Current changes: Social security and income tax

Current changes: Social security and income tax

The upcoming turn of the year will bring a number of legal changes to social security and income tax law. The following article provides an overview of the key points, which deal in particular with the Progression Settlement Act 2024 and the Budget Accompanying Act 2024. The adoption of both draft laws by the National Council and Federal Council is to be expected at the end of November. In addition, there have been changes on an international level during the year, which must already be taken into account on an ongoing basis or in the income tax assessment for the year 2023.

 

Reduction in the unemployment insurance contribution

From January 1, 2024, the unemployment insurance contribution is to be reduced from 2.4% to 2.3% for apprentices and from 6% to 5.9% for all other insured persons (blue-collar workers, salaried employees and independent contractors). The split between employers and employees will remain unchanged. However, the planned reduction in contributions will not apply to insured persons with low incomes. A gradual reduction of the unemployment insurance contribution is to remain unchanged at 2% and 1% (or 1.2% and 1% for apprentices).

 

Increase in employer contribution

If the total payroll of all marginally employed persons exceeds the threshold of EUR 751.37 (value 2024: EUR 777.66), employers with more than one marginally employed person must pay a so-called employer contribution. In a recently published ruling, the Constitutional Court clarified that multiple marginally employed persons are covered by unemployment insurance and the corresponding unconstitutional provision will be repealed with effect from April 1, 2024. Due to the inclusion in unemployment insurance, the employer contribution is now to be increased from 16.4% to 19.4% from 1.1.2024.

 

Adjustment of tariff limits

The threshold amounts for the tariff levels are to be adjusted as follows in 2024:

Tax rate

Tariff limit 2023

Tariff limit 2024

0%

up to EUR 11,693

up to EUR 12,816

20%

up to EUR 19,134

up to EUR 20,818

30%

up to EUR 32,075

up to EUR 34,513

41% and 40% respectively

up to EUR 62,080

up to EUR 66,612

48%

up to EUR 93,120

up to EUR 99,266

50%

from EUR 93,120

from EUR 99,266

55%

from EUR 1 million

from EUR 1 million

 

Extension of tax benefits for overtime, dirt, hardship and hazard allowances and sunday, public holiday and night allowances

The maximum possible tax-free allowance for the first 10 hours of overtime per month is to be increased from the current EUR 86 to EUR 120 in future. For the calendar years 2024 and 2025, it should also be possible to pay up to EUR 200 tax-free for the first 18 hours of overtime per month.

In addition, the tax-privileged monthly allowance for the payment of dirt, hardship and hazard allowances (SEG allowances) as well as for bonuses for Sunday, public holiday and night work (SFN bonuses) and overtime bonuses associated with this work is to be increased from the current EUR 360 to EUR 400 from 2024.

 

Increase in the additional child allowance and childcare subsidy

To support families, the additional child allowance is to be increased from the current EUR 550 to EUR 700 per child per year from the 2024 assessment. In addition, from the 2023 assessment, any weekly allowance and childcare allowance received in the same calendar year will no longer be detrimental to the additional child allowance.

In addition, the tax-free subsidy for childcare is to be extended by doubling the tax-free childcare allowance - currently EUR 1,000 to EUR 2,000 in future - and raising the age limit from 10 to 14 years. At the same time, processing will also be simplified. In the future, it should be possible for the employee to initially pay the costs themselves and be reimbursed at least in part by the employer (upon presentation of the invoice, which must be included in the payroll account).

In addition, the creation of elementary educational facilities by employers is to be made more attractive by making free or discounted attendance at company kindergartens and company nurseries tax-free in future, even if they are also attended by children from outside the company or are run jointly by several employers.

 

Multilateral agreement in the area of social security

Since July 1, 2023, a multilateral agreement on cross-border teleworking applies to the signatory states at European level. The new regulation enables employees, in agreement with the employer, to perform up to 49.99 percent of their teleworking activities in their home country abroad without changing the applicable social security regime. For more information on the definition of teleworking applicable for the new regulation, please refer to our more detailed article on the topic of cross-border home office. In case that the activity performed abroad  is not considered as teleworking, the provision of Article 13 of Regulation (EC) 883/2004 continues to apply, according to which social security responsibility changes from the country of employment to the home country of the employee if the employee performs at least 25% of his work in the home country.

 

Application of the progression proviso in the source state

Due to the ruling of the Supreme Administrative Court (VwGH) of 7.9.2022 and the subsequent amendment of the income tax guidelines, Austria will consider the progression clause when determining the domestic tax rate also in case Austria is only the source state according to the applicable double tax treaty. The new regulation represents a significant change to the previous practice, according to which the progression clause was only applied to taxpayers resident in Austria according to the double tax treaty. This regulation is applicable as of the income tax assessments for the year 2023.

 

Amendment of the cross-border commuter regulation in the DTA between Austria and Germany

The protocol of amendment to the double tax treaty (DTT) signed on 21.8.2023 revised the cross-border commuter regulation that previously applied between Austria and Germany due to the increase in home office work. Previously, the cross-border commuter regulation in Article 15 para. 6 DTT AT-GER generally required a daily commute between the place of work in one country and the place of residence in the other country (residence state).

According to the new regulation, which will enter into force on January 1, 2024, it is sufficient for the cross-border commuter regulation to apply if employees carry out their work within a legally defined border zone. If this condition is met, the residence state is allowed to tax the income of the cross-border commuter, even if the work is performed in the residence state. In cases where the cross-border commuter status is not applicable due to a recurring activity outside the border zone, the f taxation right is  divided between Austria and Germany based on the working days in the respective country. As already explained in our detailed article on "Changes to the cross-border commuter regulation", a list of municipalities located in the relevant border zone will be published as part of a consultation agreement.

 


 

Authors:

Julia Mäder

julia.maeder@bdo.at
+43 5 70 375 - 1521

      

Cornelia Stangl

cornelia.stangl@bdo.at
+43 5 70 375 - 1194

 

 

Contact persons:

Thomas Neumann

thomas.neumann@bdo.at
+43 5 70 375 - 1720
       Katja Reichl

katja.reichl@bdo.at
+43 5 70 375 - 1463