In Austria, companies are responsible for calculating the wage tax for employee remuneration, including certain reimbursed business expenses which may be considered as income. When computing the wage tax, the employer also needs to take into account certain tax exemptions or tax benefits such as:
- Miscellaneous bonuses, supplements and overtime work payment
- Business trips (mileage allowance as well as per diem allowances for business trips)
- Traveling between home and the workplace – lump sum for commuters and transportation organized by an employer
Many employers pay allowances to employees to reflect expenses they incur in their role. These allowances are generally administered though collective bargaining agreements. In Austria, the rights and entitlements arising from the employment relationship are not regulated by law, but are exclusively secured by the collective agreement which vary by industry.
For companies that do not fall within any collective agreement, the federal wage tax regulation can be applied. We’ll cover some of the more typical employee business expense reimbursements below from the federal level.
Employees are entitled to receive payments from their employers for costs associated with a business trip. The following business trip reimbursements are not subject to wage tax as long as certain conditions are met:
- Transportation costs (e.g. mileage allowance)
- Per diem (meal) allowances
- Overnight accommodation costs
The Austrian Income Tax Act (Einkommensteuergesetz) defines a business trip as an activity where an employee works away from their normal place of work as instructed by their employer. If the collective agreement contains a special regulation of the term business trip, then this regulation is to be applied.
Domestic Per Diems
Wage regulations such as within collective bargaining agreements determine whether the payment of a daily allowance is tax free
A daily meal allowance of € 26.40 is available for 24 hours during a business trip. For domestic trips greater than 3 hours, per diems of € 2.20 can be claimed for each commenced hour (“one-twelfth rule” as per the Austrian Income Tax Act). If a meal is provided, the tax-free allowance needs to be deducted by € 13.20 (50%); and if two meals are provided, the allowance is deducted by 100%.
Higher amounts are never tax-free even if a proof is provided, regardless of whether or not there is a claim under a collective agreement. This means that allowances in excess of the maximum rate must be accounted for in the wage tax.
A distinction between short-distance (up to 120 km, as a rule) and long-distance business trips is important for the period of granting tax-exempt per diem allowances.
What is the tax procedure for short-distance business trips?
- Per diem allowances can be granted tax-free due to the additional cost of meals as long as no new “center of activity” is established
- A “center of activity” is a location where you have been in the same place for more than 5 consecutive days or more than 15 times per calendar year
- When a new “center of activity” is established, only the initial per diems of 5 (consecutive) or 15 (calendar) days, are tax-exempt
In contrast, a long-distance business trip is when the distance and period of the trip is long enough that the employee cannot be reasonably expected to return home (greater than 120 km).
- Per diem allowances can be granted tax-free for a period of 6 months when taking business trips to the same place.
- Daily and overnight allowances after the first 6 months are taxable and must be included in the wage tax for the employee.
- If there is a change in the “center of activity”, the 6-month period restarts with the new location.
For overnight stays in Austria, reimbursements of actual costs of accommodation and breakfast are tax-free with proof of expense. If no receipts are shown, employers can pay tax-exempt overnight allowances of € 15 per night.
In principle, overnight allowances are only tax-free if the overnight stay is actually spent and the overnight stay can also be proven (e.g. through hotel bills). Without a receipt, an overnight supplement of € 4.40 is allowed for trips in Austria and € 5.85 per overnight stay when traveling abroad.
Expenses incurred by the company for meals and accommodation for a business trip are to be recognized as business expenses, provided they do not exceed the tax-free amounts. Higher expenses for meals are not to be taken into account, but may still need to be calculated and included in the payroll as taxable remuneration for the employee.
International Per Diems
Employers may pay tax-exempt meal and overnight allowances for trips abroad at the maximum rate applicable to foreign travel assignments of Federal employees. You can find the full list of rates in the financial documentation (Findok) of the Federal Ministry of Finance.
International per diems are calculated the same way as domestic per diems.
If a day consists of a mix of both domestic and international, then the international segment of the per diem takes precedence over the domestic portion. Here’s an example trip from Findok:
Business trip from Vienna to Frankfurt by car:
- Start of the trip was at 7 a.m.
- border crossing Passau at 11:15 a.m.
- border crossing on the return journey at 3 p.m. the next day
- end of the trip at 6:10 p.m.
According to the calendar day rule, the journey takes a total of 2 days, each lasting more than 12 hours with a breakdown between foreign and domestic shares as follows.
- 1st day of travel (11:15 a.m. to 12:00 a.m.) = 12 / 12
- 2nd day of travel (00:00 to 15:00) = 12 / 12
- No tax-free daily allowance can be paid out, as the total entitlement (12 / 12) has been exhausted by the foreign portion.
According to the 24-hour rule, the journey takes 35 hours and 10 minutes with two daily rates (24 / 12).
- The foreign share (11:15 a.m. to 3:00 p.m. the next day) is 16 / 12
- so the remaining domestic share is 8 / 12*.*
Due to the complexity of Austrian per diems and the relevant wage taxes that need to be applied, we suggest exporting the user trip details and consulting the calculation of taxable employee benefits with your tax advisor or payroll platform.
Unlike domestic per diems, international per diems do not have a deduction when only one meal is provided. However, if two meals are paid for in one day, only a third of the daily allowance is awarded (a 66% deduction on the foreign daily rate).
Tax-exempt reimbursements for overnight accommodation and breakfast, can also be reimbursed for the actual amounts shown on the receipt.