Small Business Tax in Austria

What corporate income tax rate applies to Austrian companies?

The Austrian Koerperschaftsteuer (KoeSt) is a flat 23% rate on corporate taxable profit, applicable to limited-liability companies (GmbH), the new Flexible Capital Company (FlexKapG), and share companies (AG) from 1 January 2024 onward. The rate was lowered in two steps from 25% (through 2022) to 24% in 2023 and then to 23% in 2024. Every euro of taxable corporate profit is taxed at this single rate regardless of whether profits are retained or distributed. The Federal Ministry of Finance (Bundesministerium fuer Finanzen, BMF) administers KoeSt under the Koerperschaftsteuergesetz 1988 (KStG). [^1]

For GmbH entities established after 1 January 2024, the minimum share capital is EUR 10,000 (reduced from EUR 35,000 by the Corporate Law Amendment Act 2023, GesRAnderungsG 2023). The minimum corporate income tax (Mindestkoerperschaftsteuer) is calculated as 5% of the statutory minimum capital, giving EUR 500 per year (EUR 125 per quarter). This minimum tax applies even in loss-making years. Amounts paid above the actual KoeSt liability carry forward as a tax prepayment creditable against future years. [^2]

AG (Aktiengesellschaft) entities retain a higher minimum capital of EUR 70,000 and therefore face a minimum KoeSt of EUR 3,500 per year. Banks and insurance companies face EUR 5,452 per year. [^3]

How are sole proprietors and partnerships taxed?

Sole proprietors (Einzelunternehmer) and partners in general partnerships (OG) or limited partnerships (KG) do not pay KoeSt. Their business profits flow directly into their personal Einkommensteuer (ESt, income tax) return under the Einkommensteuergesetz 1988 (EStG). Austria uses a progressive income tax scale adjusted annually for inflation (cold progression abolished from 2023, with brackets rising by two-thirds of the measured inflation rate each year). The 2025 brackets are: 0% on income up to EUR 13,308; 20% on EUR 13,308 to EUR 21,617; 30% on EUR 21,617 to EUR 35,836; 40% on EUR 35,836 to EUR 69,166; 48% on EUR 69,166 to EUR 103,072; 50% on EUR 103,072 to EUR 1,000,000; and 55% on income above EUR 1,000,000 (this top rate is time-limited until 2029). [^4]

Business income reduces via deductible expenses before applying the scale. The Gewinnfreibetrag (profit allowance) described below can further reduce taxable income.

What is the Gewinnfreibetrag profit allowance?

The Gewinnfreibetrag is a deduction available to individuals who earn business income, including sole proprietors and partners. It works in two tiers.

The first tier is the Grundfreibetrag (base allowance): 15% of annual profit up to EUR 33,000 is automatically deducted, giving a maximum base allowance of EUR 4,950. No special investment is needed to claim the base allowance; it is applied by default.

The second tier is the investitionsbedingter Gewinnfreibetrag (investment-based allowance), which applies to profits above EUR 33,000 when the taxpayer makes qualifying investments in the same calendar year. Rates are 13% on profit from EUR 33,001 to EUR 178,000; 7% on profit from EUR 178,001 to EUR 353,000; and 4.5% on profit from EUR 353,001 to EUR 583,000. The total allowance across both tiers is capped at EUR 46,400 per year. Qualifying assets include depreciable tangible fixed assets with a minimum four-year useful life and certain qualifying securities (federal bonds, bank bonds, and select investment funds) held for at least four years. Passenger cars are excluded. [^5]

The Gewinnfreibetrag is one of the most powerful annual tax-reduction tools available to self-employed individuals in Austria. Consulting a qualified tax professional before year-end can help assess whether a qualifying investment makes financial sense in a given year.

Does Austria have a separate municipal trade tax?

No. Austria abolished its Gewerbesteuer (trade tax) on 1 January 1994. Unlike Germany, where municipalities levy an earnings-based Gewerbesteuer that adds roughly 7 to 17 percentage points to the effective corporate tax rate (producing a combined federal-plus-local rate of approximately 30 to 33%), Austrian businesses pay no income- or profit-based levy to their municipality. This is a material structural advantage for Austrian-based businesses compared with German equivalents.

Austria does levy a Kommunalsteuer (municipal payroll tax) of 3% on gross wages paid to employees, but this is a wage-cost borne by employers with staff -- it is not a tax on business profits and does not affect businesses without employees. [^6]

What VAT exemption applies to small businesses?

Austrian Umsatzsteuer (USt, VAT) applies at a standard rate of 20%, with reduced rates of 13% (tourism, culture, selected goods) and 10% (food, books, medicines, housing rent). Since 1 January 2025, businesses with annual turnover below EUR 55,000 (raised from EUR 35,000 under the Kleinunternehmerregelung, paragraphs 6(1)(Z 27) UStG) are exempt from charging and remitting VAT and are not required to file preliminary or annual VAT returns. This is a non-genuine exemption: small businesses cannot deduct input VAT on their own purchases. If a business prefers to recover input VAT -- for example because it makes significant capital expenditure -- it can opt out of the exemption in writing, binding it to standard VAT treatment for five years. [^7]

From 2025, if the EUR 55,000 threshold is exceeded during a calendar year, the exemption ceases to apply immediately from the month in which the threshold is exceeded (not retroactively to January, as was the rule before 2025). A one-time 10% tolerance (previously 15%) permits a single over-run within any five-year window without losing the exemption. Invoices issued by small businesses under the exemption must carry the phrase "Umsatzsteuerbefreit -- Kleinunternehmer gemass paragraph 6(1)Z 27 UStG" rather than a VAT line. [^7]

Austrian businesses operating under the Kleinunternehmerregelung may also now apply for the equivalent VAT exemption in other EU member states under EU Directive 2020/285, provided total EU-wide turnover stays below EUR 100,000.

How does SVS social insurance work for the self-employed?

Self-employed individuals (Gewerbetreibende and neue Selbstaendige) register with the Sozialversicherungsanstalt der Selbstaendigen (SVS) and pay compulsory insurance contributions under the Gewerbliches Sozialversicherungsgesetz (GSVG). Registration is required once annual net income exceeds approximately EUR 6,613 (2026 threshold). Contributions cover health insurance (6.80% of the contribution base), pension insurance (18.50% of the contribution base), accident insurance (fixed EUR 12.95 per month), and the mandatory self-employment provision (Selbststaendigenvorsorge, 1.53% of the contribution base). The combined rate for health and pension insurance is approximately 25.3% of net profit, plus the fixed accident-insurance component. [^8]

During the first three years of self-employment, contributions are calculated on a preliminary base of EUR 551.10 per month. After the first three years, the SVS recalculates based on actual taxable income from the most recent tax assessment, with the difference settled as a back-payment or credit. Reduced rates apply for the first two years.

For guidance on structuring self-employment income to manage SVS and income-tax obligations efficiently, consider speaking with a qualified tax professional who knows the Austrian GSVG framework.

This overview covers the headline obligations. Individual circumstances -- including choice of legal form, deductible expenses, international income, and family allowances -- substantially affect the final tax bill. Austria's rules change annually. For a reliable assessment of your specific situation, consult a qualified tax professional (Steuerberater) registered with the Kammer der Steuerberater und Wirtschaftspruefer.

For a broader introduction to operating in Austria, see the Austria country overview.