What taxes will I have to pay?

If you decide to take advantage of the VAT rebate and rent your property to holiday-makers you will be required to pay income tax on your rental income. Much of these taxes can be offset and there are a number of ways to reduce the tax you pay on your rental income. For example, the interest you pay on your mortgage can be written off against rental income profits and you can also write off up to 10% of the costs of your furniture as depreciation against your rental income.

If you rent your property to holiday-makers and pay the income tax for these rentals in Austria then it is possible to receive a tax free allowance of between 2,000 – 11,000 euros per person per year, so if two people purchase a property together the allowance could be up to 22,000 euros per year.

VAT

If you claim the VAT back on your purchase you will also be required to become VAT registered with the tax authorities for 20 years. You will need to charge VAT at a rate of 13% on your rentals which can then be reclaimed each quarter upon the filing of accounts. We can recommend local tax advisors to help with your tax returns. The tax advisor will charge a one-off fee to set up your registration (please contact advisors directly for prices) and annual tax returns thereafter usually cost in the region of 500 euros per year.

Income tax rates

Profit Percentage Income Tax payable
0 euros – 11,000 euros 0%
11,001 euros – 18,000 euros 25%
18,001 euros – 31,000 euros 35%
31,001 euros – 60,000 euros 42%
60,001 euros – 90,000 euros 48%
90,001 euros – 50%

Income tax obligations in your own country

Your income tax obligations in your home country also have to be considered so please inform your tax advisor that you are renting out a vacation apartment in Austria, as he will also need to see what profits you have made over the year and make sure that you do not pay tax twice on the same income. If you need help finding a tax advisor, we can put you in touch with Austrian tax advisors specialising in rental property.

Tourism tax

When you rent your property you will need to charge your guests tourism tax for the nights they spend in your property. These rate of tax varies from resort to resort but as a rough guide it is somewhere between 1 and 3 euros per night per person for each guest over the age of 14 years.

Capital gains tax

The housing market in Austria has been subject to a number of controls in order to keep house prices within reach of locals, especially in the tourist areas. Capital Gains Tax of 30% will apply to any profits you have made on your property (effective since Jan 1, 2016).

Inheritance tax

Inheritance tax has been abolished in Austria (effective since August 1, 2008)