Independent contractors

Independent contractors who are fully insured in accordance with the Allgemeines Sozialversicherungsgesetz (ASVG – Federal Act on General Social Insurance) must receive a notice of employment, if a written contract does not exist.

They enjoy only limited protection under labour law. The provisions of the Allgemeines Bürgerliches Gesetzbuch (ABGB – Austrian General Civil Code) on the termination of the employment relationship apply analogously to freelance contracts, not those of the Angestelltengesetz (Salaried Employees Act). Independent contractors, for example, are not entitled to vacation compensation. However they are members of the chambers of labour (→ AK) and therefore have the opportunity to make use of all the service facilities provided by the chambers of labour, including legal assistance and legal representation.

Without a corresponding agreement between the employer (client) and the independent contractor, the provisions of the Angestelltengesetz (Federal Salaried Employees Act), the Urlaubsgesetz (Federal Leave Act), the Arbeitszeitgesetz (Federal Working Time Act; especially the overtime remuneration), the Arbeitsruhegesetz (Federal Act on Rest Periods) and the Entgeltfortzahlungsgesetz (Federal Continued Remuneration Act) do not apply.

Consequently, there is no entitlement to collectively agreed wages and, unless expressly otherwise agreed, to special payments and leave.

Independent contractors are included in the companys employee provision and self-employed provision scheme.

Independent contractors who are employed below the monthly de minimis threshold (marginally employed persons), must be registered for accident insurance by their employer before commencing their activities (registration of employees).

The de minimis limit for 2024 is 518.44 Euro. Marginally employed independent contractors can also voluntarily register for health and pension insurance. The application must be submitted to the responsible health insurance provider.

Independent contractors whose monthly remuneration exceeds the de minimis threshold must register as independent contractors with the responsible health insurance provider. They are therefore covered by accident, health and pension insurance.

In the event of double or multiple marginal employment in accordance with the Dienstleistungsscheckgesetz (DLSG – Federal Service Voucher Act), the special provisions on compulsory insurance apply.

Independent contractors whose monthly remuneration from a freelance relationship exceeds the de minimis threshold are also required to obtain unemployment insurance and insolvency remuneration insurance. As a result, they are entitled to unemployment benefits (→ oesterreich.gv.at) and insolvency remuneration under the same conditions as employees. Likewise, they can draw sickness benefits and receive a maternity allowance based on their income.

Applications for insolvency remuneration must be submitted to the responsible office of IEF-Service GmbH in accordance with the respective insolvency court.

Persons in multiple marginal employment relationships are entitled to sickness benefits  and a maternity allowance provided that their total income exceeds the de minimis threshold of 518.44 Euro (for 2024). Persons in multiple marginal employment relationships are not obliged to obtain unemployment insurance and are not entitled to unemployment insurance benefits.

Compulsory insurance ends with the end of the employment relationship (or entitlement to remuneration).

Independent contractors are required to pay income tax, but not wage tax, as they are treated as self-employed persons. They are independently responsible for paying income tax. The tax liability is based on the taxable annual income. If this exceeds 12,816 Euro in the year 2024 (in the year 2023: 11,693 Euro), the income from a freelance relationship must be taxed.

If the income as an independent contractor is joined by other taxable income (from employment or a pension), the tax-free annual income limit 2024 is 13,981 Euro (2023: 12,756 Euro).

Independent contractors are entrepreneurs for the purposes of the Umsatzsteuergesetz (UStG – Federal Turnover Tax Act) and are subject to value added tax. For non-genuinely VAT-exempt small enterprises, this has practically no or only a marginal impact, unless they opt for the general scheme of taxation (→ BMF)^{German text}.

The following taxes must be paid by the employer for independent contractors:

• Municipal tax
• Employer’s contribution
• Surcharge to the employer’s contribution

The following taxes do not need to be paid by the employer for independent contractors:

• Employer levy