Taxation of international executives
Are there special residency considerations for short-term assignments?
No. An individual is assumed to be resident if he/she either maintains any kind of accommodation, or is physically present, under circumstances indicating that his/her abode will not be temporary.
Are there special payroll considerations for short-term assignments?
No. As a rule the tax on employment income is levied by way of withholding through the employer. If no permanent establishment of the employer exists in Austria or if there is no other obligation for a wage tax withholding, a tax consultant can handle the withholding or income tax will be paid by assessment.
What income will be taxed during short-term assignments?
If the center of vital interest of the assignee is not located in Austria, he/she will be taxed on his/her Austrian-sourced income (if Double Tax Treaty allows).
Are there any additional considerations that should be considered before initiating a short-term assignment in Austria?
In order to avoid wage and social dumping, that could be caused by the posting or temporary employment (hiring-out) of workers from so-called low-wage countries, Austria has implemented restrictive regulations (particularly in the Anti-Wage and Social Dumping Act). A number of measures ensure equal pay conditions for employees working in Austria. Among others, the compliance with statutory minimum wages in Austria and mandatory labor regulations. Employees posted, or hired-out to Austria are entitled to the salary which is stipulated in the Austrian laws, regulations or collective bargaining agreements and which other comparable employees at the place of work in Austria would receive. Furthermore, the employer (in case of a posted employee) respectively the Austrian lessee (in case of a hired-out employee) has to keep wage/salary records in German language ready for inspection at the place of work (in Austria).
In case of transnational posting of (temporary) workers, who are employees by a company based in the EEA or Switzerland, these must be reported prior to commencement of work to the Central Coordination Office for the control of Illegal Employment (in German: “Zentrale Koordinationsstelle des Bundesministeriums für Finanzen für die Kontrolle illegaler Arbeitnehmerbeschäftigung”) (for posted employees by use of the form ZKO 3, for temporary employees by use of the form ZKO 4). For this purpose, only the electronic forms of the Federal Ministry of Finance may be used.
The most important exemptions are highlighted below. Please note that these exemptions are applicable for assignments only (as defined), except for the last one (temporary intra-group assignments/hiring-outs) which is also applicable for the hiring-out of employees:
Please note that the required permits/notifications/registrations/etc highly depend on the facts and circumstances of the individual case and therefore request for a case-by-case analysis.
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