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Social Security and other Dues for Employees
Social Security
Under the legal social security insurance plan, employees working in Austria are subject to mandatory insurance which consists of health, accident, unemployment and pension insurance. In general, both employers and employees are obligated to contribute premium payments. Should a petty limit (Bagatellgrenze) not be exceeded, mandatory insurance is only partially applicable.
Examples: If a foreign production company purchases a specific service (e.g. those of a production assistant) from an Austrian production company, social security is not an issue, since the contractual partner is an Austrian company and not an individual person who could be subject to social security liabilities. The assessed sales tax [generally 20%] paid to the Austrian company can, of course, be refunded to the foreign production company under the conditions cited.
Should a foreign production company come to Austria to film with crew members from the same country of origin, the company is not obligated to pay social security for its crew members in Austria, as long as there is no place of business operation in Austria.
Minimal Employment
Limited social security obligations apply when the salary or wage of an employee lies below a minimum amount (petty limit in 2004: € 316.19 per month). In such a case, the employees must merely be insured for accidents (the premium amounts to 1.4% of the wage and is paid by the employer). Should, however, an employer hire a larger number of employees (non-self-employed or self-employed) with income below the petty limit, and should the monthly paid salaries exceed € 474.29, the employer has to pay an additional employment tax of 16.4% of the wages (including accident insurance 17.8%), whereby it is irrelevant whether a place of business operation is established in Austria.
Full Insurance
Full insurance is mandatory for employees working in Austria above the petty income limit. Should a place of business operation exist in Austria, the employer must register the employees with the responsible government health insurance plan (Krankenkasse) and pay the employer’s portion of the premiums. Employers from EU countries can make arrangements with their employees in accordance with Art. 109 of the EC Ordinance 574/72, by which these obligations are assumed by the employee. Employers from non- EU countries are neither obliged to register their employees or to effect payment of the employer’s portion of the premiums. In such a case, the employee (with residence in Austria) must register himself with the responsible government health insurance plan and make payment of both the employer and employee portions of the premiums. This applies for both non-self-employed and freelance workers. The premiums’ percentage rate is dependent upon the type of employment.
Non-Self-Employed Work
Employer’s portion: 21.85% for salaried employees, 21.65% for workers. Employee’s portion: 17.95% for employees and 18.15% for workers.
Freelance Employees
A freelance employment contract is a hybrid between a non-self-employed worker (see 1.1.3.) and a fully independent entrepreneur. Freelance employees must essentially work independently, but may in some cases, avail themselves of other persons (representatives) in the course of the work. They are not part of the operational structure and are only bound to task-related directives from the employer. The employer is not obligated to retain their taxes, but must withhold social security insurance premiums for them. The employer’s portion thereof amounts to 17.4%, the freelance employee’s is set at 13.8%.
The employer does not pay the employee’s premiums, but he must calculate, collect and pass them on to the revenue office. This, however, does not apply to foreign production companies without a place of business operation in Austria. The basis for the calculation of premiums is the gross salary. In case it falls under the petty limit the same regulations apply as for the minimally employed (see paragraph 4.1.1.). The maximum basis for calculation of premiums is € 3,450.00 per month (in 2004), which means that any income segments above € 3,450.00 per month do not require any additional social security payments.
Self-Employed Work
In contrast to freelance employees, the self-employed persons, who work with substantial operating resources and a business license, are completely independent. They are responsible for their own insurance. The contractor is neither liable for their taxes nor for the employer’s portion of the social security premiums.
The self-employed person has to adhere to the legal regulations concerning a mandatory pension, health and accident insurance.
For self-employed persons who work on the basis of a labor contract (Werkvertrag) and freelance workers (including artists) insurance is not mandatory when:
- the income of a calendar year does not exceed € 6,453.36 and no other income is generated during the same calendar year or
- the income of the calendar year does not exceed € 3,794.28 if additional income was generated during the same calendar year.
Self-employed persons who work on the basis of a business license in Austria are subject to mandatory insurance. The entrepreneur can file for an exemption when sales in a calendar year are below € 22,000.00 and income from taxable business activities amount to a maximum of € 3,794.28 as long as:
- not more than 12 months in a 60 months period demanded mandatory insurance or
- the self-employed is at least 65 years or
- the self-employed is at least 57 years and all income and sales tax obligations were met in the previous five calendar years.
Mandatory insurance obligations start with the first day of self-employed business activity or the first day the business license is valid, and it ends with the last day of the calendar month in which business was ceased or the business license was cancelled/expired. The social security office has to be informed immediately about a possible insurance obligation, which is also recommended since the revenue office passes on information about the income of the self-employed person to the government health insurance plan (Krankenkasse). In case the registration with social security is delayed, premiums have to be paid retroactively and late fees apply.
Insurance premiums are 15% of the taxable income for the pension fund and 9% for the government health insurance plan. Accident insurance amounts to a uniform premium of € 83.16. For new entrepreneurs and artists there are possible alleviations. The maximum basis for the calculation of premiums per month is € 4,025.00 (in 2004), which means that for income segments over € 4,025.00 no additional social security premiums are due.
Other Dues
Employers are subject to additional dues on employee’s wages and salaries:
- Employer contribution to the Family Burden Equalization Fund: All employers employing workers in Austria (non-self-employed persons; not applicable to freelancers and self-employed persons) must effect payment of 4.5% of the total wage (sum of all gross wages). There are more favorable conditions for new companies and small businesses (sum of wages under € 1,460.00). The existence of a place of business operation is irrelevant in this context. This contribution is also payable for employees working below the petty limit. An exception only exists for employers with employees in Austria who are, according to the EU Directive 1408/71, legally covered by the social security of another EU-country (or Switzerland).
- Employer surcharge: Becomes due with the employer contribution to the Family Burden Equalization Fund, if the employer is a member of the Austrian Chamber of Commerce (and has an Austrian business license). Percentage rates vary by province between 0.38% and 0.44% of the total wage. The surcharge is also applicable to wages of minimally employed workers. There are more favorable conditions for new companies and small businesses.
- Communal tax: The communal tax is a regional district tax and is only payable if a place of business operation exists in Austria. It amounts to 3% of the total wages and is also payable for employees working below the petty limit. Again, there are more favorable conditions for new companies and small businesses.
- Employer Surcharge for Subway Construction: All employers who employ residents of the City of Vienna have to pay a mandatory € 0.72 for each employee for each started week of employment. This surcharge does not apply to employees who work ten hours or less per week (minimally employed).
- Employees’ Provision Fund Dues: For all employee contracts which came into effect on or after January 1, 2003 (non-self-employed persons; not applicable to freelancers and self-employed persons), the employer has to pay a monthly 1.53% of the gross salary or wage to the responsible social security carrier, who then has to forward the monies to an employee provision fund selected by the respective employee. Only the first month of employment is exempt from payment.
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