Austrian employment contracts almost universally provide for fourteen payments a year rather than twelve. The two additional payments, Urlaubsgeld in June and Weihnachtsgeld in November, are collectively the Sonderzahlungen, and they are taxed under an entirely separate and much gentler rule.
They are not statutory in the sense of being written into national law. They come from collective agreements, the Kollektivverträge, which cover the overwhelming majority of Austrian employees. In practice an Austrian salary quoted without fourteen payments is unusual enough to be worth questioning.
The six percent rule
Special payments falling within the Jahressechstel, literally the annual sixth, are taxed at a flat 6% after a tax-free amount of 620 euros. Social insurance contributions still apply, at a slightly lower rate than on regular pay, but income tax on the two extra months is charged at 6% rather than at your marginal rate.
For an employee whose regular income is taxed at 40% or 48% at the margin, that is a very substantial difference. It applies automatically through payroll, requires no application, and is available to everyone.
What it is worth
Take a gross salary of 60,000 euros paid across fourteen instalments. The regular twelve payments total 51,429 euros and the two special payments total 8,571.
Total deductions come to 19,923 euros, an effective rate of 33.2%, leaving 40,077 euros net. Averaged across twelve months that is 3,340 euros a month, with two of the calendar months considerably larger than the rest.
Calculating the same 60,000 euros as a flat annual salary under the ordinary progressive schedule, as the Australia Salary calculator does, produces 37,573 euros. The Sonderzahlungen treatment is therefore worth around 2,500 euros a year, or 209 euros a month, to an employee on this salary. Higher up the scale it is worth more, because the marginal rate it displaces is higher.
The Jahressechstel limit
The 6% rate applies only to special payments up to one sixth of annual regular earnings. Two regular monthly payments out of twelve is exactly one sixth, which is why the standard fourteen payment structure fits precisely inside the limit.
Anything beyond the sixth, a performance bonus for example, is taxed at ordinary rates as though it were regular salary. This has a practical consequence: an Austrian employer offering a discretionary bonus on top of the standard fourteen payments cannot pass it through the 6% rate, and both sides frequently assume otherwise.
A second rule applies to very large special payments. Amounts above a defined threshold within the sixth are taxed on a rising scale of 27% and 35.75% rather than 6%, which affects senior executives rather than ordinary employees.
Why this distorts international comparisons
Two problems arise whenever an Austrian salary is compared with a foreign one.
The instalment count. An Austrian offer of 60,000 euros usually means fourteen payments of 4,286, not twelve of 5,000. Someone comparing it against a German offer of 60,000 euros is comparing identical annual sums, but someone comparing monthly figures without adjusting is not. The general problem is set out in the thirteenth month guide.
The effective rate. Most published comparisons, including the 22 country ranking on this site, annualise Austrian pay and apply the ordinary schedule. That understates Austrian take-home by roughly four percentage points at this salary. Correcting for it moves Austria up several places in any European table, past France, Italy and Germany.
The direct German comparison is worth doing properly for this reason, and it is set out in the Germany versus Austria comparison.
Three practical points
- Check what the number includes. Austrian job adverts often quote a monthly gross with the phrase 14 mal, meaning fourteen times. Multiply accordingly.
- Part-year employment is prorated. Starting in September produces a proportionate Weihnachtsgeld, not a full one, and the Jahressechstel is calculated on actual earnings.
- Leaving mid-year triggers a settlement. Accrued but unpaid Sonderzahlungen are payable on termination, which makes a final Austrian payslip larger than expected.
Related: Australia software engineer pay