Employer of Record & PEO — 8 min
Expanding your talent pool and hiring workers across borders could be just what your business needs to build diverse teams. Many companies are harnessing the power of remote work and embracing remote-first recruiting practices to attract the best talent world over. If you’re looking to employ remote workers in Europe, Austria has everything you're looking for — highly skilled professionals, cultural diversity, and ease of doing business in the country.
Hiring workers in another country is not an easy task. Businesses that want to hire and pay remote workers in Austria must make sure they comply with the local labor laws, streamline onboarding activities, and establish reliable payroll systems.
But this shouldn’t stop you from hiring workers abroad. In this article, we’ll explain Austrian labor laws, tax practices, and how you can efficiently pay remote workers based in Austria.
Foreign businesses can pay their remote workers in Austria by establishing a legal entity in the country, working with a global employment partner, or paying their Austrian workers as contractors.
If you are over the age of 18 and a resident of the European Union (EU), you can open a legal entity in Austria right away. If not, you may be required to have a residency permit. There are several things you must establish for your entity to be valid. You will need to have a registered office, open a bank account, and find a permanent representative — all of which need to be based in Austria. Your legal entity can take on the form of one of the following structures, including:
Civil law partnership
The process of opening a legal entity in Austria can be expensive and time-consuming. There’s also a great deal of paperwork involved, and you have to make sure that your entity remains compliant with local employment laws.
A global employment service can hire and onboard workers in Austria on your behalf. Working with a global employment partner like Remote can take the hassle out of the international hiring process. Remote has expertise in every aspect of global hiring — managing recruitment, onboarding, taxes, compliance, benefits, and the payments process. Some global employment companies are part of partner-dependent networks, whereas others operate via their own legal entities in the country.
Another option is to pay your workers in Austria as a contractor. This means you won’t have to offer benefits or deal with tax withholding. Contractors are not placed on payroll like employees. They are paid once they submit an invoice to you based on the number of hours they work. However, intentionally classifying your workers as contractors to avoid paying taxes or benefits could land your business in serious trouble.
As with many members of the EU, you can pay workers in Austria in Euros (€). To make payments to workers in Austria, you can use money transfer companies that specialize in sending money to European countries. Many of these companies offer competitive exchange rates and transfer fees.
To generate revenue, the Austrian government utilizes value-added tax (VAT), corporate tax, and income tax. Currently, the VAT rate is 20%, with a corporate tax rate of 25%. The income tax rates for each tax bracket in the country are as follows:
Below €11,693 = 0%
€11,693 to €19,134 = 20%
€19,135 to €32,075 = 30%
€32,076 to €62,080 = 42%
€62,081 to €93,120 = 48%
€93,121 to €1,000,000 = 50%
Above €1,000,000 = 55%
Your Austrian workers should be well-informed about where remote workers pay taxes to avoid confusion, especially if they are transitioning from an in-person job to a remote one.
Employment income in Austria comprises remunerations and benefits. Various parts of an individual's income are taxable, which include:
Loans and salary advances
The reimbursement for privately paid housing is fully taxable, as well as the reimbursement for tax costs.
Employee-contributed pension benefits incur partial taxes. Increases from voluntary additional insurance are also subject to partial taxes.
The allowances provided for living expenses during business trips are called per diem payments. Austrians consider per diem payments as something separate from travel and accommodation spending. Along with mileage allowances and accommodation costs, per diem remains tax-exempt in Austria.
The difference between allowance and reimbursement in Austria is insignificant. The terms are often used interchangeably when people discuss business trips.
Travel cost reimbursements, mileage allowances, per diem allowances, overnight accommodation reimbursements, and accommodation allowances are all tax-exempt in Austria. If an individual goes on a business trip and cannot provide receipts of their expenses, officials will grant them refunds based on maximum, tax-exempt allowance amounts.
There are several payroll deductions employers must make in Austria. These deductions include:
Business travel expenses
Work equipment and attire
Labor organization membership fees
Mandatory pension and social insurance contributions
There is no federal minimum wage in Austria. However, workers are protected by collective bargaining agreements, which were advanced by the country's main social partner organizations — the Austrian Trade Union Federation, the Chamber of Labor, the Federal Economic Chamber, and the Austrian Chamber of Agriculture. These agreements state that workers must earn at least €1,500 each month. This minimum applies to workers in all industries.
In Austria, those who have worked more than 40 hours during a week are entitled to overtime pay. Workers in Austria can work up to 12 hours a day and up to 60 hours a week.
When working overtime, workers are paid a surcharge of 50% of their hourly salary. If they work overtime during the night, on Sundays, or during public holidays, the surcharge amount jumps to 100%.
The local labor laws in the country are a blend of EU policies and Austria's collective bargaining agreements and shop-floor agreements. Here are some key labor laws in Austria:
Oral agreements about employment conditions are just as valid as written ones.
A lunch break is mandatory for those working an eight-hour workday.
Each worker is entitled to 25 days of paid holidays each year.
Sick pay is six to 12 weeks of full pay plus four weeks of half pay.
Racial and ethnic discrimination in the workplace is prohibited.
Employees can establish trade unions and engage in strikes.
Employers must ensure workplace health and safety.
Both verbal and written dismissals are acceptable.
Employees need to provide their employers with notice of resignation.
The retirement age is 65 years for men and 60 years for women.
Part-time workers are afforded the same protections as full-time employees.
Women on maternity leave can receive their average earnings as maternity benefits.
Changes in the terms of employment can be made if the existing contract is terminated and a new one is drafted.
A man can receive a month of unpaid paternity leave if he lives in the same house as the mother of his child.
Pregnant women cannot work during the eight weeks before their due date, and new mothers cannot work eight to 12 weeks after giving birth.
Pregnant women should not engage in strenuous or high-risk activities.
Employees and employers contribute to the social security system, which covers health, education, pensions, parental benefits, and disability benefits.
Austrian workers can submit employment complaints to their government, so you have to make sure you comply with Austrian labor laws.
When you hire an independent contractor in Austria, you don’t have to offer them benefits or withhold taxes, as contractors are responsible for filing their own income tax. You’ll have to pay your contractors once they submit an invoice to you.
Some common ways to make payments to your contractors in Austria include checks, bank transfers, wire transfers, direct deposits, digital wallets, and online payment systems such as PayPal or Wise. When you’re hiring workers in Austria, make sure to avoid misclassifying remote contractors because that could lead to severe legal and financial consequences, including employment litigation and unpaid benefits.
To make sure you’re classifying your contractors correctly and to keep compliant with local laws, it might be easier for you to convert your contractors to employees. A global employment platform like Remote can help you do this quickly and efficiently.
Paying international contractors across multiple countries can be a hassle. But, you can use Remote’s contractor management platform to process invoices, automate payments, and pay your contractors compliantly in their local currency. Remote makes contractor payments quick and easy.
You can hire and pay remote employees in Austria by establishing a local entity in the country. However, you’ll have to say compliant with employment laws and tax practices. Importantly, you’ll want to avoid triggering permanent establishment.
Permanent establishment means that your company has a taxable presence outside the country where your business is based. Companies try to avoid this situation because it means you’ll have to pay corporate taxes both in the country you’re based and in the country where you're hiring from (via a local entity).
Alternatively, you could work with a reliable employer of record, or EOR to employ and pay your remote employees in Austria so that you don’t have to handle it all yourself. An EOR like Remote can simplify the hiring process by handling employee onboarding, payments, taxes, benefits, and compliance. Read our helpful article on how you can use an EOR to hire a remote workforce.
Hiring in Austria is an excellent option for companies that want to expand globally. But global employment can be stressful. From navigating local employment laws and tax practices to setting up payroll services to pay global employees efficiently — there’s a lot you’ll need to manage.
But you’re in luck. Remote’s global payroll for distributed teams can take the hassle out of the process and save you precious time and money. Our payroll services can help you pay your workers on time, whether they are employees or independent contractors. Our easy-to-use platform can help you navigate the complexities of hiring and paying workers in Austria with ease.
Need more guidance on hiring and onboarding employees abroad? Download our practical guide to hiring remote employees and get started today! Or contact us today to speak to our expert team about growing your team in Austria with Remote.
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Employer of Record & PEO — 8 min
Employer of Record & PEO — 10 min
Remote & Async Work — 8 min
Visas and Work Permits — 4 min