Banks & Finances Austria

If you are planning to move to Austria and are looking for a bank that is most accommodating to foreigners, you should consider a few leading banks that have proven to be convenient and accessible for international clients:

 

Raiffeisen Bank International: One of the largest banks in Austria; offers a wide range of services, including basic current accounts, accounts for youth and students; has an extensive network of branches and ATMs across the country; most documentation and services are provided in German.

 

Bank Austria (part of the UniCredit group): Offers various account options, including mobile accounts; services available in English, which significantly eases interaction for those who do not speak German.

 

Erste Bank: Known for its convenient online platform "George," which supports several languages, including English. Erste Bank also offers a wide range of accounts, including student and youth accounts.

 

Volksbank: Offers various flexible account options, including youth and student accounts; more regionally oriented; knowing German will be useful when interacting with the bank.

 

BAWAG P.S.K.: One of the largest banks in Austria; offers a wide range of account packages, including low-fee accounts and those aimed at youth; offers modern banking solutions and an extensive ATM network; some services are available in English.

 

Revolut/Wise: online banking options that can be a convenient and quick way to get a euro bank account for a foreigner.

Steps to open a bank account

 

1. Choose a bank: In Austria, both large international banks and local banks are available. The choice depends on your needs: availability of English-language services, convenience of branch locations, online banking, etc.

 

2. Complete an application: You can open an account in person at a branch or, in some cases, online. However, online opening is available only for residents (people living in Austria for more than 183 days).

 

3. Provide documents: To open an account you will need:

- A passport or other identification document.

- Proof of registration at your place of residence or another document confirming your residence.

- Employment contract or proof of employment, or documents confirming student status.

- Visa or residence permit (if applicable).

- In some cases, the last three pay slips may be required.

 

4. Identity verification: If you open an account online, you will need to verify your identity. This can be done through video identification, sending pictures of documents, or visiting a bank branch.

 

5. Receive a bank card: After opening the account, a debit card and online banking access information will be sent to you by mail.

 

Additional points

 

- Accounts for non-residents: Non-residents can open an account in Austria, but it requires a personal visit to the bank and providing additional documents such as proof of income and tax identification number from your country.

 

- Basic payment account: If you are having difficulty opening a regular account, you have the right to open a basic payment account, which allows you to perform basic banking operations. This type of account is available even to those who do not have a registered place of residence in Austria.

Choice of ATMs: In Austria, you'll find many ATMs belonging to major banks such as Erste Bank, Raiffeisen, and UniCredit. It is recommended to use ATMs belonging to these banks, as they usually do not charge additional fees for cash withdrawal with foreign cards. Avoid ATMs operated by private companies, as they may charge high fees for usage.

 

Fees and exchange rate: Some banks may charge a fee for cash withdrawal abroad, as well as for currency conversion. To minimize costs, it is better to choose ATMs that allow withdrawals in euros, and avoid dynamic currency conversion (DCC). DCC offers you the option to pay in the currency of your card, but it is usually less favorable due to a poor exchange rate.

 

Cash withdrawal limits: In Austria, cash withdrawal limits can be up to 400 euros per transaction. However, the limit also depends on your bank's conditions. Plan your transactions to avoid frequent withdrawals and associated additional fees.

 

Cards that allow avoiding fees: If you frequently travel or live in Austria, consider using cards that offer favorable conditions for cash withdrawals abroad. For example, cards from N26, Revolut, or Wise provide free or minimal fee cash withdrawals abroad, as well as favorable exchange rates.

 

Security: When using a card abroad, ensure it supports locking in case of loss or theft. Many modern cards, such as Wise, also offer management via a mobile app, where you can quickly block the card if necessary.

International bank transfers

   - SEPA transfers: If you are sending money to countries in the European Economic Area (EEA), SEPA (Single Euro Payment Area) is the most cost-effective and fastest way to transfer. SEPA transfers are processed just like domestic bank transfers and should not cost more than local transactions.

   - SWIFT transfers: To send money outside the EEA, the SWIFT system is used. Although this method is very reliable, it can be expensive. Banks often charge high fees (sometimes over 30 euros) and apply less favorable exchange rates.

 

Online money transfer services

   - Wise: This is one of the most popular and economical options for international transfers. Wise offers transparent fees, rates close to the market exchange rate, and allows sending money to more than 150 countries.

   - Revolut: Suitable for regular small transfers. The service offers low fees and good exchange rates but may have limits on the transfer amounts.

   - PayPal and Xoom: PayPal allows sending money to more than 200 countries, but fees and exchange rates may be higher compared to specialized services. Xoom, a subsidiary of PayPal, offers more favorable conditions for international transfers.

 

Money transfer services

   - Western Union and MoneyGram: These companies allow you to quickly send money practically anywhere in the world. Convenient for sending cash or in situations where the recipient does not have a bank account. However, their fees can be higher, especially for sending small amounts.

 

Currency exchange brokers

   - If you need to send large amounts, consider using currency exchange brokers like OFX or Currencies Direct. They offer competitive exchange rates and can be beneficial when transferring large amounts.

 

Recommendations:

- Compare offers: Before sending money, it is recommended to compare different services based on their fees, transfer speed, and exchange rates.

- Avoid hidden fees: Carefully study the conditions to avoid hidden fees, especially when using traditional banks.

- Consider the transfer time: If speed is important, it's better to choose specialized transfer services like Wise or Western Union, which can deliver money within a few hours.

Foreigners in Austria can obtain a loan or mortgage, but the process can be more complex and demanding compared to local residents or EU citizens.

 

Requirements for getting a loan or mortgage

   - Residency: Most banks in Austria require a residence permit. This is especially important for non-EU residents, as they are considered a higher risk for the bank. Some banks may also insist that income is in euros and earned in Austria.

   - Income: You must provide proof of stable income for the last 3-6 months. Foreign citizens may need a higher amount of equity—up to 40-50% of the property's value.

   - Documents: You will need a passport, employment contract, account statements, proof of income, and other documents that must be translated into German and notarized.

 

Mortgage conditions

   - Interest rates: In Austria, mortgage interest rates range from 2% to 4%, making them quite attractive compared to other countries.

- Initial Deposit: For foreign nationals, the initial deposit usually ranges from 20% to 50% of the property's value, depending on the type of housing and the bank.

- Mortgage Term: The maximum mortgage term is usually 35 years, and loan payments should not exceed 40% of your monthly income.

 

Additional Expenses

- Fees: Banks charge a one-time fee for loan processing, which can range from 1% to 2% of the loan amount. There may also be costs for property appraisal, insurance, and legal services.

- Insurance: In some cases, banks may require mortgage insurance to protect the borrower in the event of unforeseen circumstances, such as job loss or serious illness.

 

Restrictions for Foreign Nationals

- Area and Purpose of Purchase: In certain regions of Austria, there are restrictions on property purchases by foreigners, especially in tourist areas. If you plan to use the property as your primary residence, the procedure may be simpler.

 

Thus, while obtaining a loan or mortgage as a foreigner in Austria is possible, it requires thorough preparation and meeting all the bank's conditions. It is advisable to consult with local financial advisors and open an account with an Austrian bank in advance to simplify the process.

Real Estate Payment

- Bank Transfer: For real estate payments in Austria, bank transfers are typically used. If you are purchasing property through a mortgage, your bank will transfer funds directly to the seller after signing the purchase agreement. The funds are transferred through a notary, who ensures that all legal formalities are complied with.

- Escrow Account: In Austria, it is common practice to use escrow accounts managed by a notary or lawyer. The buyer transfers the money to this account, and it remains there until all formalities are completed and the property is registered in the buyer's name.

- Foreign Transfers: If funds are coming from abroad, it is important to consider possible fees and exchange rates.

 

Car Payment

- Bank Transfer: When purchasing a car, payment can also be made via bank transfer, especially if it is a significant amount. The seller usually requires payment confirmation before handing over the car and documents.

- Financing and Leasing: Many car dealers in Austria offer car financing or leasing options. In this case, the bank or a financial company pays for the car directly, and the buyer repays the debt in installments.

- Credit Cards: Credit cards are less commonly used for car payments, as the amount may exceed card limits, and significant fees for credit card usage may apply.

 

Tips for Foreigners

- Source of Funds Verification: If money is transferred from abroad, especially from non-EU countries, banks may request documents confirming the legality of the funds' origin. This is a standard practice under anti-money laundering laws.

- Using Local Bank Accounts: Opening an account in an Austrian bank can significantly simplify the payment process, reduce fees, and speed up transactions.

Bank Deposits

- Savings Accounts: This is one of the most popular ways to save money in Austria. Savings accounts offer a fixed or variable interest rate, and money can be withdrawn at any time. Interest rates on these accounts are generally low, but this option is suitable for those seeking a safe and accessible way to preserve their funds.

- Term Deposits: This type of deposit implies that money is placed for a fixed period (from several months to several years) at a fixed interest rate. During this period, funds are not available for withdrawal without penalties, but the interest rate is usually higher than on regular savings accounts.

 

Investments in Stocks and Bonds

- Stocks: Investing in stocks of companies traded on stock markets, such as Wiener Börse, can be profitable but comes with high risks. For those familiar with the stock market and prepared for price fluctuations, this can be a promising way to increase capital.

- Bonds: These are debt securities considered less risky compared to stocks. Bonds can be government or corporate. The investor receives fixed interest throughout the bond's term and, upon expiration, gets back the nominal value of the bond.

 

Pension Savings

- Private pension funds: In Austria, there is an opportunity to make private pension savings through pension funds. Such funds offer various investment strategies, ranging from conservative to aggressive, allowing adaptation of savings to individual needs and preferences.

- Life insurance with savings: This product combines life insurance with capital accumulation. Part of the contributions goes to insurance, and part to investing funds, which are paid out at the end of the insurance term or if an insured event occurs.

 

Investment Funds and ETFs

- Investment funds: These are collective investment schemes where funds from many investors are pooled and invested in various assets (stocks, bonds, real estate). Investors earn income depending on the fund's performance.

- Exchange-traded funds (ETFs): These are investment funds traded on the stock exchange like stocks. They offer access to a diversified asset portfolio and allow investments in various sectors or indices with low fees.

 

Real Estate

- Investing in real estate: The Austrian real estate market is stable and attractive for long-term investments. Buying property for rental can be a good way to generate passive income.

 

Gold Bullion and Precious Metals

- Buying gold and precious metals: Investing in gold and other precious metals is considered a way to protect capital from inflation and economic instability. In Austria, there are specialized dealers where you can purchase gold in the form of bars or coins.

 

Crowdfunding and P2P Lending

- Crowdfunding: Investing through crowdfunding platforms allows supporting startups and innovative projects. This can be a high-risk but potentially profitable type of investment.

- P2P lending: P2P lending platforms allow individuals to lend to other people or small businesses, earning interest income in return.

 

It is recommended to consult with financial specialists or banks to choose the best strategy.

In Austria, foreigners living or working in the country are subject to certain tax obligations. These obligations depend on their residency status, type of income, and other factors.

 

Tax Status: Residents and Non-residents

- Residents: Individuals who reside in Austria for more than 183 days a year are considered tax residents. They are taxed on their global income, regardless of where it was earned.

- Non-residents: Individuals who reside in Austria for less than 183 days a year are taxed only on income earned in Austria.

 

Income Tax

- For residents: Income tax in Austria is progressive, with rates ranging from 20% to 55%, depending on the amount of income. All types of income, including salary, rental income, capital income, and business income, are subject to taxation.

- For non-residents: Non-residents pay tax only on income earned in Austria. The rates are similar to those applied to residents.

 

Capital Gains Tax

- Income from capital gains, including dividends, interest, and profits from stock sales, is taxed at a fixed rate of 27.5%. This tax applies to both residents and non-residents.

 

Real Estate Tax

- When purchasing real estate in Austria, foreigners are required to pay a real estate transfer tax of 3.5% of the purchase price. Additionally, a land registry fee of 1.1% for the registration of property rights in the land registry is charged.

 

Social Contributions

- If a foreigner is officially employed in Austria, they are required to make contributions to the social security system. These contributions include pension insurance, medical insurance, and unemployment insurance.

 

Tax Benefits and Deductions

- Residents can take advantage of various tax deductions and benefits, such as deductions for children, education expenses, or medical expenses. Non-residents have limited access to such benefits.

 

Tax Agreements

- Austria has entered into agreements to avoid double taxation with several countries, which allows the avoidance of double taxation on the same income both in Austria and the country of origin of the income.

 

Tax Obligations upon Departure

- If a foreigner ceases to be a resident of Austria, they must notify the tax authorities of their departure and submit a final tax return. The tax obligations will depend on the income received before the departure date.

 

To obtain more detailed information and optimize taxation, it is recommended to consult with a tax advisor or use the services of specialized firms.

In Austria, tax declaration for foreigners depends on their tax status and type of income. Foreigners residing or working in Austria must fulfill certain tax obligations and submit tax returns.

 

Tax Status: Resident / Non-resident.

 

Process of Submitting a Tax Return

- Deadlines: The tax return is usually submitted by April 30 of the year following the reporting year if the declaration is filed in paper form, and by June 30 if submitted online through the FinanzOnline portal.

- Online Submission: Most taxpayers in Austria, including foreigners, can submit returns online through the FinanzOnline system. This is a convenient method that allows tracking the status of the return and receiving notifications of possible adjustments.

- Necessary Documents: To submit a return, it is required to provide data on income, deductions, paid taxes, and contributions to the social security system. Documents confirming the right to tax deductions or benefits may also be required.

 

Types of Income to be Declared

- Salary and Other Income: Foreigners are obliged to declare income from work in Austria, as well as any other income received in the country, including rental income, capital gains, and business income.

- Foreign Income: Tax residents of Austria must also declare income received outside the country. If Austria has a double taxation avoidance agreement with your country, an exemption method or a credit for foreign-paid taxes may apply.

 

Tax Deductions and Benefits

- Deductions for Children and Family: Foreigners living in Austria with family may be entitled to various tax deductions, such as child tax deduction or family bonuses.

- Education and Medical Expenses: Certain expenses, such as costs for education or medical services, can also be considered when calculating taxes.

 

Taxation in Case of Departure from Austria

- If a foreigner leaves Austria, they must file a final tax return, indicating all income received prior to departure. It is important to notify the tax authorities of the departure to avoid further tax obligations in Austria.

 

Consultations and Assistance

Foreigners are advised to consult tax advisors, especially if they have complex financial and tax situations. Advisors can help with properly filling out the declaration and optimizing taxation.

Austria offers various rules and benefits for self-employed individuals and freelancers, making business operations in this country convenient and attractive.

 

Registration and Legal Status

- Gewerbetreibender (businessman) and Freiberufler (freelancer): Austria distinguishes between commercial activities and liberal professions. Businessmen must register their activities in the trade register, whereas freelancers engaged in liberal professions (e.g., doctors, lawyers, artists) are exempt from this obligation.

- Einzelunternehmen (sole proprietorship): The simplest and most popular way to conduct business for the self-employed. Sole proprietors bear full responsibility for their obligations.

 

Taxation

- Income Tax: Self-employed individuals are required to pay income tax on the income derived from their activities. The tax rate is progressive and ranges from 20% to 55%, depending on the level of income.

- Value Added Tax: If the annual turnover exceeds 35,000 euros, self-employed individuals are required to register as VAT payers. The standard VAT rate in Austria is 20%, but there are reduced rates for certain goods and services.

 

Social Security

- Social Contributions: Self-employed individuals and freelancers are required to pay contributions to the social security system, which include pension insurance, health insurance, and accident insurance. The amount of contributions depends on the level of income.

- Pension Savings: Self-employed individuals are also required to make pension contributions, which enable them to accumulate funds for retirement. The amount of contributions varies depending on income.

 

Benefits and Support

- Tax Deductions: Self-employed individuals can take advantage of various tax deductions, such as deductions for professional expenses, business trips, education, etc. This helps to reduce the tax burden.

- Subsidies and Grants: In Austria, there are various government support programs available for the self-employed, including startup subsidies, innovation grants, and preferential loans.

 

Accounting Rules

- Simplified Accounting: For self-employed individuals with an annual income of up to 700,000 euros, simplified accounting is allowed, which involves recording income and expenses.

- Full Accounting: If income exceeds 700,000 euros, self-employed individuals are required to maintain double-entry accounting, which necessitates more complex bookkeeping.

 

International Aspects

- Double Taxation: Austria has entered into double taxation avoidance agreements with several countries, which helps to prevent double taxation on income earned abroad.

- Remote Work: For freelancers working with international clients, it is important to consider tax obligations both in Austria and in the client's country. It is important to properly draft contracts and consider currency exchange.

 

To fully utilize all opportunities and comply with all requirements, it is recommended to consult with tax and legal professionals.