An Introduction to Austrian Payroll Part 2
What we ll cover in part 2: Tax Benefits Social Insurance Employment Law
Tax
Tax Administration Bundesministerium fur Finanzen (BMF) is the controlling government department The website can be found at www.bmf.gv.at Administration is performed through local tax offices (Finanzamt) In Vienna the particular office is determined by your postcode (there are 8 different offices)
Tax the basics The Austrian tax year is the calendar year January to December Income is divided in to 7 different types with specific rules applying to each type employment income is one of the types An Austrian has all of the different types of income aggregated together before tax is calculated via the tax return There is a withholding obligation for the employer to undertake PAYE is known as Lohnsteuer
Payroll Account This must be created for all employees A record per employee Can be maintained abroad but must be bought into Austria in a reasonable time period if requested by the authorities as part of an audit Should be kept electronically most communication between employer and tax authority is electronic
Payroll Account Items included on the Payroll Account Up to 40 data items proscribed by law Includes personal data, data on partners and also children Pay by regular payments and one-off payments Tax and social security assessable pay and deductions calculated for pay period and YTD Certain tax free payments such as per diems, mileage expenses and business expenses Pension contributions Grants from the employer towards childcare costs Commuter lump sum and euro deductions operated via payroll
Payroll Account Supporting documentation must be retained in original format (paper or electronic copies) Sole earner/lone parent declaration Commuter expense declaration Child care subsidy claims Expatriate staff expenses (rent, school fees) Stock option agreements Overtime hours worked
Sole earner/lone Parent Tax reduction for lone parents and sole breadwinners For the sole breadwinner the parents must have been together for at least six months in the tax year The none working parent can have small earnings (under 6,000 pa) A credit reducing tax is awarded through the payroll calculation
Sole earner/lone Parent Tax reduction for lone parents and sole breadwinners The parent submits form E30 to the employer to claim the allowance The employer is responsible for identifying obviously inaccurate declarations The details must be included in the Annual Wage Tax Adjustment
Sole earner/lone Parent The rates are: 41.17 per month for one child 55.75 per month for two children 74.08 for three children An additional 18.33 per month for each subsequent child
Tax relief for Commuter Costs Austria allows some relief for home to work travel costs The Commuter Tax is a relief applicable when the employee travels 20 KM or more to work There is a standard (small) relief applicable where the employee travels at least 2 KM and public transport is not available for at least half the journey
Tax relief for Commuter Costs Pro rata amounts are given to part timer employees The full allowance is awarded to those who travel at least 11 days per month
Commuter Tax Rates for Commuter Tax: Distance Home to work Public transport reasonable monthly deduction Public Transport unreasonable monthly deduction 2KM to 20 KM - 31 20KM to 40KM 58 123 40KM to 60KM 113 214 60KM + 168 306
Commuter Euro An additional deduction from tax for commuting costs Awarded at the rate of 2 per KM travelled on the journey to work The maximum award is 80 pa So those with a journey of 40KM or more get the maximum allowance This deduction is applied via the payroll calculation Part timers are awarded a pro rata amount in line with the commuter tax calculation
Commuter Tax Relief How is this applied? The employee completes form L34 and gives it to the employer The employer must evaluate the form and challenge any obvious discrepancies The employer then uses the new online calculator available on the BMF website to calculate the value of the deduction: https://finanzierung.or.at/pendlerpauschale/
Commuter Tax relief Other issues: Relief is also available to those who live in another country and commute into (Germany, Slovakia etc) - the employee must apply using form L33 This is sent to the tax authority, there is no facility to calculate cross border journeys using the online calculator
Commuter Tax relief Other issues: Forms must be received by 30 th June each year otherwise the claim is not valid Employees who have a company car cannot claim either relief Employees with a Job Ticket a tax free employer funded public transport pass cannot claim either relief.
Other Tax Deductions Other deductions claimed on the Payroll Account: Standard employee deduction of 54 per year Tax free allowances are based on personal circumstances There is a standard employee business expense deduction of 291 per year All these allowances are coded automatically into the payroll system
Austrian tax rates From 2015 the Austrian government started to implement changes in the tax regime There were significant changes in the current year, reducing the rates of tax for the lower bands and adding an additional higher rate band of 55%
Austrian tax rates From 2015 the Austrian government started to implement changes in the tax regime There were significant changes in the current year, reducing the rates of tax for the lower bands and adding an additional higher rate band of 55%
Austrian tax rates 2016 Taxable Income Rate of tax Up to 11,000 0% 11,000-18,000 25% 18,001-31,000 35% 31, 001-60, 000 42% 60, 001 90, 000 48% 90, 000 1, 000, 000 50% Over 1m 55%
Other Compensation Not all of the salary is taxed using these rates Salaries are often paid in 14 instalments including a Christmas bonus and a holiday allowance Such additional payments are taxed using a special rule Where 1/6 of the ordinary payments, up to a maximum of 21, 000 are not exceeded the payments are tax free If the additional payments do not exceed 1/6 of the ordinary payments but exceed 21, 000 a tax free amount of 620 is applied The special rules do not apply to social insurance
Other Compensation Extraordinary payment value Tax rate 0-620 0% The next 24, 380 6% The next 25, 000 27% The next 33, 333 35.75% For amounts exceeding 83, 333 Up to 55%
Other Compensation Other exemptions: Bonuses for following items tax free up to 360/month: Dirty money schmutzzulager Difficult/dangerous working condition erschwerniszulage/gefahrenzulager Weekend, holiday and night work Overtime premiums for the first 5 overtime hours each month tax are free up to a maximum of 50% of base salary, with an overriding limit of 86 per month
Benefits In Kind Taxation position Benefits in kind must be added to pay and taxed at source. They are also subject to social insurance They must be recorded separately on the Payroll Account The general valorisation principle is used i.e. fair market value Certain benefits in kind are taxed using specified rules
Benefits In Kind Standard benefits in kind include: Luncheon vouchers Jubilee benefits Stock options Travel expenses
Company cars The monthly benefit in kind value for company cars is calculated as 1.5% of list price including extras and VAT The maximum ceiling is 720 per month If the employee travels less than 500 KM per month then half the value is used e.g. 0,75% Employees must maintain a logbook detailing all private and business travel Any amounts made good by the employee will reduce the benefit in kind value
Accommodation Accommodation provided via employment Standard accommodation consisting of bedrooms, living area and bathroom is valued using a flat rate charge per square metre. Different provinces have set their own rates For example - Vienna 5.16/M 2, Styria (for Graz) 7.11/M 2, Upper Austria (for Linz) 5.58/M 2 So 70 square metre apartment in Vienna has a taxable BIK value of 70 x 5.16 = 361.20 per month However where the accommodation provided is under 30 square metres then no taxable benefit in kind is created
Accommodation If the employee has to bear operating costs (not including light, heat and telephone) a 25% discount of the value is given If the apartment fails to meet the standard living accommodation definition a 30% discount is given If the actual market value is 100% higher or 50% lower than the standard calculated value, then the actual market value is used If the employer covers heating costs an additional supplement of 0.58/metre is added There is a calculator available on the BMF website to work out the taxable value
Car Parking Space at Work Car Parking Space at Work is a taxable benefit in kind This covers employer owned garages and car parking spaces or those rented by the employer It applies to both company car holders and those who drive their own vehicles to work The benefit applies equally to guaranteed spaces, first come first served spaces and those only occasionally used The Standard benefit in kind is calculated as 14.53 per month
Miscellaneous benefits Staff discounts beyond normal commercial discounts Small quantities (such as food for personal use) can be ignored Interest free loans where the balance exceeds 7,300 The benefit in kind is calculated using the Maribor interest rate + 0.75%
Tax free Travel Expenses Maximum mileage allowance of 0.42/KM Payable for a maximum of 30,000 KM per tax year Reimbursement at this rate includes motorway tolls Tax free subsistence reimbursed at rate of 2.20 per hour for all trips of 3-12 hours duration So maximum payment of 26.40/day
Tax Free Travel Expenses Continued... Additional payment of 0.05c/KM due for each additional passenger 0.24c/KM paid for motorbikes 0.38c/Km (limited to 2,000 KM a year) for bikes or electric bikes All mileage claims must be backed up by a mileage log using the official log for company car usage
Tax Free Travel Expenses International Travel Flat rate subsistence rates are provided for Austrians on foreign trips For example the day rate for the UK is 41.40 The day rate to Germany is 35.30 Trips to border towns within 15 KM of the frontier are treated as domestic journeys
Tax free Benefits What can the employer provide tax free? Meal voucher to a maximum value of 4.40 per day Gifts/vouchers at Christmas of 186 Company social events to maximum of 365/year Shares in the employers business to a maximum of 1,460 a year
Job Ticket An employer provided ticket for public transport to get the employee to work The ticket must be for the named route unless it covers a mass transit system such as the Vienna metro The employer must purchase the ticket not reimburse for it The employee should not claim commuter tax relief The scheme can be provided on a salary sacrifice basis subject to any CBA limitations
Payroll Calculation On Line Payroll Calculator http://onlinerechner.haude.at/bmf/brutto-netto-rechner.html
Paying Tax over to Tax Authority Key Deadlines Tax deducted from employee salaries must be remitted to local tax office by 15 th of the following month For example tax deducted from April salary must be paid by 15 th May If the date falls on a weekend or public holiday the date falls back to the next working day Tolerance rule cleared funds by the 18 th are treated as being paid on time Payment after this date incurs a penalty of 2% of the tax due, repeated if the payment is 3 months late
Year End processes Year End Declaration Required by the employer submitting form L16 for each employee The return is due for all existing employees by 28 th February Form is due for leavers in year to be submitted by the end of the month following leaving date using the ELDA system online For example an employee leaves 31 st August, L16 to be submitted by 30 th September Paper returns only allowed in exceptional circumstances and must be submitted by 31 st January if used Annual wage tax declaration is filed by April in paper or June online using FinanzOnline Employees have to submit their return in the same deadlines
L16 Form Provides a detailed breakdown of each element of the employees package Each field is given an identifying code e.g. KZ210 general cash KZ215 tax exempt overtime pay KZ220 the other payments that the special 6% tax is levied on KZ240 deduction for tax free expenses The form must include the work address using the Statistics Austria 5 digit code for location
Social Security
Social Security Austria has a comprehensive system focusing on three areas: Social insurance financed by compulsory insurance contributions providing: Accident insurance(auva), Retirement pension insurance (PVA), Health insurance (VGKK) Unemployment insurance Public assistance in the form of grants and allowances funded from general taxation Comprehensive details can be found at : http://ec.europa.eu/employment_social/empl_portal/ssrineu/your%20social%20security%20rights%20in%20austria_en. pdf
Social Security Social welfare funding of last resort for disability, retirement and living benefits funded from general taxation System made up of 25 separate insurance companies with the Association of Austrian Social Insurance Institutions providing an umbrella organisation Employers will inevitably have to interact with a number of different insurance bodies Comprehensive details can be found at : http://ec.europa.eu/employment_social/empl_portal/ssrineu/your%20social%20security%20rights%20in%20austria_en. pdf
Social Security Rates Rates for salaried employees: Health insurance 3.87% Pension insurance 10.25% Unemployment insurance 3% Other miscellaneous cover 1% Total liability 18.12% Capped to maximum monthly income of 4,860 So maximum employee contribution per month 880.63
Social Security Rates Employer rates for salaried employees: Health insurance 3.83% Accident insurance 1.3% Pension insurance 12.55% Unemployment insurance 3% Other miscellaneous cover 0.85% Total liability 21.48% Again capped to maximum monthly income of 4,860 So maximum employer contribution 1, 043.93
Social Security rates Special payments The special one off payments qualifying for the 1/6 average pay taxation rates subject to different rate Levied on special payments on top of the normal contribution capped to 9,720 pa Contribution of 17.12% due from the employee (or 1,664.06 for the year) Contribution of 20.98% due from the employer (or 2, 039.26 for the year) This makes maximum employer contributions 13,799.30
Social Security rates Variations to standard rates Employees who have been classified as blue collar workers have a lower monthly social security base Hence the employee and employer pay lower contribution rates Employees over the age of 60 have no accident insurance charged on them a saving for the employer of 1.3%
Social Insurance Low income Employees earning below the low income threshold make no contribution at all There are aggregation rules to generate contributions on multiple low income employments The employer only has to pay the accident insurance contribution of 1.3% on these employees This threshold for 2016 is pay of 415.72 per month The employer must then pay towards health and pension
Registration process It is very important to register new hires promptly New hires must be registered before commencing work Registration is submitted electronically via ELDA Only if there is no access to computer equipment (including temporary IT failure) can registration be made by paper which must be faxed to the relevant office Registration is made with relevant Sickness Insurance institution So for Vienna based employees it would be the Vienna institution
Registration Process New Starters: Before starting work (i.e. up to the day before commencing) the minimum information must be submitted This is employer identity, name and social security number or date of birth of the employee And place of work and start date
Registration Process New Starters: Further details regarding salary, contract type, family details etc must be submitted within 7 days of commencing work A copy of the completed application must be given to the employee Failure to meet the deadlines for starter, leaver and changes could result in a fine of up to 5,000 per error
Social Security Number VSNR All Austrians issued one as part of birth registration 10 digit number positions 5-10 being DoB The number cannot begin with a zero, position 4 is a check digit
Social Security Number VSNR Needs to be included on new employee registration However foreign workers arriving in Austria won t have one, so date of birth and gender must be provided instead Numbers which show the month of birth as 13 are not necessarily wrong these are issued to certain foreign guest workers, also used where the allocation for a particular date of birth has been exhausted
Changing Employment Contract Details of significant changes to the employment contract must be registered with social security: Name and or address changes Ending of an apprenticeship Change to the contribution group (worker to salaried employee) Change to the insurance class (older worker over 60 exempt from accident insurance) All changes must be reported via ELDA within 7 days of the end of the calendar month in which the change is effective
Leavers Leavers must be de-registered promptly De-registration must take place within 7 days of the end of compulsory insurance cover Process submitted electronically via ELDA to the relevant sickness insurance institution It is particularly important to record the reason for termination of employment using one of the options given Certain reasons (including voluntary resignation) result in a 4 week lock on unemployment benefit being paid Compromise agreements do not result in this lock being applied
Unpaid leave Deregistration is sometimes required If unpaid leave is under one month no action is taken However, if unpaid leave lasts for more than one month deregistration must be submitted Periods of absence for military or civil service also require deregistration Retirement also needs to be reported using a special form submitted by ELDA
Other Employer Charges Other employer costs calculated from payroll Employer contribution to the family compensation fund (FLAG) of 4.5% of gross wages including low income employees less 1,460 Employer contribution surcharge additional charge on top of the above paid to the individual regions of Austria For example Vienna is 0.4%, Styria is 0.39% and Upper Austria is 0.36%
Other Employer Charges Employer contribution to subway construction This only applies to employers with employees in Vienna It is levied at a flat 2 per head per week on all Viennese based employees Those working less than 10 hours per week or over the age of 55 are exempt
Municipal Tax Calculated from payroll Kommunalsteuer Levied on the employer but not the employee Calculated using all cash pay and taxable benefits in kind Expense reimbursements and severance payments are not included in the calculation Based on the payroll total provided that the minimum threshold is exceeded Payable is made to each municipality in proportion to the number of employees employed in that municipality Annual return due by 31 st March (or within one month of closing) each year (form KommSt1) via ELDA
Occupational Pensions There are compulsory employer contributions in excess of social insurance contribution It is designed to provide a second tier pension for employees Contributions are due one calendar month after commencement of employment So an employee starting on 7 th March would have an employer contribution due on pay from 7 th April 30 th April All remuneration is subject to the employer contribution including benefits in kind up to the maximum social insurance threshold ( 4,860 per month) Contributions remitted with other deductions by 15 th of month via social insurance to be passed to the relevant occupational pension fund
ELDA What is it? The electronic system for transferring pay and tax/social insurance data to the relevant Austrian bodies In order to use it the company official must have a Citizen Card or registered mobile phone signature See www.buergerkarte.at for details Anyone with a citizen card can then register at www.elda.at and download the free software that allows the transmissions to be made The portal is only available in German Payroll providers will have software that interacts automatically with ELDA
Useful websites For Social Insurance: http://www.hauptverband.at/portal27/portal/hvbportal/content/contentwindow?contentid=10007.693656&action=2&vi ewmode=content http://www.hauptverband.at/portal27/portal/auvaportal/content/contentwindow?contentid=10007.670935&action=2&v iewmode=content http://www.hauptverband.at/portal27/portal/vgkkportal/content/contentwindow?contentid=10007.722378&action=2&vi ewmode=content http://www.pensionsversicherung.at/portal27/portal/pvaportal/content/contentwindow?contentid=10007.707551&actio n=2&viewmode=content https://www.usp.gv.at/portal.node/usp/public http://www.noedis.at/portal27/portal/dgnoegkkportal/content/contentwindow?contentid=10007.678835&action=2&vie wmode=content http://www.ooegkk.at/portal27/portal/ooegkkportal/content/contentwindow?contentid=10007.704986&action=2&view mode=content.
Inspection and Audit Employers pay records could be inspected by either tax office or by social insurance inspectors Inspections are undertaken via the joint committee GPLA covering tax, social insurance and municipal tax Inspectors will want access to: Payroll account records Working time records Contracts of employment Travel expense claims All employers are visited under a rolling 3-5 year programme
Data retention Employers must retain all payroll records for a minimum of seven years Remember this includes payroll and HR records and has to be taken into account if you move between payroll systems/payroll vendors
Thank you for attending! END