Austrian government confirms retroactive change to wage tax deduction for foreign employers
As reported in an earlier article (see blog post from 27.11.2020), the Austrian government announced in December that the wage tax withholding obligation for employers without a wage tax PE in Austria would be repealed with retroactive effect. In accordance with this draft, under the new rules these employers will no longer be required to withhold wage tax from the income of employees who are subject to unlimited tax liability in Austria. The new rules fully replace the former legislation, which had only been in place since 1 January 2020.
If a foreign employer withheld wage tax in 2020 under the previous rules, without this being necessary under the new rules, this deduction will now be regarded as voluntary. The new rules also include more precise requirements in this regard.
The wage tax obligation itself has not been completely abolished, but replaced with a disclosure obligation in the form of a wage statement (L17 form), which applies in the following circumstances:
- The employee is subject to unlimited tax liability in Austria
- The employee has their centre of activities in Austria for more than six months in a calendar year
The deadline for disclosure of wage statements ends – if submitted electronically – at the end of February of the subsequent year (otherwise the end of January of the subsequent year). For the calendar year 2020, a longer period will apply on a transitional basis, with the deadline being 31 March 2021.
Due to a reorganisation of the Austrian tax authorities, Tax Office Austria is responsible for both voluntary wage tax deductions and processing wage statements for all Austrian regions from 1 January 2021.
We would be happy to advise you on the new rules if you are a foreign employer with employees who have connections to Austria, or if you require support issuing wage statements.