...for people with unlimited tax liability

If you are self-employed, you can offset all expenses related to your professional activity against your taxes. This means that you can include them as expenses in your income and expense account. The higher your business expenses are, the lower your taxable profit will be in the end.

Attention: Privately incurred expenses, such as rent and energy costs for your home, clothing, food, childcare, and living expenses, are not business expenses.

In the following list, you will find typical business expenses that you can offset against your tax:

• Rent and energy costs for rooms used exclusively for professional purposes (e.g. office, studio, rehearsal room, storage room, business premises)
  • If there is a room in your home that you use exclusively for your professional activity, and if this room is the centre of your professional activity, you can offset the pro rata rent and energy costs—calculated according to the size of the room in square metres—against your tax (e.g. artists' studios, writers' workrooms).
• Office supplies (e.g. stationery, printer cartridges, copies, business cards)
• Work equipment up to an acquisition cost of €1,000 (e.g. mobile phone, camera, musical instruments, tools). If the acquisition costs are higher than €1,000, you must account for them in a certain way in your tax return. See the section on depreciation.
• Telephone and internet costs (reduced by the proportion of private use)
• Postage costs
• Maintenance and repairs (e.g. repair of office equipment)
• Professional or work clothing: this must be clothing that you cannot use in everyday life (e.g. uniform, ballet costumes)
• Sub-honours (orders that you place yourself)
• Training and further education costs
• Specialist literature
• Consultancy costs (e.g. tax consultancy if business-related, legal fees)
• Compulsory insurance contributions to the Social Security Institution for the Self-employed (SVS) towards statutory health, pension, and accident insurance as well as contributions towards unemployment insurance. See the chapter on social security.
• Business meals up to 50% (e.g. to initiate a business relationship with a new customer. To do this, you must prove with whom and for what purpose you met for a business meal. Your hospitality must have a clear promotional purpose and be predominantly business-related. Note this information on the invoice, for example).

Attention: If you are a self-employed artist, you may receive subsidies from the Artists' Social Security Fund for the payment of your social security contributions. See the chapter on social security. You cannot offset the portion of your social security contributions that you have covered with benefits from the Artists' Social Security Fund against your taxes as a business expense.

If you need to purchase items for your professional activity that cost more than €1,000, you cannot offset them against tax as a business expense and reduce your profit immediately. If the item is suitable for longer use in your business, you must offset (depreciate) the acquisition costs over its period of use. In each of these years, a proportion of the acquisition costs will therefore reduce your taxable profit (depreciation).

An asset’s useful life depends on how long you can use the item in your business in an economically viable way. This must always be estimated by the taxpayer. However, there are a few rules of thumb in the tax authorities' guidelines, and the law regulates this for certain items: 

• IT equipment can be depreciated over three years. Please note: if a computer is used in a private household, the distinction between professional and private use must be proven on a case-by-case basis. As a basic rule, the tax authorities assume that at least 40% of a computer’s use in a private household is for private purposes.
• New cars are amortised over eight years .
• Furnishings and office refurbishments are amortised over 10 years.

Example: You are a photographer and bought a PC for €1,200 in the first half of 2016. You were able to amortise the device over three years. This means that you were able to include this operating expense in your income and expense account in 2016, 2017, and 2018 at €400 each year and thus reduce your profit.

Example: You are a freelance artist and produce prints. You buy a printing press for this purpose. It cost €5,000 and you expect to use it for the next 10 years. Over the next 10 years, you can write off €500 each year and reduce your taxable profit by this amount.

You must observe the half-year rule when calculating amortisation: 

• If you purchase the asset in the first half of the year (i.e. by 30^th June at the latest), you can recognise its depreciation for the entire tax year.
• If you do not purchase the asset until 1^st July, you can only recognise half of the annual depreciation in the year of purchase. The missing half year is added on at the end, so it is not lost.

Example: If you had purchased the PC in the second half of 2016, you would only have been able to write off €200 for 2016, €400 each in 2017 and 2018, and €200 again in 2019.

Example: If you had bought the printing press in May 2020, you would have been able to write off €500 for the whole year. As you bought it in September 2020, you were only able to write off €250 for that year. You can write off the "missing €250" at the end of the year 2030.

If you are mobile in your self-employed work, you can include the travel expenses that you are not reimbursed for (e.g. by your client) in your income and expense account. Travelling expenses include

• Travel costs (e.g. leasing instalments for a company car, taxi, train ticket, plane ticket, bicycle, rental car)
• Additional catering expenses (daily allowance)
• Overnight stay expenses (overnight allowance)
• Incidental expenses 

In the following sections, you will find information on the different types of travel expenses. 

As a self-employed person, you do not have to pay tax on a certain percentage of your profits. If you make profits of up to €33,000, you can deduct 15% of these profits (maximum €4,950) from your provisional profit for 2026. As a result, your taxable profit is lower and so is your income tax.

Example: You have income of €14,000. You have operating expenses of €4,000. Your profit before tax-free profit allowance is therefore €10,000.
The tax-free profit allowance is 15% of €10,000: therefore €1,500. Once you have deducted this €1,500 from your profit you are left with a taxable profit of €8,500.

Info: If you submit your tax return at FinanzOnline, the basic tax-free allowance is automatically accounted for. There is an online option to waive this.

You can either calculate your income and expense account by proving your expenses individually with receipts ("itemised statement") or you can record certain expenses using a lump sum (basic lump sum). The regulation for this can be found in Section 17 of the Income Tax Act. In this case, your operating expenses are calculated using a flat-rate percentage of turnover. 

Attention: If you switch from the flat-rate calculation of operating expenses to itemised accounting when calculating profits, you can only switch back to the flat-rate method after five financial years have passed.

Info: If you only have a few operating expenses, the basic flat rate can be financially advantageous.

The flat-rate amount is

• 12% of your net turnover for income from artistic activities;
• 6% of your net turnover for income from writing, lecturing, scientific, teaching, or educational activities.

In addition to this lump sum, you can deduct the following expenses according to their real costs: 

• Purchase of goods if they are resold on a commercial basis; these must be recorded in a goods receipt book
• Labour costs (e.g. if you have hired staff)
• Third-party wages (subcontracts, if you commission other contractors)
• Compulsory contributions towards your social security.

Entrepreneurs who have a net annual turnover of no more than €40,000 can deduct their operating expenses at a flat rate of 45% of their operating income. There is one exception to this: if the small business provides services, the flat rate is only 20%. The lump sum is capped at €18,900 or €8,400 for service providers.

As an alternative to this general basic flat rate, there is also a professional group-specific regulation on a flat rate for artists and writers: they can deduct 12% of their turnover, up to a maximum of €8,725 per year, from their tax as operating expenses. This amount covers the following operating expenses on a flat-rate basis:

• Expenses for standard technical devices (e.g. computers)
• Telephone
• Office supplies
• Specialist literature
• Entrance fees
• Clothing/expenses relating to appearance
• Per diems
• Workspaces in your own home
• Catering for customers

Artists and writers can additionally deduct other business expenses.

In Austria, a distinction is made between seven different types of income:

• Income from agriculture and forestry
• Income from self-employment (e.g. income from artistic activity)
• Income from commercial operations (e.g. you have a business such as a cabinetmaker's workshop)
• Income from employment (e.g. employment at a theatre as an actor)
• Income from capital assets (e.g. from the sale of shares)
• Income from letting and leasing (e.g. you rent an apartment out)
• Other income (e.g. income from the sale of private property or from speculative transactions)

Attention: You must also include your foreign income in your income tax return. Whether this is included in your income in Austria depends on whether it is taxable under the applicable double taxation agreement. 

The following items are not considered to be income and are therefore tax-free:

• Payments from subsidies
• Unemployment benefits
• Emergency assistance
• Childcare allowance

Grants from the Artists' Social Security Fund: these serve to help you pay your social security contributions.

You can find detailed information on these benefits in the chapter on social security.

There is no general tax exemption for prize money and scholarships. Whether they are tax-free in individual cases depends on the reason why you received this amount of money. It is a matter of whether the prize money or scholarship is to be regarded as business income or not.

When receiving prizes, a distinction is made between whether you receive the prize money in return for something or whether you are granted the prize without having to give anything in return: 

artists typically receive prizes for a specific individual achievement. In this case, for example, you take part in a competition and create a work of art for this purpose. If you win, the prize is taxable because it is based on performance.

If you receive a grant in honour of your personal achievements or your life's work, your prize money is not subject to you giving anything in return. This prize money is not taxable (and does not include VAT, see the chapter on value added tax).

Example: You took part in a competition to redesign a fountain in your hometown. Your design has convinced the jury: you have won, the fountain will be redesigned according to your plans, and you have won prize money for your design. The prize money is taxable.

Example: An association for the promotion of visual arts awards prize money to recognise artists for their particularly socio-critical works. The winning artist receives prize money in return for transferring the exploitation rights to certain works of art to the association (see the chapter on copyright for an explanation of the term ‘exploitation right’). From an economic point of view, the prize money represents remuneration for the exploitation rights granted and is therefore taxable.

Example: In the following examples, the prize money is not taxable:
- You receive a State Prize from the Republic of Austria for your artistic oeuvre. 
- You receive an appreciation award from the Republic of Austria for your personal artistic and political commitment. 
- Because of your outstanding artistic achievements, you receive an award from a funding agency. 
 

If you receive a scholarship, a distinction is made as to whether the money primarily serves your gainful employment and, from an economic point of view, is a substitute for income or not:

Scholarships awarded by the Federal Ministry of Education, Science and Research in accordance with the Student Support Act and the Schooling Allowances Act are generally tax-free. 

Scholarships that are granted as part of school or university education (in particular dissertation or thesis scholarships) are not subject to income tax if

• it is a grant for scientific work that is not commercially utilised,
• the work is not carried out as part of an employment contract or a contract for work and labour, or as a supplement to an employment contract or a contract for work and labour, and
• the amount awarded does not constitute a replacement of income. This can be assumed if the annual grant is not higher than the maximum study allowance ceiling for students financing their own livelihood. From September 2023, this constitutes an amount of €977 per month, which is adjusted annually. If the contributions exceed this amount, they are to be treated as gainful employment and are subject to income tax.

Scholarships in the form of one-off grants that are not linked to a source of income and merely serve to cover costs do not constitute income replacement and are therefore not subject to income tax (e.g. reimbursement of costs for specialist literature, materials, travelling activities).

Scholarships received after completing university education (e.g. postgraduate scholarships, research scholarships, and post-doctoral scholarships) are generally to be regarded as income substitutes. These represent either income from self-employment or, in the case of an employment relationship, income from employment and are subject to income tax.