August 2019
According to Austrian regulations, obligatory social security contributions are deductible from the tax base. This rule is generally applicable for foreign obligatory social security contributions.
A recent decision by the Austrian Supreme Court for tax matters (Verwaltungsgerichtshof) outlined the deductibility of foreign health insurance contributions in Austria. In general, statutory contributions are deductible expenses when calculating the income tax due in Austria. As the legal obligation of being subject to health insurance might differ in each country, the deductibility of the foreign health insurance contributions can be limited. The Austrian authorities distinguish between statutory contributions to foreign health insurance systems and contributions to private health insurance due to a legal obligation.
In many countries, employed and self-employed persons are subject to statutory health insurance in their home country. However, they might also be subject to taxation in Austria for their work performed in Austria. In the case that the foreign health insurance system is comparable to the Austrian system, the foreign health insurance contributions can be deducted irrespective of the assessment basis and the contribution rate. This indicates that there is no discrimination against persons who are subject to a foreign statutory health insurance system.
There are also systems without a compulsory health insurance but with a legal obligation to be health insured. In these cases, the Austrian tax law limits the maximum deductible amount with the Austrian health insurance amount. The difference here is that the contributions are only tax-deductible up to the Austrian maximum threshold for health insurance contributions, which is 8% of the threshold of EUR 5,220.00 in 2019. The reason for this restriction is that the higher level of these contributions generally refer to higher insurance benefits.
Katja Reichl
katja.reichl@bdo.at