Sole proprietorship or company in Austria: tax comparison
Taxes and contributions for a sole proprietor under each available system and for your own company, for a resident of the chosen country with the same profit.
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Sole trader, actual expenses
Sole proprietorEinzelunternehmen — Einnahmen-Ausgaben-Rechnung
Profit = revenue minus actual expenses and SVS contributions. A 15% basic profit allowance (up to EUR 4,950) is deducted and the rest is taxed at the progressive 0–55% scale.
Conditions
You need a trade licence (Gewerbeberechtigung) for the free IT trade and membership of the Economic Chamber; SVS insurance is compulsory from the first euro, at least about EUR 160.81 a month.
VAT: small-business exemption for turnover up to EUR 55,000 a year (§ 6(1) no. 27 UStG); above that, 20% VAT.
Sole proprietorEinzelunternehmen — Basispauschalierung (§ 17 Abs. 1 EStG)
Instead of actual expenses you deduct 6% of turnover (technical consulting; at most EUR 25,200) plus SVS contributions. The rest is as under actual expenses: 15% basic allowance and the 0–55% scale.
Conditions
Prior-year turnover at most EUR 420,000; no bookkeeping obligation. The 6% rate applies to commercial or technical consulting; other IT services may qualify for 15% (up to EUR 63,000).
Worth it only when actual expenses are lower than the flat rate; other costs (rent, equipment) cannot be deducted separately.
Sole proprietorEinzelunternehmen — Pauschalierung für Kleinunternehmer (§ 17 Abs. 3a EStG)
For small businesses without VAT: expenses are deemed to be 20% of revenue (service business; at most EUR 11,000); only SVS contributions are deducted on top. Then the 15% basic allowance and the 0–55% scale.
Conditions
Only if the small-business VAT exemption applies: turnover ≤ EUR 55,000 in both the previous and the current year. IT services count as a 'service business' (20%, not 45%).
CompanyGesellschaft mit beschränkter Haftung (GmbH)
The company pays 23% corporate tax (at least EUR 500 a year). Dividends are taxed at 27.5% (KESt). The owner-director without salary is still insured with SVS: contributions are based on the dividends, or on the minimum base if nothing is paid out.
Conditions
Share capital at least EUR 10,000 (§ 6 GmbHG). A shareholder appointed managing director of a GmbH that is a Chamber member is compulsorily insured with SVS (§ 2(1) no. 3 GSVG); dividends count towards the contribution base (up to EUR 97,020 a year).
The EUR 500 minimum corporate tax is due even with a loss; the excess is credited in later years.
Business activity: IT services / consulting for business clients
One owner resident in Austria, no employees, no other income, no children, full year; the activity is a free IT trade (trade licence, Economic Chamber member), not in the start-up years.
SVS 2026: pension 18.5%, health 6.8%, self-employed provision 1.53% of a base between EUR 551.10 and EUR 8,085 a month; accident insurance EUR 12.95 a month. For a sole trader the base is profit before pension and health contributions. Economic Chamber dues are not included.
Income tax at the 2026 scale; 15% basic profit allowance (up to EUR 4,950) without the investment-linked part; VAT is not included.
GmbH: the owner is the sole shareholder and managing director without salary; profit after tax is either paid out in full as dividends or kept in the company.
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