Tax tips for employers & employees
1. Optimal utilization of the annual salary
If, in addition to the regular monthly salary, other payments (such as overtime pay, night work bonuses, dirt, hardship and risk allowances, etc.) are paid out or if non-cash benefits are only offset twelve times a year, then the preferentially taxed one-sixth of the year is generally not optimally utilized by vacation and Christmas bonuses. In this case, a bonus could be paid out in the amount of the remaining one-sixth of the year, which is taxed at between 6% and 35.75% depending on the amount of the one-sixth of the year. If the annual sixth amounts to more than € 83,333, a tax rate of 50% or at most 55% applies to amounts in excess of this. For employees who have received reduced remuneration due to short-time working, the annual sixth is to be increased by a flat rate of 15% (also for the control sixth).
Please note: If more than one-sixth of the current remuneration received in the current calendar year 2023 is taxed at a preferential rate at the fixed tax rate, the employer must pay tax on the excess amounts by rolling them up at the standard rate when the last current remuneration is paid (in December or in the month of termination).
2. Future security for employees up to € 300 tax-free
The payment of premiums for life, health and accident insurance (including subscription to a pension investment fund) by the employer for all employees or certain groups of employees is still tax-free up to € 300 per year and employee.
Please note: If the ASVG maximum contribution basis has not yet been exceeded, the payments are subject to social security contributions if they originate from a deferred compensation scheme.
3. Employee participation and cost-of-living bonus
3.1. Employee participation
There is an allowance of € 3,000 per employee and year for the benefit from the free or discounted transfer of shares in the employer's company or in affiliated group companies. The benefit must accrue to all employees or a certain group of them; the share must be held by the employee for more than 5 years. In the opinion of the VwGH, members of the management also constitute a group eligible for benefits.
3.2. Employee profit participation and cost-of-living bonus
Since January 1, 2022, it has been possible to give active employees a tax-free share of the company's previous year's profit of up to € 3,000. Alternatively, a tax-free cost-of-living bonus of up to € 3,000 can still be paid out to employees in 2023. We have compared the most important differences here:
| Cost-of-living bonus | Employee profit-sharing bonus |
Beneficiary bonus amount | € 2,000 per year per employee without conditions; An additional € 1,000 in the case of a wage-shaping provision | € 3,000 per year per employee |
Tax exemptions | Wage tax, municipal tax, employer's contribution, surcharge on employer's contribution and social security contributions | Wage tax |
Employee groups | no employee groups | Profit sharing must be allocated to employee groups with objective, comprehensible criteria |
Company profit | no profit required | Premium amount capped at the previous year's capped at the previous year's EBIT |
Replaces "normal" bonuses | No, must be additional payments | Yes, if all prerequisites are met |
TIP: As a rule, the cost-of-living bonus will be the preferred instrument for the employer in 2023. If a cost-of-living bonus is to be granted to the employee, make sure that it is paid out with the December payroll at the latest.
4. Preview of employee participation in start-ups
The Start-up Promotion Act 2023, which is currently under review, is to include a new benefit for employee participation from January 1, 2024. A tax deferral will be introduced for start-up employee shareholdings, meaning that the non-cash benefit from the free transfer of company shares will only be taxed upon the employee's "exit" (e.g. subsequent sale of the shares). In addition to the deferral of taxation, preferential taxation is to take place. It may therefore be advantageous for all start-up entrepreneurs to postpone this type of employee participation until 2024.
Please note: This employee participation is closely linked to the planned introduction of a new company form "FlexKap" (flexible corporation); however, this had not yet been approved by the legislator at the time this client information was issued.
5. Christmas gifts up to € 186 tax-free
(Christmas) gifts to employees are exempt from wage tax and social security contributions within an annual allowance of € 186 if they are gifts in kind (e.g. vouchers for goods, gold coins). Gifts of money are always subject to tax.
Please note: If the gifts to employees go beyond mere courtesies (e.g. books, CDs, Blu-rays), VAT is also payable (if an input tax deduction could be claimed).
6. Company events up to € 365 tax-free
A tax-free amount of € 365 per employee and year is available for participation in company events (e.g. company outing, Christmas party, team meetings). All company events for the entire year are added together. Any excess amount is taxable wages.
7. Benefits in kind on the occasion of a service or company anniversary up to € 186 tax-free
Benefits in kind granted to employees on the occasion of a company or service anniversary are tax-free up to € 186 per person and year.
8. Childcare costs: € 1,000 allowance from the employer is tax-free
If the employer provides a childcare allowance for all or certain groups of its employees, this allowance is exempt from income tax and social security contributions up to an amount of € 1,000 per year per child up to the age of ten. The prerequisite is that the employee is granted the child deduction for the child for more than six months of the year. The allowance may not be paid to the employee, but must be paid directly to an institutional childcare facility (e.g. kindergarten), to a pedagogically qualified person or in the form of a certificate from an institutional childcare facility.
9. Tax-free job ticket or climate ticket
To promote the use of public transport, the costs of public transport ("job ticket") can also be paid tax-free by the employer if the ticket is valid at least at the place of residence or at the place of work. The job ticket also includes the so-called "Klimaticket" (also known as the 1-2-3 ticket).
The ticket can be provided by covering all or part of the costs. The extension of tickets, especially annual tickets, constitutes a ticket purchase. However, if the job ticket is provided instead of the previously paid taxable salary, this constitutes a non-preferential, taxable salary conversion.
10. Homeoffice
As compensation for the additional costs incurred by employees working from home, the employer can pay up to € 3 per home office day (= € 300 per year) tax-free for a maximum of 100 days per calendar year. In order for this home office allowance to be taken into account, the professional activity must be carried out at the employee's home on the basis of an agreement made with the employer (= home office agreement).
In order to be able to document the home office days, the employer is obliged to keep a record of these days. The number of home office days must be stated in the payroll account and on the payslip (L16).
If the home office allowance is not used up to the maximum amount by the employer, the employee can claim the difference as income-related expenses in their employee tax assessment.
Example: Mr. Fritz works exclusively in his home office for 100 days. His employer pays him € 2 per home office day, i.e. a total of € 200. In his tax return, Mr Fritz can also claim the unused amount of € 100 as income-related expenses. The amount is the difference between the maximum amount (€ 3 x 100 = € 300) and the amount received from the employer of € 200.
Digital work equipment and the (mobile) telephone provided to the employee by the employer for home office purposes do not constitute a taxable benefit in kind, even in the case of partial private use.
In addition, employees can also claim expenses for the ergonomic furnishing of their home workplace outside of a study (e.g. desk, swivel chair, lighting) up to an amount of € 300 in the calendar year 2023 as income-related expenses. However, the prerequisite for this is that the employee has worked from home for at least 26 days.
If, in addition to the ergonomic equipment and the home office lump sum, an employee has also purchased work equipment exclusively for work purposes, this can be claimed as income-related expenses as before. However, digital work equipment is offset against the home office lump sum.
11. Flat-rate travel allowances
Lump-sum travel allowances paid to athletes, referees and sports supervisors (e.g. trainers, masseurs) by non-profit sports clubs are tax-free and non-contributory in 2023 up to € 120 per day of work, up to a maximum of € 720 per calendar month of work.
Please note: An annual reporting obligation has been introduced for the paying clubs. The club must send a report to the tax office by the end of February of the following year (for the first time by 29.2.2024 for the year 2023) for each athlete, referee, coach who has been paid tax-free lump-sum travel expenses for a non-self-employed activity.
Source: ÖGSW