Up to now foreign employers without a permanent establishment for payroll purposes in Austria were not obliged to run a payroll administration for its Austrian employees. Therefore, no wage tax was withheld during the year, with the consequence that the employees were obliged to file a tax return and declare the employment income in the tax return. Nevertheless, the foreign employer was allowed to register voluntarily for payroll purposes and deduct wage taxes on a monthly basis. Due to a legislative amendment, the current law will change from 1 January 2020.
According to the amendment to the Austrian Income Tax Act (AITA), employers with no permanent establishment for payroll purposes in Austria will also have a payroll-tax withholding obligation on employment income of employees, if employees are subject to unlimited tax liability in Austria. If the employees are subject to limited tax liability in Austria, the payroll-tax withholding obligation on employment income of these employees in Austria continues on a voluntary basis.
Katja Reichl
katja.reichl@bdo.at