What Will Self-Employment in Austria Cost Me?
- Severina Ditzov
- Sep 2
- 3 min read
Updated: Oct 21
Becoming self-employed in Austria comes with freedom and flexibility, but it also comes with responsibilities - especially when it comes to taxes and social insurance. Many newcomers underestimate these costs, so let’s break it down step by step.
Social Insurance Contributions (SVS)
Your biggest ongoing cost will be your SVS (Sozialversicherung der Selbständigen) contributions. These are mandatory and cover:
Health insurance
Accident insurance
Pension
The standard rate is around 28 % of your profit (not your total revenue). This may feel steep, but it ensures your access to Austria’s social system. For the first three years of self-employment, reduced SVS contributions apply, helping ease the financial burden upfront (although paying too little initially may result in unexpectedly high back payments later when your contributions are recalculated).
Read more: Understanding reduced SVS contributions in the first three years of running a business in Austria
Good to know:
Payments are made quarterly.
If your income is below roughly €6,600 per year, you may qualify for reduced contributions.
Optional extras like unemployment insurance or sick pay can increase your contribution rate.
Even with health insurance, expect to pay 10-20% out of pocket for many medical services.
SVS contributions lower your taxable income, which can reduce the amount of income tax you owe.
Income Taxes
Austria uses a progressive tax system - the more you earn, the more tax you pay.
Here’s the basic breakdown (as of 2025):
Up to €13,308: 0%
€13,308 – €21,617: 20%
€21,617 – €35,836: 30%
€35,836 – €69,166: 40%
€69,166 – €103,072: 48%
Over €103,072: 50%
Example:
If you earn €20,000 profit (after business expenses):
First €13,308 is tax-free
Remaining €6,692 is taxed at 20% = €1,338.40 tax owed
Tip: Deductions matter. Business expenses (software, office supplies, education, travel, etc.) can dramatically lower your taxable income. That €20,000 profit might drop to €10,000 after proper deductions - and that can reduce your tax bill to zero.
Side self-employment
If you already have regular employment, your self-employment is considered “secondary.” Taxes are calculated differently, and you might need double insurance, depending on your income and whether your employer already provides health and pension coverage. This can affect both SVS contributions and your overall tax burden.
Taking your first steps as self-employed? Our guidebooks "A complete guide to self-employment in Austria' make the rules simple and give you the confidence to move forward.
VAT (Umsatzsteuer / Mehrwertsteuer)
VAT is another important factor to consider. The standard rate is 20%. If your annual revenue is under €55,000, you can use the Small Business Exemption, which means you don’t need to charge VAT to customers, but you also can’t reclaim VAT on purchases.
If you decide to register for VAT, you can reclaim the VAT you pay on business costs such as computers, equipment, or software, but you’ll also need to add 20% VAT to your invoices.
Keep in mind that once you opt in, you’re committed for five years. VAT returns are typically filed quarterly or monthly, and while hiring a tax advisor might cost €700 or more per year, it’s also possible to learn how to file VAT returns yourself.
Managing Costs in Practice
One of the most important lessons for self-employed people is to start saving from day one. A good rule of thumb is to put aside about 50% of everything you earn to cover SVS contributions, income taxes, and other business expenses. It might feel like too much, but it ensures you are prepared when quarterly or yearly payments come around.
Another key is to track every expense. Every receipt matters, whether it’s for a new laptop, software subscription, or even smaller office supplies. These expenses can reduce your taxable income and make a big difference at the end of the year.
Don’t forget that there are also grants, loans, and start-up funding programs in Austria designed to support entrepreneurs. Exploring these can help you cover initial costs or even scale your business faster.
Finally, think about your network. Many self-employed people reduce costs by collaborating with others - sharing office space, tools, or simply exchanging knowledge and contacts.
Self-employment in Austria isn’t free - SVS contributions and taxes take a noticeable chunk of your income. But with good planning, smart expense tracking, and knowing your exemptions, you can manage the costs and focus on building a sustainable business.
If you’d like to learn more about this topic, the webinar recording is available in our library.
