Self-Employed Tax in Austria

Who counts as self-employed for Austrian income tax?

Austrian tax law draws two distinct self-employed categories. An Einzelunternehmer (sole trader) operates a registered trade or business and must hold a Gewerbeschein licence; income is classified as Einkuenfte aus Gewerbebetrieb under the Einkommensteuergesetz 1988 (EStG). A Neue Selbstaendige is a licence-free freelancer - authors, artists, lecturers, translators, IT consultants, and similar professionals who work under Werkvertrag or freier Dienstvertrag contracts; income is Einkuenfte aus selbstaendiger Arbeit. Both categories face identical progressive income-tax rates and SVS social insurance, file the same Form E1 plus the business-income supplement E1a via FinanzOnline, and must register with the tax office (Finanzamt) within one month of starting activity. The primary difference is the WKO Chamber of Commerce membership fee that Einzelunternehmer pay and Neue Selbstaendige do not. Both are distinguished from employees, who pay Lohnsteuer withheld at source rather than filing Einkommensteuer returns themselves. For the broader country context see the Austria country overview.

What are the 2025 income tax rates on self-employed profit?

Austria applies seven progressive income-tax brackets to annual taxable profit after deducting business expenses and allowances. For 2025 the thresholds were inflation-adjusted under the automatic annual indexation introduced in the 2022 reform package (Steuerreform 2022). Tax is zero on income up to EUR 13,308 per year; above that the following marginal rates apply in sequence: 20% on EUR 13,308-21,617; 30% on EUR 21,617-35,836; 40% on EUR 35,836-69,166; 48% on EUR 69,166-103,072; 50% on EUR 103,072-1,000,000; and 55% on any income exceeding EUR 1,000,000 (the so-called Reichensteuer retained from the 2016 reform). An annual income tax return is mandatory if total income exceeds EUR 13,308, or EUR 14,517 when employment income is also present; the FinanzOnline electronic deadline is 30 June of the following year [usp-tarifstufen]. The self-employed pay Einkommensteuer on profit, not on turnover; determining profit accurately therefore matters enormously for the eventual bill.

How do the flat-rate expense options work?

Two pauschalierte Betriebsausgaben regimes let eligible self-employed skip itemised expense records and instead deduct a percentage of revenues automatically.

The Basispauschalierung (basic flat rate) under Section 17 EStG applies to Einzelunternehmer and Neue Selbstaendige whose prior-year revenues did not exceed EUR 320,000. From 2025 the standard deduction rate is 13.5% of net revenues (increased from 12% by the Budgetbegleitgesetz 2025); a reduced 6% rate applies to consulting, asset-management, supervisory-board, and academic or writing income. The flat rate covers virtually all ordinary operating costs including depreciation, rent, insurance, advertising, and vehicle costs. On top of it, actual social-insurance (SVS) contributions, materials, wages, and fully reimbursed travel expenses remain separately deductible. Once chosen, the method binds for five years before reverting to itemised accounting [usp-basispauschalierung].

The Kleinunternehmerpauschalierung is a simpler alternative available from 2023 for self-employed with annual income below the EUR 55,000 VAT threshold. It lets traders deduct 45% of income (maximum EUR 24,750) as a flat operating-expense allowance, or 20% (maximum EUR 11,000) for service businesses. Social-insurance contributions, the Gewinnfreibetrag profit allowance, and actual travel reimbursements may still be deducted on top. The classification of trade versus service follows the Finance Ministry's Service Business Ordinance; mixed businesses use the predominant revenue type [wko-kleinunternehmerpauschalierung]. This option combines especially well with the Kleinunternehmer VAT exemption for micro-businesses whose turnover stays comfortably below EUR 55,000.

How is the Gewinnfreibetrag profit allowance calculated?

The Gewinnfreibetrag (profit allowance) under Section 10 EStG lets natural persons earning business or self-employment income reduce taxable profit by up to EUR 46,400 per year - no corporate entity qualifies. It has two parts. The Grundfreibetrag (basic allowance) is 15% of profit on the first EUR 33,000, giving a maximum deduction of EUR 4,950 with no investment required. Above EUR 33,000 in profit the investitionsbedingter Gewinnfreibetrag (investment-based allowance) is available: 13% on assessment bases up to EUR 175,000, 7% on the next EUR 175,000, and 4.5% on amounts up to EUR 230,000, tapering to zero above EUR 580,000. To claim the investment tranche the taxpayer must acquire new tangible depreciable fixed assets with a useful life of at least four years, or qualifying long-term securities, during the same tax year. The combined maximum allowance across both tranches is EUR 46,400 per taxpayer per year. For businesses using Kleinunternehmerpauschalierung or other lump-sum profit methods only the Grundfreibetrag is available automatically - the investment tranche requires switching to standard or Basispauschalierung accounting [wko-gewinnfreibetrag].

What are the SVS social-insurance contributions for the self-employed?

All self-employed persons earning more than EUR 6,613.20 annually must register with the Sozialversicherungsanstalt der Selbstaendigen (SVS) and pay contributions under GSVG (Gewerbliches Sozialversicherungsgesetz) for Einzelunternehmer or FSVG for most Neue Selbstaendige. The 2025/2026 contribution rates are: pension insurance 18.50%, health insurance 6.80%, and the Selbstaendigenvorsorge (self-employment provision) 1.53% - a total of approximately 26.83% of the contribution base. In addition a flat accident-insurance premium of EUR 12.95 per month (EUR 155.40 per year) applies regardless of income. The contribution base is net taxable income after business expenses but before income tax; it is capped at a monthly maximum (Hoechstbeitragsgrundlage) of EUR 8,085 per month in 2026.

In the first three years of self-employment SVS cannot yet know actual income, so contributions are assessed provisionally on a minimum monthly base of EUR 551.10 (EUR 6,613.20 per year for 2025/2026), producing a combined minimum monthly contribution of approximately EUR 160.81 (pension EUR 101.95 + health EUR 37.48 + Selbstaendigenvorsorge EUR 8.43 + accident EUR 12.95). Once the income-tax assessment for each year becomes legally binding the SVS recalculates contributions on actual income and issues a back-payment or refund [svs-erstejahre]. The first-three-years lower base is a significant cash-flow advantage for new entrants, but the subsequent catch-up payment can be substantial in a successful first year.

How do income-tax prepayments work?

Because the self-employed have no employer withholding wages at source, the Finanzamt issues a Vorauszahlungsbescheid (prepayment notice) requiring quarterly income-tax instalments. The four payment dates are 15 February, 15 May, 15 August, and 15 November each year. The amount is based on the previous year's assessed income tax divided into four equal parts; the minimum annual prepayment that triggers the system is EUR 300. If actual income in the current year is lower than the prior year, a taxpayer may request a reduction by informal application to the Finanzamt by 30 September of that year, or by formal objection within one month of the prepayment notice [usp-vorauszahlung]. Any underpayment is settled when the annual return is assessed; excess prepayments are refunded. New businesses with no prior assessment begin paying prepayments after the first income-tax assessment is issued, typically for their second year of activity.

What is the Kleinunternehmer VAT exemption?

Under Section 6(1)(27) Umsatzsteuergesetz (UStG) entrepreneurs whose annual turnover does not exceed EUR 55,000 are classified as Kleinunternehmer and are exempt from Umsatzsteuer (VAT) - they do not charge VAT on invoices, do not file preliminary or annual VAT returns, and do not remit VAT to the Finanzamt. The threshold was raised from EUR 35,000 to EUR 55,000 on 1 January 2025, implementing EU Directive 2020/285 on the Small Enterprises Scheme. The exemption comes at a cost: Kleinunternehmer also cannot reclaim input VAT on business purchases. A tolerance rule allows turnover to exceed EUR 55,000 by up to 10% in the same calendar year without losing the exemption until the following year; exceeding by more than 10% ends the exemption immediately on the portion above the threshold. The regime applies automatically to Austrian-based entrepreneurs and since 1 January 2025 is also open to EU-based enterprises operating in Austria, subject to a EUR 100,000 EU-wide aggregate ceiling [usp-kleinunternehmen].

For self-employed with turnover comfortably below EUR 55,000, combining the Kleinunternehmer VAT exemption with the Kleinunternehmerpauschalierung income-tax flat rate creates a low-administration package requiring no VAT records, no itemised expense receipts, and minimal bookkeeping.

The income-tax rules summarised here are general information only. Individual circumstances vary, thresholds adjust annually, and the interaction between GSVG contributions, income-tax deductions, and expense-accounting methods can significantly affect the outcome. A qualified tax professional registered in Austria can review your specific situation, recommend the most appropriate expense-accounting method, and represent you before the Finanzamt.