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Freelancing and Independent Contracting

Understand the distinctions and regulations for freelancers in Austria

Difference employees and contractors

In Austria, the distinction between employees and independent contractors is of great importance for both employers and workers. This differentiation affects aspects such as social security contributions, taxes, and worker protections.

Control and Dependence

One of the main factors that distinguish employees from independent contractors is the level of control exerted by the company. Employees are subject to the company's instructions regarding work methods, scheduling, and location. On the contrary, independent contractors have more freedom in how they perform their work.

Economic Dependence

Economic dependence is another key factor in this differentiation. Employees usually depend financially on a single employer for their income. In contrast, independent contractors can work for multiple clients and have their own business setup.

Integration into the Company

The degree of integration into the company's structure is another distinguishing factor. Employees typically follow company rules and use company equipment. Independent contractors, however, often use their own tools and resources and operate outside the company's organizational structure.


The method of remuneration also differs. Employee compensation is usually based on a fixed salary or hourly wage, regardless of the work completed. Independent contractors, on the other hand, are typically paid based on the project or service delivered.

The correct classification of workers is crucial. Misclassifying an employee as an independent contractor can lead to penalties and fines for both parties. If there is any uncertainty about the classification, it is advisable to consult with a legal or tax professional.

Independent contracting

Independent contracting, also known as freelancing, is a popular way to work in Austria. It offers flexibility and autonomy, but also comes with specific responsibilities. This guide explores the nuances of independent contracting in Austria, including contract structures, negotiation practices, and common industries.

Contract Structures

The type of contract you use will depend on the nature of your work and your relationship with the client. Here are some common structures:

  • Werkvertrag (Contract for Work): This is the most common type of contract for independent contractors. It outlines the specific scope of work, deliverables, and payment terms.
  • Dienstvertrag (Contract for Services): This type of contract is used for ongoing services, such as consulting or cleaning. It's less specific than a Werkvertrag and focuses on the general nature of the services provided.
  • Gesellschaft bürgerlichen Rechts (GbR) (Civil Law Partnership): This is a simple partnership structure for two or more freelancers working together on a project.

Negotiation Practices

Negotiation is an essential part of securing freelance contracts in Austria. Here are some key points to remember:

  • Fees: Discuss your hourly rate or project fee upfront. Research industry standards and consider your experience when setting your rates.
  • Payment Terms: Negotiate clear payment terms, including milestones for payment if the project is large. It's common to request an upfront deposit.
  • Scope of Work: Clearly define the scope of work in the contract. This will help avoid misunderstandings and potential disputes later.
  • Termination Clause: Include a termination clause in the contract that outlines the process for ending the agreement by either party.

Common Industries for Independent Contractors

Many industries in Austria utilize independent contractors. Here are some of the most common:

  • Information Technology (IT): Web developers, programmers, and IT consultants are in high demand.
  • Creative Industries: Graphic designers, writers, photographers, and translators often work as freelancers.
  • Marketing and Sales: Marketing consultants, social media specialists, and copywriters can find freelance opportunities.
  • Consulting: Management consultants, business advisors, and trainers frequently work independently.

Intellectual property rights

Intellectual property (IP) rights are a crucial aspect for independent contractors in Austria. The ownership of the IP created through their work can sometimes be complex, making it essential for both freelancers and clients to understand these rights.

In Austria, the Urheberrechtsgesetz (Copyright Act) operates differently from some other jurisdictions. The original author retains copyright ownership of their creations by default, even if the work was commissioned for a specific purpose. This implies that the freelancer, not the client, automatically owns the copyright unless otherwise agreed upon in a contract.

For instance, if a graphic designer creates a logo for a client's company, the designer holds the copyright under Austrian copyright law, unless they explicitly transfer ownership to the client through a written agreement.

The Role of Contractual Agreements

A well-defined contract is essential to ensure clear ownership of IP created by freelancers. This contract should explicitly address:

  • Ownership of Copyright: The contract should clearly state whether the copyright for the work belongs to the freelancer or if it's transferred to the client.
  • License Grant: If ownership remains with the freelancer, the contract can grant the client a license to use the work for a specific purpose and timeframe.

For example, the logo design contract can specify that the copyright transfers to the client upon full payment, granting them the right to use the logo for their business purposes.

Intellectual property law can be complex. If you're unsure about the best approach for your specific situation, consulting with a lawyer specializing in intellectual property is highly recommended. They can guide you in drafting contracts that protect your interests and ensure clear ownership of the work you create.

Tax and insurance

Freelancing in Austria offers freedom and flexibility, but it also comes with specific tax and social security responsibilities.

Tax Obligations

Freelancers with an annual income exceeding €11,000 (2024 threshold) are required to pay income tax (Einkommensteuer) based on a progressive tax scale. Registration with the tax office and submission of annual tax returns are necessary.

If your annual net turnover exceeds €35,000, you must register for Value Added Tax (VAT) (Umsatzsteuer) and charge VAT on your services at the standard rate of 20%. Reduced rates apply to specific goods and services.

Tax prepayments are required throughout the year, with final tax returns due by April 30th (June 30th for online submissions) of the following year.

Social Security Options

Freelancers are responsible for arranging their social security. Registration with the Sozialversicherungsanstalt der gewerblichen Wirtschaft (SVA) is mandatory for most freelancers. The SVA offers various insurance options, including:

  • Pension Insurance (Pensionsversicherung): Provides retirement benefits (contributions around 18.5% of income).
  • Accident Insurance (Unfallversicherung): Covers work-related accidents and illnesses (contributions around 1.2% of income).
  • Health Insurance (Krankenversicherung): Provides access to public healthcare (contributions around 7.65% of income).
  • Unemployment Insurance (Arbeitslosenversicherung): Offers unemployment benefits (optional, contributions around 6% of income).

You can choose which SVA insurances you want to participate in, but some, like health insurance, are mandatory. Consider your income level and risk tolerance when making your decision.

Tax legislation and social security regulations can be complex, so consulting a tax advisor or the SVA directly is recommended for personalized guidance.

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