How to run payroll in Austria

In Austria, most employers pay employees monthly, typically on the last working day of the month. Here's the complete payroll cycle.

Austrian law requires employers to pay salaries at least once per month. Most companies stick to monthly payments on the last working day, though some pay on the 25th or 15th of each month.

Payment must be made within the agreed timeframe in your employment contracts. If no specific date is set, payment is due at the end of the working period.

13th and 14th month payments

Austria mandates both 13th and 14th month payments for most employees. These aren't bonuses – they're legal requirements that you can't skip.

The 13th month payment (Christmas bonus) is due by December 31st each year. The 14th month payment (vacation bonus) must be paid by June 30th.

Both payments equal one month's gross salary. If an employee hasn't worked the full year, you'll calculate the amount proportionally based on months worked.

These payments have favorable tax treatment. The first €620 of each payment is tax-free for employees earning up to €25,000 annually.

Holiday and vacation pay

Vacation pay in Austria is straightforward – employees receive their regular salary during vacation time. There's no separate vacation pay calculation or accrual system to worry about.

Employees earn 25 working days of paid vacation after six months of employment. This increases to 30 days after 25 years with the same employer.

When employment ends, you must pay out any unused vacation days at the employee's current daily rate. Calculate this by dividing monthly gross salary by 21.75 (average working days per month).

Payment methods

Bank transfers are the standard payment method in Austria. Cash payments are technically allowed but rarely used for regular salaries.

You must transfer salaries to Austrian or EU bank accounts in euros. For international employees, make sure their bank can receive SEPA transfers to avoid delays and fees.

Payslip requirements

Austrian payslips must include detailed information about gross pay, deductions, and net pay. You can provide payslips electronically if employees agree in writing.

Required payslip elements:

• Employee name and social security number
• Pay period and payment date
• Gross salary breakdown
• All tax deductions (income tax, solidarity surcharge)
• Social security contributions (employee and employer portions)
• Net pay amount
• Year-to-date totals

Payslips must be in German or include German translations for official terms. Keep copies for seven years as required by Austrian tax law.

Think you just withhold federal tax? Austria adds municipal taxes that catch many employers off guard.

Austria's income tax system combines federal rates with local municipal taxes that vary by location. You'll withhold both from employee paychecks, plus handle quarterly filings and annual reconciliations.

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Income tax brackets

Austria uses progressive tax rates for 2026, with a tax-free allowance of €12,816 annually (€1,068 monthly).

Annual Income (€)	Monthly Income (€)	Tax Rate
€0 - €12,816	€0 - €1,068	0%
€12,817 - €21,000	€1,069 - €1,750	20%
€21,001 - €31,000	€1,751 - €2,583	32.5%
€31,001 - €60,000	€2,584 - €5,000	42%
€60,001 - €90,000	€5,001 - €7,500	48%
€90,001 - €1,000,000	€7,501 - €83,333	50%
Over €1,000,000	Over €83,333	55%

Municipal tax adds 0% to 3% depending on the employee's residence. Vienna charges 3%, Salzburg 2.5%, while some rural areas charge nothing.

Withholding requirements

You're responsible for withholding income tax from each paycheck using Austria's monthly tax tables. Register for payroll tax within 30 days of hiring your first employee.

Monthly withholding reports are due by the 15th of the following month. Submit through FinanzOnline, Austria's tax portal. Late filing triggers penalties starting at €150 for the first offense.

Annual reconciliation compares total withholdings against actual tax owed. File by March 31, 2027 for 2026 earnings. Employees can claim additional deductions through their personal tax returns.

Tax registration

New employers need these registrations before the first payroll:

• Employer tax number from local Finanzamt (tax office)
• FinanzOnline access for electronic filing
• Municipal tax registration in each employee's residence city

Allow 2-3 weeks for initial registration. You'll need your business registration certificate and employee details including addresses.

Special tax considerations

Non-resident employees pay the same rates but can't claim certain deductions. They must file Austrian tax returns if earning over €12,000 annually from Austrian sources.

Tax treaties may reduce withholding for employees from Germany, Switzerland, and other treaty countries. Employees must provide treaty claim forms before you can apply reduced rates.

Expat packages create complications. Housing allowances and school fees are often taxable in Austria even if paid directly by foreign headquarters.

Common tax mistakes

Wrong municipal rates happen when employees move without updating addresses. Penalties reach €500 per employee for incorrect municipal tax withholding.

Missing quarterly payments cost 6% annual interest plus penalties. Austria requires quarterly estimated payments by the 15th of February, May, August, and November.

Incomplete annual reconciliation triggers automatic penalties of €300 minimum. Include all employee address changes and treaty claims in your annual filing.

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Employer contributions in Austria add 21.83% to every salary. Budget for it.

Austria's social security system requires substantial employer contributions across multiple areas. These aren't optional - they're mandatory for all employees from day one.

Contribution breakdown

Contribution Type	Employer Rate	Employee Rate	Cap (2026)
Social Security	12.55%	10.25%	€6,540/month
Health Insurance	3.78%	3.87%	-
Unemployment	3.00%	3.00%	-
Accident Insurance	1.30%	-	-
Family Allowance	3.00%	-	-
Housing Fund	0.50%	0.50%	-

The social security cap applies only to pension and unemployment contributions. Once an employee earns more than €6,540 per month (€78,480 annually), you stop paying contributions on the excess amount.

Total employer cost example

For a €60,000 annual salary:

• Base salary: €60,000
• Social security: €7,530
• Health insurance: €2,268
• Unemployment: €1,800
• Accident insurance: €780
• Family allowance: €1,800
• Housing fund: €300

Total employer cost: €74,478 Cost multiplier: 1.24 (you pay 24% more than base salary)

Contribution caps and high earners

Social security contributions cap at €6,540 monthly income. For employees earning above this threshold, your contribution burden actually decreases as a percentage of total salary.

A €100,000 salary costs you €121,068 total - just 21% above base salary instead of 24%. The cap saves you about €2,700 annually on high earners.

Registration requirements

You must register with multiple Austrian agencies before paying your first employee:

• Austrian Health Insurance Fund (ÖGK): Register within one week of hiring
• Austrian Public Employment Service (AMS): Register before first payroll
• Accident Insurance Association: Register within one week
• Tax office: Register for payroll tax withholding

Each registration requires your business license, employee contracts, and proof of Austrian business registration.

Payment deadlines

All employer contributions are due by the 15th of the following month. If the 15th falls on a weekend or holiday, payment is due the next business day.

Late payments incur a 2% monthly penalty plus interest. The Austrian authorities don't offer grace periods - payments are either on time or penalized.

Submit contributions electronically through the ELDA system. Paper submissions aren't accepted for companies with more than five employees.

Austria has 13 public holidays in 2026. Work on these days? Pay double.

Your Austrian employees get solid leave entitlements that directly impact your payroll calculations. Here's what you need to budget for and how each type affects your monthly processing.

Annual leave

Austrian employees get 25 working days minimum vacation after completing their first year. That jumps to 30 days after 25 years with the same employer.

Vacation pay is calculated at 100% of regular salary. You must pay vacation time in advance when employees take their leave - not after they return.

Employees can carry over unused vacation to the following year, but it expires on June 30 if not used. When someone leaves, you must pay out all unused vacation days at their current daily rate.

Calculate daily vacation pay by dividing monthly salary by 21.75 (the average working days per month).

Sick leave

Employees get unlimited sick days, but the payment structure changes based on duration. You pay 100% of salary for the first 6-12 weeks (depending on tenure), then social insurance takes over.

Employees need a doctor's certificate from day 4 of illness. For payroll, treat sick pay the same as regular salary - it's subject to all normal taxes and contributions.

The social insurance fund reimburses you 50% of sick pay costs after the third week of continuous illness.

Parental leave

Maternity leave runs for 16 weeks total - 8 weeks before birth and 8 weeks after. Social insurance pays 100% of average earnings from the last 13 weeks, capped at €5,830 monthly in 2026.

Paternity leave gives fathers 4 weeks at the same 100% rate and monthly cap.

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Parental allowance (Kinderbetreuungsgeld) comes after maternity leave. Parents can choose between different models, with payments ranging from €436 to €2,000 monthly depending on the option selected.

Public holidays 2026

Date	Holiday	Notes
January 1	New Year's Day
January 6	Epiphany
April 6	Easter Monday
May 1	Labour Day
May 14	Ascension Day
May 25	Whit Monday
June 4	Corpus Christi
August 15	Assumption Day
October 26	National Day
November 1	All Saints' Day
December 8	Immaculate Conception
December 25	Christmas Day
December 26	Boxing Day

Work on public holidays requires double pay - 100% regular wage plus 100% holiday premium. Most employees get the day off with full pay instead.

Mandatory benefits affecting payroll

13th and 14th month bonuses are mandatory in most sectors. These equal one month's salary each, paid in June (vacation bonus) and November/December (Christmas bonus).

Both bonuses get preferential tax treatment - only 6% tax rate up to one-sixth of annual salary.

Meal vouchers aren't mandatory but are common. You can provide up to €8 daily tax-free. The employer contribution (minimum 50%) is tax-deductible.

Company cars for private use add taxable benefit equal to 1.5% of list price monthly, plus 0.6% per kilometer for commuting if applicable.

Employment contracts in Austria must include specific mandatory elements or they're legally invalid. Missing clauses around working time, termination notice, or collective bargaining agreements can trigger labor court disputes and fines up to €7,280 per violation.

What monthly filings are required?

Wage tax and social security reporting

You must file Lohnzettel (payroll reports) by the 15th of the following month through FinanzOnline. Late submissions trigger penalties starting at €150 per employee for the first week, escalating to €500 per employee after 30 days.

The monthly filing includes:

• Gross wages and salary payments
• Tax withholdings (Lohnsteuer)
• Social security contributions for all schemes
• Special payments and benefits-in-kind

Municipal tax declarations

Vienna and other municipalities require separate Kommunalsteuer filings by the 15th of each month. The 3% municipal tax applies to gross wages and must be reported through local tax portals.

Missing municipal tax filings result in estimated assessments that typically exceed actual liability by 25-40%.

What annual reporting is mandatory?

Year-end reconciliation deadlines

Submit your annual wage tax return (Jahreslohnzettel) by January 31, 2027 for the 2026 tax year. This reconciliation must match monthly filings exactly or trigger automatic audits.

Employee documentation requirements

Provide each employee with their annual Lohnzettel by January 31. This document enables personal tax return filing and must include:

• Total gross wages for 2026
• All tax withholdings by category
• Social security contributions breakdown
• Special payments and 13th/14th month salaries

Audit and verification processes

The Sozialversicherung (SVS) audits approximately 15% of employers annually. They verify contribution calculations, employee classifications, and benefit entitlements going back three years.

Common audit triggers include:

• Discrepancies between monthly and annual filings
• High ratios of freelancers to employees
• Significant changes in workforce size

What employee records must you maintain?

Employment contract essentials

Payslip compliance standards

Austrian payslips must be bilingual (German plus employee's native language if requested) and include 18 mandatory elements. Missing information like collective agreement references or detailed contribution breakdowns can result in €220 fines per payslip.

Key payslip requirements:

• Gross salary breakdown by component
• All deductions itemized separately
• Year-to-date totals for tax and contributions
• Employer social security registration numbers
• Clear identification of 13th and 14th month payments

Record retention obligations

Maintain all payroll records for seven years from the end of the calendar year. This includes contracts, payslips, time records, and tax documentation.

Digital storage is acceptable but must meet DSGVO (GDPR) standards with audit trails and backup systems. Lost records during audits result in penalty assessments based on estimated maximum liability.

What are the penalty structures?

Violation	Penalty Amount	Additional Consequences
Late monthly filing (1-7 days)	€150 per employee	Interest charges from due date
Late monthly filing (8-30 days)	€300 per employee	Estimated assessments
Late monthly filing (30+ days)	€500 per employee	Automatic audit trigger
Missing payslip elements	€220 per occurrence	Employee complaint rights
Incorrect tax withholding	20% of underpayment	Criminal liability if intentional
Social security underpayment	20% penalty + 6% annual interest	Retroactive employee benefit adjustments
Missing employment contracts	€7,280 per employee	Labor court jurisdiction
Inadequate record keeping	€3,600-€36,000	Estimated tax assessments

Which agencies oversee payroll compliance?

Primary regulatory bodies

Bundesministerium für Finanzen (Federal Ministry of Finance) oversees all tax-related payroll compliance through local Finanzämter (tax offices). Use FinanzOnline (finanzonline.bmf.gv.at) for all tax filings and communications.

Sozialversicherung Österreich (SVS) manages social security compliance and audits. Access employer services through the SVS Business Portal (businessportal.sv.gv.at).

Regional considerations

Vienna: Additional municipal tax reporting through Stadt Wien portal (wien.gv.at/finanzen) Salzburg: Separate tourism tax obligations for hospitality employers Tyrol: Cross-border worker special reporting for German and Swiss residents

Contact your regional Wirtschaftskammer (Chamber of Commerce) for industry-specific collective bargaining agreement guidance and compliance support.

2026 brought several important payroll changes to Austria. Here's what you need to update.

Minimum Wage Increase - Effective January 1, 2026 Austria's statutory minimum wage increased to €1,776 per month (gross), up from €1,744 in 2025. This represents a 1.8% increase.

The hourly minimum wage is now €10.50 for a standard 40-hour work week. Collective bargaining agreements may set higher rates, so check your industry-specific agreements.

Social Security Contribution Ceiling - Effective January 1, 2026 The contribution ceiling for social security increased to €6,060 per month (€72,720 annually), up from €5,950 in 2025.

This affects high earners who'll see slightly higher social security deductions until they hit the new ceiling. Update your payroll systems to reflect this change.

Pension Insurance Rate Adjustment - Effective January 1, 2026 Employee pension insurance contributions remain at 10.25%, but the employer rate increased slightly to 12.55% (from 12.45%).

This adds approximately €6 monthly to employer costs for an employee earning €3,000 gross.

Digital Payroll Reporting Enhancement - Effective March 1, 2026 Austria expanded mandatory digital reporting to include monthly overtime hours and night shift premiums. You must report these through the existing ELDA system.

Late or incomplete reports face penalties starting at €500 per employee.

Upcoming Changes Austria announced plans to digitize vacation day tracking starting January 2027. Employers will need to report annual leave balances and usage electronically. More details expected by mid-2026.