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.
VATIf 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%