New Austrian legislation on homeworking and its implications for payroll
On 24 February 2021, the Austrian National Council approved the 2nd COVID-19 Tax Measures Act, which provides for non-taxable reimbursement of costs by the employer and a flat rate deduction for business expenses for the employee if homeworking (so-called “home office”) has been agreed. After a year of working from home due to COVID-19, employees or works councils in many companies are calling for rapid implementation – even if the legislation will only enter into force in coming weeks. In addition to drafting a Home Office Agreement, and deciding on the prerequisites for working from home, it will also be necessary to prepare the necessary changes to payroll.
Documentation and reporting obligation for “home office” days
A Home Office Agreement will create additional documentation and reporting obligations for employers, even if no non-taxable flat rate for homeworking is granted. The number of days in a calendar year spent working from home must be recorded in the wage account and stated on the payslip (L 16). The following 3 prerequisites must be taken into account:
1. Homeworking must have been agreed: It is a requirement that homeworking activities are based on an agreement between the employee and the employer. According to the legislative documentation, this could take the form of a provision within a collective agreement or works agreement, or be concluded as an individual agreement. According to the online FAQs of the Austrian Ministry of Finance, instructions from the employer during the COVID-19 pandemic can be classified as an agreement (Source).
2. Only applies to days exclusively spent working from home: Home office days only include working days on which work is carried out exclusively from home. Working days on which the employee works partly from home and is partly on a business trip or works in the employer’s offices do not count as home office days.
3. The activities must be carried out at home: A home can be defined not only as the primary registered address or secondary registered address of the employee, but also the home of a close family member or relationship partner, if the employee carries out homeworking activities from this location. If work is carried out in cafés, libraries, hotel rooms, or in public spaces, no home office day shall exist for the purposes of Austrian tax law.
Granting flat rate expenses for homeworking
- Employers can grant non-taxable flat rate expenses for homeworking, which are exempt from social security and non-wage labour costs, in the amount of EUR 3 per home office day for a maximum of 100 home office days in a calendar year (max. EUR 300 per calendar year).
- The flat rate expenses do not need to be checked against the number of home office days on a monthly basis. However, employers must ensure that only EUR 3 is granted per home office day on average across the calendar year (e.g. by recalculation at year-end), and no more than EUR 300 is granted per calendar year.
- The non-taxable flat rate expenses for homeworking must also be stated in the wage account and on the payslip (L 16).
- Discrepancies between the recorded home office days, travel expense records, and journey logs, could risk creating wage tax liabilities for the employer during wage tax audits. It is therefore advisable to carry out plausibility checks.
Typical questions relating to implementation
- How can home office days be recorded in existing company systems, e.g. timesheets, and be identified in the wage account at least through recalculation at year-end?
- How can home office days be determined for Q1 and Q2 2021, if a Home Office Agreement was already in place during this period? According to the online FAQs of the Austrian tax authorities, it is permissible to use estimates for this time period. It should be checked whether utilisation planning in connection with COVID-19 measures could provide a basis for an estimate of this kind, or which relevant data could be used.
- How can company guidelines and instructions on timekeeping help ensure that only home office days that fulfil the requirements are recorded? For employees, there is a tax incentive to document as many home office days as possible, to receive non-taxable flat-rate expenses for homeworking from the employer, or to claim a flat rate deduction for business expenses in the tax return. The reporting obligation applies to the employer.
- Due to the reporting obligation for home office days, the Austrian tax authorities will receive data on the extent of the employee’s homeworking activities. Questions may potentially arise regarding which municipality is entitled to receive municipal taxes if the number of home office days indicates a greater degree of organisational and economic connection with a home office, rather than the employer’s offices.