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Austria taxes tax residents on income from everywhere, so tax already paid abroad doesn’t take that income off the Austrian return. Depending on the treaty and the type of income, Austria either exempts the foreign income but counts it when setting the rate on the rest, or taxes it and credits the foreign tax. Pay from a foreign employer, dividends from a foreign broker and rent from a flat abroad each go on a different form, and foreign banks pass residents’ account data to the Austrian tax office. This covers people who are tax resident in Austria; income tax is federal and works the same in every state.
For a tax resident of Austria, income taxed abroad is still Austrian business: the foreign tax comes first, and Austria then either steps back from the income or takes its share and credits what was paid. The common assumption that it belongs to the foreign tax office alone leaves the Austrian return incomplete.
This article is the overview. It sets out the Austrian rules for residents and stops where a treaty question starts (which country may tax which income), pointing to the article that goes deeper in the sentence that touches each topic.
Worldwide income: what unlimited tax liability covers
Austrian tax law taxes anyone with a home or habitual abode in Austria on all income, at home and abroad, according to the opening rules of the income tax act (in German). The technical name is unbeschränkte Steuerpflicht (unlimited tax liability). The article on tax residency covers the home test and the stay of more than six months.
Nothing in that rule asks whether another country has already taxed the income. Foreign tax changes what Austria does with the income, which is the next section’s subject, and leaves it on the Austrian return.
Austria also works out foreign income on its own terms. The income tax act’s rules on determining income (in German) say Austrian provisions govern how foreign income is calculated, so depreciation, expenses and the profit method follow Austrian law rather than the foreign return.
Foreign losses count only up to the loss under foreign tax law and are reported in the return. Where the foreign income is exempt in Austria, those losses are added back in the year they are, or could be, used abroad.
Non-residents
This article covers people who are tax resident in Austria. Someone taxed only on Austrian-source income as a non-resident falls under different rules, set out in the article on non-residents with Austrian income.
International organisation staff
Pay from an international organisation with a headquarters agreement in Vienna may follow that agreement instead of the rules here, and the agreement decides how that pay interacts with other income. The organisation’s HR or legal office is the first stop; the article on international organisation staff covers what applies where.
Contested flag
Tax residency with homes in two countries, and the year of arrival or departure, can’t be settled from the general rule.
Austrian law makes a person unlimited-liability taxable once a home or habitual abode exists in Austria. Treaties add their own tie-breaker tests for people with homes in both countries, so someone can be resident in Austria under domestic law and resident elsewhere under a treaty.
For the year of arrival, the finance ministry’s information on a mid-year move to Austria (in German) says only income earned while unlimited liability applies goes into the assessment, and only foreign income received in that period can raise the rate through the progression proviso. The information dates from 29 October 2007 and rests on guideline paragraphs that couldn’t be opened for this article, and no single official page covers every case. The article on the year you arrive or leave tracks the position.
Exemption with progression or credit: how Austria avoids double taxation
Austria has concluded double taxation agreements (Doppelbesteuerungsabkommen) with its most important partner states. The finance ministry’s overview of the agreements (in German) says Austria relieves double taxation in one of two ways: it exempts the income under the progression proviso, or it credits the foreign tax.
Each agreement is a separate text and can depart from the model, so the treaty with the country in question decides which method applies to which income. The article on double taxation agreements covers how to find and read it.
Exemption with progression (Befreiungsmethode with Progressionsvorbehalt) means Austria doesn’t tax the foreign income itself but counts it when it sets the rate on the rest. The finance ministry’s page on employment income with a foreign element (in German) says the foreign income is left untaxed under this method but has to be taken into account in determining the tax rate. The cost shows up on the Austrian income, which is taxed at the higher average rate the combined total would bear.
Credit (Anrechnungsmethode) means Austria taxes the foreign income together with everything else and credits the foreign tax against the result. The credit stops at the Austrian tax that falls on that income (Anrechnungshöchstbetrag, the credit cap), so foreign tax above that level isn’t credited.
Which method applies is set treaty by treaty and often by type of income. The ministry’s own examples on the page above use exemption with progression for a German social insurance pension and credit for Liechtenstein tax on a commuter’s pay.
Where no treaty applies, a finance ministry regulation on avoiding double taxation (in German) takes over. It exempts a closed list of positive foreign income when the foreign state taxes it at an average burden above 15%: income from foreign real estate, business profits from a permanent establishment abroad, construction and assembly work abroad, lecturing, performances and work as an employee abroad. The exempt income still raises the rate on the rest, as under a treaty.
Everything else under that regulation, including dividends and interest, falls to the credit rule, with a separate cap calculated for each foreign state.
The individual income types have articles of their own: rent from a flat abroad, selling property abroad and foreign pensions. Which country may tax a particular income, and so which method Austria then applies, is a treaty question for a tax adviser.
Foreign dividends and interest
Capital income from abroad is taxed at the special rates, 25% on deposit interest and 27.50% on everything else, according to the income tax act’s capital income rules (in German). Income taxed at those rates counts neither in the total of income nor in the income the tariff runs on, unless the taxpayer opts for the regular tariff. A foreign dividend therefore stays out of the progression computation; foreign rent that Austria exempts goes into it.
A foreign broker withholds no KESt (Kapitalertragsteuer, the Austrian withholding tax on capital income). The finance ministry’s page on capital income (in German) says foreign dividends are therefore not subject to KESt withholding and have to go into the tax return. The article on foreign brokers covers what a foreign broker leaves to the investor.
Foreign withholding tax is credited in two different ways. An Austrian paying agent handling a foreign dividend may credit foreign tax against KESt up to 15% of the income, according to the same page.
In the assessment the credit is narrower. The notes printed on the E 1kv form for 2025 (in German) allow only foreign tax that the source country may charge under the treaty, limit it to the Austrian tax on that income, and exclude foreign tax that can be reclaimed abroad. Tax withheld above the treaty rate is a claim on the foreign state, not an Austrian credit; the article on foreign withholding tax covers that side.
Contested flag
How a foreign pension, retirement account, ISA or fund is classified turns on its terms and the treaty, and no official page settles particular products.
The product’s terms decide what kind of income a payout is, and the treaty decides which country may tax that kind of income. Whether a US 401(k) or IRA, a UK pension or ISA, or a non-reporting foreign fund falls one way or the other is a product-and-treaty question, so this article states no treatment for any of them.
The article on foreign pensions and the article on ETFs and funds cover the Austrian side. A tax adviser with cross-border experience is the route for a particular product.
Which form carries what
An employee whose only income is a salary usually files nothing, and the tax office may even run the assessment automatically. That route needs a file showing nothing but wage income and a refund of at least , as the article on the employee assessment explains. Foreign income sits outside that file, and the finance ministry’s page above says the assessment is compulsory for unlimited taxpayers with certain foreign income.
An employee whose only foreign item is pay uses the L 1 with its supplement L 1i. Other income, such as dividends and rent, goes on the E 1 (the income tax return) with its own supplements:
| Income | Form | What to know |
|---|---|---|
| Pay from a foreign employer with no Austrian wage tax | Supplement L 1i, with the L 1 or E 1 | The ministry points foreign pay without Austrian withholding to the L 1i; the foreign employer’s pay statement is the L 17, usually submitted by the employer |
| Dividends and interest from a foreign bank or broker | Supplement E 1kv, with the E 1 | Foreign capital income without KESt goes here; the form leaves out capital income of EUR 22 or less in total |
| Rent from a flat abroad that Austria taxes (credit method) | Supplement E 1b, with the E 1 | The E 1b has a box for relief under the regulation for states without a treaty |
| Foreign income exempt with progression, such as rent a treaty leaves to the other country | A line in the foreign-income section of the E 1 | The 2025 E 1 asks there for positive foreign income exempt under the progression proviso that the L 1i doesn’t already carry, kept out of the income lines |
Form lines change from year to year, and no 2026 version of these forms was available when this article was checked, so the table follows the 2025 forms. The article on the E 1kv line by line works through the capital income lines, and the guide to which return suits which reader maps situations to forms.
Two compulsory grounds matter here. Other income above EUR 730 is one, and capital income at the special rate with no KESt withheld is another, according to the income tax act’s assessment rules (in German). Which foreign items count toward that first figure is covered in the article on compulsory assessment.
Cross-border commuters
Residents of Austria who work across a border are among the groups the finance ministry’s page on employment income with a foreign element lists. Which country may tax the pay, and whether Austria then exempts it or credits foreign tax, depends on the treaty with the neighbouring country. That’s a treaty question for a tax adviser.
Tip
Foreign tax that can be reclaimed abroad can’t be entered as a credit on the E 1kv. Asking the foreign broker or tax authority whether a reclaim route exists, before filling the credit lines, avoids entering tax the form excludes.
Converting foreign amounts into euros
The return takes euro amounts. The explanatory notes to the L 17 pay statement (2025 version, in German) set the method for foreign pay: convert at the exchange rate of the payment or transfer day, and a deduction of 1.5% is allowed to cover exchange and bank charges.
The ministry publishes a yearly table, the L 17b, of ECB reference rates with that deduction applied (the Steuerwert, tax value). When the figures don’t cover the whole calendar year, the notes call for the day rate, or one value built from the ECB reference rates published for the months concerned, and name the Vienna stock exchange’s currency converter where the ECB publishes no rate.
Those notes are written for pay. No official statement of its own turned up for dividends, rent or foreign tax, so for a described resident the same method applied to each payment is the sensible default (an editorial reading, not a rule), and a tax adviser can confirm it before the first filing.
Foreign accounts, assets and what the tax office sees
Austria taxes income, and the Austrian return asks for income from foreign accounts, shares and flats rather than a list of the accounts and assets themselves. None of the forms read for this article asks for a general declaration of foreign assets.
Data arrives anyway. The finance ministry’s page on automatic information exchange (in German) describes the Common Reporting Standard (CRS): financial institutions pass on information on accounts held by persons resident in another participating state.
The 2025 E 1 form (in German) tells residents what that means in Austria: the tax office receives information about the income and assets abroad of people living in Austria. The E 1kv adds that foreign institutions in participating states send account and depot data to the tax office for control purposes.
For a hypothetical resident with a foreign depot, dividends missing from the return can therefore be compared with what the foreign institution reported. The article on CRS and FATCA covers what an Austrian bank reports in the other direction.
US persons
The Austrian return doesn’t settle US obligations. US citizens and residents abroad generally file in the same way as people living in the United States and count income from worldwide sources, according to the IRS page on filing requirements abroad.
Foreign accounts add a separate report: the FBAR is required where their aggregate value exceeded USD 10,000 at any time in the year, according to the IRS page on the FBAR. The article on US persons covers the overlay, and a US-qualified tax professional is the route for the US side.
A foreign dividend and a foreign rental, worked through
The numbers below show how the special rate, the credit and the progression proviso combine for one described resident, and what the exempt rent costs on the Austrian side.
Illustration
A hypothetical single employee, tax resident in Austria all year and living in Graz, in Styria, earns a gross EUR 4,500 a month on 14 payments in the tax year, receives a EUR 3,000 dividend from shares held at a foreign broker and lets a flat in another country for a net EUR 12,000.
Assumptions: 14 salary payments, so EUR 54,000 of regular pay and EUR 9,000 of special payments (the 13th and 14th salary), EUR 63,000 gross in all. No children, no commuter allowance, no deductions beyond the flat allowance, and pay high enough that no low-income supplement applies. Not a US person, not international organisation staff.
The dividend is EUR 3,000 gross, already converted into euros on the day of receipt with no 1.5% deduction, from a treaty country that withholds 15% at source (an assumed rate; each reader has to check their own treaty). The flat is in another treaty country, and the assumed treaty lets that country tax the rent and has Austria exempt it with progression. Rent received is EUR 16,800 and expenses and depreciation worked out under Austrian rules are EUR 4,800, so the net rent is EUR 12,000.
Forms: the E 1 with the E 1kv for the dividend, and the exempt rent on the E 1’s line for foreign income exempt under the progression proviso (the E 1b would carry rent Austria taxes); there is no L 1i because no foreign employer pays the salary.
Contributions: the employee pays health (), pension (10.25%) and unemployment insurance (2.95%), plus the chamber of labour levy (0.50%) and the housing-subsidy contribution (0.50%, higher in Vienna), 18.07% in all, according to the social insurance carriers’ table of 2026 values (in German). The same table charges neither of the last two on special payments, which carry 17.07%.
The salary. Regular pay of EUR 54,000 less EUR 9,757.80 of contributions and the flat allowance of EUR 132 leaves EUR 44,110.20. The special payments of EUR 9,000 less EUR 1,536.30 of contributions leave EUR 7,463.70; the first EUR 620 is tax-free and the remaining EUR 6,843.70 is taxed at 6 %, which gives EUR 410.62. They fit inside the annual sixth of regular pay, keep those fixed rates, and are left out of the progression computation.
The dividend. The special rate of 27.50% on EUR 3,000 is EUR 825.00. The 15% withheld abroad, EUR 450.00, equals the assumed treaty rate and is below the Austrian tax on this income, so all of it is credited and EUR 375.00 is left to pay in Austria. The dividend stays out of the tariff and the progression computation altogether.
The rent and the progression proviso. The net rent of EUR 12,000 isn’t taxed in Austria. The tax rate on the salary is set as if it were part of the income, using the tariff:
| Tariff band | Salary alone | Salary plus exempt rent |
|---|---|---|
| Income counted | EUR 44,110.20 | EUR 56,110.20 |
| Up to EUR 13,539 at 0 % | EUR 0 | EUR 0 |
| EUR 13,539 to EUR 21,992 at 20 % | EUR 1,690.60 | EUR 1,690.60 |
| EUR 21,992 to EUR 36,458 at 30 % | EUR 4,339.80 | EUR 4,339.80 |
| Above EUR 36,458 at 40 % | EUR 3,060.88 | EUR 7,860.88 |
| Tariff tax | EUR 9,091.28 | EUR 13,891.28 |
The average rate on the combined income is EUR 13,891.28 divided by EUR 56,110.20, which is 24.757%. Applied to the Austrian income of EUR 44,110.20 it gives EUR 10,920.42.
The income tax act’s tariff rules (in German) set the average rate before the credits and take the credits off afterwards. The Verkehrsabsetzbetrag (EUR 496 a year) is therefore subtracted last, leaving EUR 10,424.42, against EUR 9,091.28 less the same credit, or EUR 8,595.28, without the rent.
| Austrian income tax for the year | Without the foreign items | With them |
|---|---|---|
| Regular pay | EUR 8,595.28 | EUR 10,424.42 |
| Special payments | EUR 410.62 | EUR 410.62 |
| Dividend after credit | EUR 0.00 | EUR 375.00 |
| Total | EUR 9,005.90 | EUR 11,210.04 |
The exempt rent adds EUR 1,829.14 of Austrian tax and the dividend adds EUR 375.00, EUR 2,204.14 in all. The average rate is shown to three decimals; the tax office’s own rounding of the rate may move the result by a few euros.
Payroll sees only the salary, so the extra tax on the rent and the dividend isn’t withheld at source. For this hypothetical resident it comes out of the assessment as a payment due, roughly the size of the difference in the table.
The rent is exempt, yet it still costs about 15% of its amount in Austrian tax here, because it raises the average rate applied to the whole salary. Had the assumed treaty used the credit method instead, the same EUR 12,000 would sit in the tariff, all of it in the 40 % band in this scenario (EUR 4,800 of tax), and the tax paid on it abroad would be credited up to that amount. Which of the two a real treaty uses for a real flat is the treaty question that the article on renting out a home abroad picks up, and the article on the tax brackets explains the tariff used here.
Records to keep
The 2025 E 1 form says no receipts or originals are sent in, and that the documents should be kept for at least seven years in case the tax office checks. The fiscal code’s record-keeping rule (in German) sets the same seven years for books, records and their vouchers, counted from the end of the calendar year they relate to.
For foreign income, the set that supports a line usually includes the broker’s year-end statement and dividend notices showing gross income and tax withheld, rental contracts, receipts and cost proofs, any foreign tax assessment, and the conversion rate and date used for each item.
Where relief comes from the regulation for states without a treaty, the regulation makes relief conditional on a properly kept list of the income. The regulation’s record-keeping section (in German) asks for the state, the type and amount of the income worked out under Austrian rules, the average foreign tax burden and the documents behind each entry; wage income already run through Austrian payroll is exempt from the list.
Bottom line
Austria taxes residents on income from everywhere, then either exempts the foreign income while counting it for the rate, or taxes it and credits the foreign tax, depending on the treaty and the type of income. Each foreign item sits on its own form, the euro conversion and the records fall to the resident, and data from foreign institutions reaches the tax office. Which country may tax a particular income, and how a particular product is classified, is where a tax adviser earns the fee.
Getting help
Once income from two countries is involved, the treaty decides which country taxes what, and the Austrian side then follows from it. A Steuerberater (licensed tax adviser) can advise on an individual case, and the member directory of the Chamber of Tax Advisers and Auditors shows who holds a licence, with search by location and by Steuerberater or Wirtschaftsprüfer. The directory has no language filter, so English support is a question for the first contact.
Members of the Arbeiterkammer (chamber of labour) can get help with their own employee assessment from their state chamber. The services differ by state, and whether a chamber handles foreign income is for that chamber to say. The article on tax and payroll help sets out who may do what.
Official sources
- Double taxation agreements, overview, Federal Ministry of Finance (in German)
- Employment income with a foreign element, Federal Ministry of Finance (in German)
- Regulation on avoiding double taxation where no treaty applies, Legal Information System of the Republic (in German)
- Form E 1kv for 2025, supplement for capital income, Federal Ministry of Finance (in German)
- Automatic and international exchange of information, Federal Ministry of Finance (in German)
- Income tax act: who is taxed on what, Legal Information System of the Republic (in German)
