An hour of work has many prices: what it costs the employer, what appears on the payslip, what arrives net, and how much of it can really be consumed once VAT is paid. Here you can see the complete chain, the comparison of employment, sole proprietorship and GmbH, and an adjustable household budget.
Regular monthly pay: the employer's true costs on the left, what remains on the right.
Annual view incl. the 13th and 14th salary (taxed at a preferential 6%).
A customer pays an amount. They can pay it to a self-employed person, or spend it as an employer on an employee. This page follows the same euro down both routes to the net figure, on the law as it stands in 2026: VAT, social insurance under GSVG and ASVG, the progressive income tax schedule and wage tax including the favoured 13th and 14th salary.
Self-employed on the left, employed on the right. Both columns are the same height because the customer pays the same both times. Green is what arrives.
The share of the customer's euro that arrives, depending on how much the customer pays per year. The curves fall because the schedule rises, and flatten where social insurance stops at the contribution ceiling.
VAT is the point where many self-employed people's arithmetic goes wrong, in both directions. Legally it is not a tax on the business but on consumption. The business adds it to its price, collects it from the customer and passes it on, after deducting the input VAT it paid itself. If the customer is a company, it reclaims the VAT as input tax, and for both sides the money simply passes through. The calculation above shows that as the business customer: the 20 percent never appears.
If the customer is a private person the picture changes. They can reclaim nothing, so for them the gross price is the price. And because a private customer is willing or able to pay only a certain amount, the VAT in practice presses down the net price the business receives. That is the experience of watching 120,000 euro turn into 100,000 before one's own charges have even begun. Legally the money was never the business's. Economically it is missing all the same.
That is why the calculation shows both versions. With a private customer the VAT is the largest difference between the two routes, and it explains almost on its own why the employee keeps more there.
The employee's column contains things that are missing from the self-employed column and that the self-employed person has to pay for out of net income: five weeks of paid leave and about thirteen public holidays, together roughly a seventh of the working year, continued pay in sickness, and unemployment insurance, which the self-employed can only take out voluntarily. Social insurance is capped for both. But the self-employed person carries the 26.83 percent alone, while for the employee 18.07 percent employee and 20.98 percent employer share the load, and the employer's part appears in the column as part of payroll costs.
Charge the employee's time off against the self-employed person and the lead with a business customer shrinks to little or disappears. That is an estimate, not a calculation, and it depends on how much leave someone actually takes.
What the model assumes. The employee works in Vienna (employer contribution surcharge 0.36 percent), without commuter allowance, family bonus or sole-earner credit. The self-employed person is calculated on the final SVS contribution base with the basic profit allowance and without the investment-linked allowance. The GmbH line in the curve is pure full distribution at 23 percent corporation tax and 27.5 percent capital gains tax, without a managing director's salary, and is therefore only a lower bound. All values are for 2026.
Legal forms for founding a business in Austria, in brief: the choice determines liability, tax logic, social insurance and founding effort. It can be changed later, but a switch costs time and advice.
Founded via a trade registration, practically free of charge, no capital requirement. Full personal liability with private assets. Taxed through income tax including the profit allowance, social insurance via the SVS. Fits a first venture and small risks.
Partnerships for teams: in an OG (general partnership) all partners are liable without limit, in a KG (limited partnership) the general partner is fully liable and the limited partners only up to their contribution. Profit is attributed directly to the partners and taxed there as income. Requires an entry in the commercial register.
A separate legal entity: liability is in principle limited to the company's assets. Share capital of €10,000 (€5,000 to be paid in), notarial deed and commercial register, ongoing accounting obligations. Tax logic as above; managing shareholders are subject to GSVG. Fits as soon as risk, revenue or partners demand it.
The start-up variant of the GmbH: likewise €10,000 share capital, but simplified share transfers and enterprise-value shares for employee participation. Designed for companies that want to take on investors and give teams a stake.
Everything so far looked only at Austria. The obvious next question: how does that compare? The honest measure is the tax wedge, the share of total labour cost that never reaches the employee. The OECD calculates it the same way for every member: employer cost minus net pay, divided by employer cost, for a single person without children at the national average wage. That is exactly the total burden rate from the first tab, only computed for 38 countries at once.
Tax wedge 2025, single person without children at the average wage. The vertical line marks the OECD average. Austria is third of 38.
Austria's wedge is not one number. Computed with the same engine as the first tab: employer cost against annual net including the 13th and 14th salary.
The burden is one side. The other is what the state pays out again. Social protection benefits as a share of GDP, next to the tax wedge of the same country.
States without personal income tax do not appear in the OECD comparison, because there is no wedge to measure. How they finance themselves instead:
Financed from oil and gas, since 2018 also 5% VAT and since 2023 a 9% corporate tax. Social insurance only for nationals; expatriates pay nothing and receive nothing.
No income tax for residents since 1869, except for French citizens. The state lives on VAT, property transactions and the gaming sector. Social insurance contributions do exist.
The same hydrocarbon model. Contributions for nationals only. Public services are extensive for citizens and thin for the majority migrant workforce.
Financed through customs duties, tourism and licence fees for offshore companies. No public pension of the European kind, and the cost of living is high.
The lowest value in the OECD statistic, and a case worth reading carefully: at the average wage income tax and contributions cancel out against credits. Social spending is correspondingly low.
Pensions are funded through private individual accounts that the OECD does not count as a tax. The burden is therefore statistically low but not economically absent.
Household electricity including all taxes and levies, second half of 2025. For industry Austria sits 9 to 14% above the EU average on the pure energy price, depending on the consumption band.
The chain followed to its end: of €100 in employer costs, roughly half remains net, and when it is spent the state takes another cut via VAT. Important for perspective: these taxes and contributions are no black hole, they fund pensions, health and education and largely come back as services. But knowing the chain is the basis of every entrepreneurial calculation.
Annual average for the median earner; weighted VAT mix (10% on rent & food, 20% standard rate).
Where does the money go privately? The starting point is the average figures from the 2024/25 household expenditure survey (Statistics Austria): €4,170 of spending per household per month. Set your own household net income and shift the shares; whatever is left is your savings rate.
Bar = your setting · ▏marker = Austrian average (2024/25 household expenditure survey).
What can happen with the savings rate from the household budget: compound interest lets returns earn returns of their own, so small becomes large over decades. The same mathematics works in reverse for a loan: there, you pay the compound interest to the bank. Both adjustable below.
The longer the horizon, the more the returns overtake the contributions. That is exactly why time is the most important factor in building wealth.
The annuity from purchase price, equity, interest rate and term, checked against the 40% lending rule (Austrian KIM regulation). In practice, transaction costs of around 10% come on top.
Where do the taxes and contributions from the other tabs flow? Into the state budget. Austria's federal government plans 2026 with €125.9bn of outflows against €107.6bn of inflows. The gap of €18.3bn is new debt. The largest single item is pensions, and demographics make it bigger year after year.
Federal budget bill 2026 (Ministry of Finance). The largest revenue sources are VAT and wage tax, precisely the taxes covered in Price & balance and in this tool.
Ever fewer contributors finance ever more pension years. That is not a matter of opinion but of population statistics.