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Wage administration

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WAGE ADMNISTRATION

Have you established a legal entity in Austria and are you planning to employ workers that are subject to the Austrian social system? Or: are you planning to perform business operations via your home organization in the territory of Austria and to employ workers that are subject to the Austrian social system? In both cases , you are obliged to register your organization at the local Austrian health insurance company and tax office for the purpose of the income tax administration and to have your wages processed according to Austrian regulations. With the help of our Austrian partners, we can help you prepare a work contract and determine a relevant collective agreement that your employee falls within, as well as set a minimum wage you must pay to your employees, including all other legally binding benefits; we will also help you calculate of Austrian salaries, legally binding contributions and the income tax. We only need to receive monthly data in the correct format in order to take over all the administration related to your employees.

 

VOLUNTARY WAGE ADMINISTRATION

If you are a foreign entity in Austria active in temporary detachment of employees, your Austrian client is obliged to deduct the withholding tax in the amount of 20% in every invoice. You may arrange exemption from this deduction by requesting the so-called exemption from the withholding tax (Freistellung). The condition of granting the exemption is voluntary payment of the payroll tax on behalf of the temporary-employed staff to the Austrian tax office, which should be preceded by voluntary wage administration by an Austrian tax consultant. Another condition of the exemption is absence of outstanding payments of the payroll tax.

 

In order to stop deduction of the 20% withholding tax in invoices issued by an Austrian client, it is necessary to arrange voluntary wage administration on behalf of your employees and voluntary payment of the Austrian payroll tax to the Austrian tax office. Afterwards, the tax office will give you an exemption confirmation, which you will present to your Austrian client, and the client will not be eligible to deduct any withholding tax.

You do not have this obligation in case of employee detachment according to a works contract. You would have this obligation only if you employed a person with a permanent residence in Austria, who falls within the Austrian social system. In such a case, your Slovak company would have to be registered in the local social insurance company and tax office for the purpose of payment of contributions for the given employee.