders pay income tax (Einkommensteuer) on their profit at progressive rates up to 55%; the first tranche of income is tax-free (basic allowance). Income tax is assessed annually – if you earn more in one year, only the additional income is taxed at a higher rate. Social insurance contributions (SVS) and business expenses such as your business address are deductible, which reduces your taxable profit.

SVS – social insurance for the self-employed

Sole traders and managing directors of GmbH and UG are insured under the Austrian social insurance scheme for the self-employed, administered by SVS (Sozialversicherung der Selbständigen). The insurance covers pension, health and accident insurance and is compulsory for most self-employed activities.

Contributions are calculated on the basis of your profit. Newly self-employed founders benefit from reduced contribution bases in the first years (founders' privilege, Gründungsprivileg), and monthly payments are possible to keep liquidity planning predictable. Registration with SVS follows automatically from your business registration – the exact contribution depends on your individual situation and is confirmed by SVS.

Tax number (Steuernummer) and VAT ID (UID)

Tax number (Steuernummer): assigned by your tax office after business registration; used for all correspondence, tax returns and payments
VAT ID (UID): separate number for EU cross-border transactions, applied for via FinanzOnline; shown on invoices to EU clients
Deadlines: annual income tax returns are generally due by the end of June of the following year when filed online; VAT prepayment returns follow your filing rhythm

Both numbers are issued free of charge by the tax office. Keep them ready for contracts, invoices and the legal notice (Impressum) of your website.

How we support you

Mergus is not a tax adviser – but we make sure that the foundation around your company is clean: we support your company formation in Vienna, provide the registered business address in 1010 that appears on your invoices and legal notice, and help you set up a clean connection to your bookkeeping from day one. For tax filings and individual questions, we introduce you to certified tax advisers (Steuerberater) who work in English and German.

Frequently asked questions about taxes for founders

Do I need a tax adviser in Austria?

Not by law, but strongly recommended: Austrian tax law is complex, and a certified tax adviser (Steuerberater) takes care of returns, deadlines and structuring. We are happy to introduce you to one.

What is the difference between the tax number and the VAT ID?

The tax number (Steuernummer) is your personal identifier with the tax office for all Austrian matters. The VAT ID (UID) is an additional number for cross-border transactions within the EU and appears on invoices to EU clients.

Which taxes does a GmbH pay in Austria?

A GmbH pays corporate income tax (Körperschaftsteuer) of 23% on its profit. Distributions to shareholders are subject to capital gains tax of 27.5%, unless a tax treaty provides otherwise.

What does SVS mean and who has to pay it?

SVS is the Austrian social insurance institution for the self-employed. Sole traders and managing directors are generally insured with SVS; contributions are based on profit, with reduced bases for founders in the first years.

Can I deduct the business address as an expense?

Yes. The costs of your business address and virtual office are business expenses that reduce your taxable profit – for sole traders and companies alike. We provide a proper invoice, on request with your VAT ID.

What is the small-business exemption?

The small-business exemption (Kleinunternehmerregelung) allows businesses with low turnover to invoice without VAT. The applicable thresholds change regularly – your tax adviser will confirm the currently valid limit for your situation.

When are tax returns due?

Annual income tax returns are generally due by the end of June of the following year when filed online via FinanzOnline. VAT prepayment returns follow a monthly, quarterly or annual rhythm depending on turnover.

Do international founders pay double tax?

Austria has concluded double-taxation treaties with many countries that regulate which state may tax which income. The rules depend on your country of residence and your legal form – individual advice is essential here.