How to set up as an independent contractor in Austria

Ready to take control of your career and make a living on your own terms?

Then Austria is an ideal location to begin your self-employed journey.

As well as boasting a thriving economy and a supportive business community, the capital, Vienna, is one of the world’s top destinations for remote work. And if you're planning to work from home, there's no better Zoom background than a real-life Alpine vista.

Before you get started, though, you’ll need to understand how to:

• Successfully register your business in Austria

• Avoid misclassification as an employee

• Create compliant contracts that protect you

• Invoice and collect payments from around the world

In this article, we’ll cover all these things. We’ll also help you navigate your tax obligations as a self-employed worker, and discuss some of the other risks and liabilities you should be aware of. So order another slice of apfelstrudel, and let's begin.

First, it’s important to clarify how Austria defines independent contractors.

What is an independent contractor according to Austrian law?

Independent contractors are workers who provide paid services to another party. However, they are classified differently to employees, and are not always entitled to the same benefits.

See also: Why businesses hire contractors vs. international employees

In general, the nature (and structure) of the worker/company relationship determines your status. For example, if you manage your own hours, work with other multiple companies, and provide your own tools and equipment, you’re generally considered to be a contractor.

In Austria, though, things are slightly different. As an independent contractor, you can have continuing contracts with clients, and they may even provide your tools and resources for you (although you will still control how you complete the work).

Contractors also enjoy some legal protections in Austria. If it’s specifically outlined in your client agreement, you can claim social insurance and unemployment insurance, and may also be eligible for statutory benefits such as holiday pay and periods of notice.

New self-employed workers

Note that most self-employed people in Austria require a trade license (Gewerbeschein) to do business. However, this is not always the case. If you do not require a trade license (for example, if you’re a writer, translator, artist, or lecturer), then you may be classed as a “new self-employed worker”. These workers operate under a “contract for work” agreement, which is considered complete once the agreed service or outcome has been successfully delivered.

Business registration in Austria

To work as an independent contractor in Austria, you’ll need to choose a legal structure for your business. Some of the most popular models include:

• Sole proprietorship: A simple structure that is ideal for independent, individual contractors. You have full control of the enterprise, although there is no legal separation between you (the owner) and the business; you are personally responsible for all its debts and liabilities.

• Partnership (Personengesellschaft): A partnership agreement. In Austria, a partnership is considered a formal legal entity, and must be registered on the commercial register (Firmenbuch). There are several types of partnership arrangements, including limited (KG), general (OG), and civil law (GesbR) partnerships.

• Corporation (Kapitalgesellschaft, often referred to as a GmbH): A formal, legal entity that is separate from you, the individual. All income and losses are attributed to the company as opposed to you personally. Corporations must also be registered on the commercial register.

There are pros and cons to each structure, but most independent contractors choose the sole proprietorship model, as it is fairly simple to operate. In Austria, you can even quickly set one up online.

If you choose this structure, you’ll also need to notify the Tax Office (Finanzamt) and the Social Insurance Institution for the Self-Employed (Sozialversicherung der Selbständigen, or SVS) during setup.

If you require a trade license to work (i.e. you’re not a new self-employed worker), you will receive it at the end of the setup process. This will be recorded in the Austrian Business License Information System (GISA). You will also receive a tax number.

For more information on registering your sole proprietorship, visit the Austrian Business Service Portal (Unternehmensservice).

How do I get paid as an independent contractor in Austria?

As an independent contractor, it’s down to you to handle your invoices and payment collection. Unfortunately, this means billing each client individually and collecting payment through their preferred payment method — which can be inefficient and time-consuming.

Some of the most common ways to collect payments include:

• Bank transfers

• Direct deposits

• Paper checks

• Money orders

• Virtual wallets

• Digital transfer services like PayPal and Wise

These methods all have their own pros and cons. For instance, bank and digital transfers can be pretty quick, but often come with hefty service fees. And if you have clients in other countries besides Austria, the payment collection process can be even more complicated. 

Alternatively, you can use a trusted solution like Remote. Our platform is a simple, secure, and reliable way to get paid quickly in euros — and with no hidden fees. Learn more about how our platform can help.

Independent contractor taxes in Austria

As an independent contractor, you’re also responsible for calculating and paying your own taxes. Like most countries, Austria has a progressive income tax rate that indicates how much you owe.

As a contractor, you’ll need to pay income tax if your annual business profits exceed €11,000. The Austrian tax year runs from January to December, and you must file your tax return by April 30 the following year (or June 30 if you submit online).

Contractors pay tax in advance on a quarterly basis. The Tax Office will determine how much you owe and inform you a month prior to each payment (alternatively, you can set up a direct debit). In your first year of business, your tax sum will be calculated based on your profit estimate.

On the plus side, you can claim tax deductions for multiple business expenses, such as:

• Equipment and work supplies

• Rent and energy bills (related to business use, such as a studio or an office)

• Maintenance and repairs

• Professional and consulting fees

• Education and training costs

• Travel costs and expenses

VAT information for independent contractors in Austria

If your net turnover is less than €35,000, you do not need to charge VAT (Umsatzsteuer).

If your net turnover is €35,000 or more, you must charge your Austrian clients VAT. The current VAT rate in Austria is 20%, although some goods and services are taxable at lower rates of 13% and 10%. You can apply for a VAT number through the Tax Office.

Liability considerations for independent contractors in Austria

As a sole proprietor, you are personally liable for finance and tax debts, which means your private assets can be forcibly used to settle your business debts. Many independent contractors purchase liability insurance to minimize this risk.

It’s also important to cover yourself when drafting and signing agreements with clients. Our legal experts can provide you with fully compliant contract templates, for both Austrian and international clients.

Accounting requirements for independent contractors in Austria

In Austria, accounting requirements depend on the structure of your business and your level of income.

As an independent contractor, you’re not required to prepare public financial statements unless you generate a turnover of:

• over €700,000 in two consecutive financial years, or;

• over €1,000,000 in a single financial year.

However, it’s still a good idea to keep accurate records of all your transactions, and to save all your receipts. This will also make it easier to file your taxes.

For more information on your accounting obligations, you can consult the Austrian Business Services Portal.

The dangers of contractor misclassification in Austria

As we’ve mentioned, contractors are classified differently to employees. The protections and benefits employees enjoy do not typically apply to contractors.

As a result, companies may deliberately misclassify you to circumvent their legal obligations, while at other times, it may happen accidentally. Whether it’s intentional or not, misclassification can result in penalties and fines for both you and your client.

As an independent contractor, you can work with your clients to ensure this doesn’t happen. Discuss your role and responsibilities with them, and review the working arrangement regularly. 

If your working relationship changes over time and you become more integrated into a client’s company, you can ask to be converted into an employee.

How do I ask the company I’m working with to convert me to an employee in Austria?

Open a dialogue with your client and carefully discuss the risks and benefits of moving to an employer-employee relationship. In particular, be clear about how it can benefit both parties — not just you.

You can even suggest the help of a third-party solution, such as Remote, to ease the transition. Our global employment services help both parties stay compliant by taking care of key HR functions (like payroll management and benefits administration) in line with Austrian law.

4 ways Remote makes life easier for contractors and their clients

As you can see, there’s a lot to take on board when setting up as an independent contractor. Remote can help you with many of these challenges, allowing you to focus on growing your business and delivering to your clients. Here’s how:

1. International payments in countries around the world

Navigating all of your clients’ different invoicing, approvals, and payments systems can be complicated and time-consuming. And manual methods of invoicing and collecting payments can increase the risk of fees, errors, and delays.

Remote gives you access to a highly secure, streamlined dashboard that makes invoice management and international payments cost-effective and efficient. You can use our platform to get paid in euros hassle-free, without any hidden fees.

2. Localized in-app contracts and advice

When you draft agreements and contracts for your clients, you run the risk of non-compliance with local labor laws — especially when working with international clients. Remote offers localized contracts tailored to Austrian laws, ensuring that you stay compliant. Our legal experts can also provide guidance on complex issues, such as local classification and intellectual property protections.

3. Invoicing automation

With Remote, you no longer need to rely on spreadsheets and other manual tools to invoice for payments; we remove many of the inaccuracies and delays caused by archaic processes and manual management. Our platform lets you create invoices, submit them for approval, and subsequently get paid in your local currency without needing to switch to any other tool or software.

4. Tax management

Tax management is notoriously complex work. Remote helps you quickly and efficiently deal with tax management by compiling data about your income based on your invoices and payments received.

Setting up as a contractor in Austria

Having the freedom and flexibility to work on your own terms is liberating. But your administrative responsibilities can distract from what you really want to be doing: helping your clients, delivering great work, and collecting invoices.

By using a stable, trusted platform like Remote, you can manage these obligations quickly and efficiently, allowing you to focus on your business goals. Specifically, we can help you:

• Avoid intermediary fees and delays with international client payments

• Draft compliant contracts for Austrian and foreign clients

• Enhance your invoice management and avoid manual processes

• Comply with local labor laws regarding work practices

Our platform makes it quick, simple, and seamless to get started as an independent contractor. Learn more about how our expertise can save you time and resources today.