Moving between Austria and Germany in 2021: how is salary taxed?

Moved between Austria and Germany in 2021? Salary taxation depends on residence and work location. Understand withholding, refund risks and filing deadlines.

A move between Austria and Germany can divide salary between two tax systems, while income taxed in one country may still affect the rate in the other. Payroll withholding alone does not settle the final tax liability, which depends on individual circumstances.

This article concerns income earned in 2021 and the corresponding annual assessments. The profile below is illustrative; no personal amounts or refund estimates are reproduced.

Start with residence and the place of work

Consider an employee who lives in Austria, later moves to Germany for work and subsequently returns to Austria. The annual wage certificate may combine income relating to several different tax situations.

The starting point under Article 15 of the Austria–Germany tax treaty is the employee’s residence and where employment is physically exercised. An employer’s address or the country shown on the payslip does not, by itself, answer the treaty question.

A useful timeline separates:

  • periods of residence in each country;

  • the country where work was actually performed;

  • periods when a home remained available in the other country;

  • salary paid for periods without active work.

Registration and deregistration documents support this timeline, but the underlying living arrangements also matter. Keeping a home available can change the analysis.

Separate taxable income from income used for the rate

There are two different questions: whether a country can tax an amount, and whether it can use that amount to determine the rate on other income.

Under exemption with progression, income can be exempt from direct taxation in one country while increasing the rate applied to that country’s taxable income. Article 23 of the treaty addresses relief from double taxation.

Germany’s partial-year residence rules can bring foreign income earned outside the German residence period into the progression calculation. This does not mean that the same foreign salary is simply taxed twice.

The Austrian treatment requires a separate review of the periods of tax liability. It is unsafe to enter every foreign salary amount as progression income solely because the employee lived in Austria at the end of the year. Equally, excluding an entire period requires a supported residence analysis.

Home-office salary needs its own allocation

Working from an Austrian home for a German employer raises a distinct allocation question. German wage tax on the payslip is not conclusive evidence that Germany was entitled to tax that salary.

Before requesting a refund, establish the treaty treatment applicable to the actual home-working arrangement and the relevant year. A 2021 home-office period should not be assigned automatically on the basis of the employer’s location or a general rule alone.

If wage tax was withheld contrary to the treaty, the recovery route must be examined in the country that withheld it. Do not assume that the other country will simply credit that tax against its own assessment.

Foreign social insurance contributions need a separate review. Their deductibility depends on their legal nature and the applicable deduction rules; appearing on a payslip is not enough to settle every issue.

Why an initial Austrian refund can change

An assessment based only on a few months of Austrian payroll income can show a refund because monthly withholding and the annual tax calculation operate differently.

If additional salary is taxable in Austria but was absent from that assessment, adding it changes the annual calculation. The original refund may decrease or become an amount payable, depending on income, deductions and tax already withheld.

The calculation should therefore reconcile:

  1. salary taxable in Austria;

  2. allowable expenses and contributions;

  3. any income relevant only to progression;

  4. Austrian wage tax already deducted.

A possible German refund must be calculated separately, using the final German taxable income, relevant progression income and withholding already credited. It is not a guaranteed net gain across both countries.

Austrian codes and the importance of the correct form

The international supplement L 1i distinguishes employment income taxable in Austria from exempt income subject to progression.

Code 359 concerns relevant employment income for which Austria has the taxing right, after applicable work-related expenses. Code 453 concerns relevant foreign employment income exempt with progression. These categories are not interchangeable.

The appropriate filing route and any wage statement requirements must be checked for 2021, including whether L 17 is needed. Additional non-employment income can also change which return and supplements are appropriate.

A short explanation of the residence periods and salary allocation can help the tax office understand why the annual wage certificate does not match a single taxable figure.

Deadlines and earlier assessments

The Austrian Ministry of Finance lists 31 December 2026 as the final date for requesting an employee assessment for 2021.

That five-year request window is not an extension of the original deadline where a return was compulsory. Nor does it establish, by itself, how an existing assessment can be changed.

First determine whether the earlier notice was an automatic employee assessment or an assessment issued following a return. The procedural route depends on that distinction, the notice and any later actions. An ordinary Austrian appeal generally has a one-month time limit.

Germany also distinguishes voluntary returns from compulsory assessments. Do not assume that a time limit quoted for one category applies to the other. Where a compulsory assessment is relevant, the filing deadline and the limitation period for assessment are separate questions: a year may still be assessable even though the return is already late.

Paid release and other issues to review separately

Salary paid during a release from duties requires separate examination of the agreement, residence and rules applicable to the year. It should not automatically follow either the payment date or the preceding work period. Severance and compensation for unused leave may require further distinctions.

Similarly, a payroll tax-class correction does not establish the final benefit of joint assessment. The spouses’ full income figures and eligibility conditions must be considered.

Social security is another separate issue. A tax allocation does not prove that contributions were paid into the correct national system.

Prepare a consistent file for both countries

Collect the annual wage certificates, monthly payslips, residence evidence, employment documents and previous assessments. Allocate the income using a documented timeline before completing either return.

Where one authority needs evidence of the other country’s tax treatment, coordinate the filings and provide the relevant assessment when available. Do not allow that coordination to cause a filing deadline to be missed.

The final check is consistency: the same income should be identifiable in both files, with a clear explanation of why it is taxable, exempt or relevant only to the rate.

Frequently asked questions

Does German payroll withholding prove that salary is taxable in Germany?

No. Withholding must be reconciled with the applicable domestic and treaty rules, including residence and the employment arrangement.

Can exempt foreign salary still affect my tax bill?

Yes. Exemption with progression can increase the rate on other taxable income without directly taxing the exempt amount.

Can I rely on an Austrian refund calculated from local payslips alone?

Only if the assessment includes all relevant income and reflects the correct residence position. Missing foreign-employer salary can materially change the outcome.

Is 31 December 2026 the filing deadline for every Austrian 2021 return?

No. It is the published final request date for the 2021 employee assessment. A compulsory return may have been due much earlier.

Should all foreign salary go into code 453?

No. Income taxable in Austria and income exempt with progression belong to different categories. The correct code follows the legal allocation.

Sources

This article explains a general framework and is not personalised tax advice. Rules change from year to year, and the treatment depends on the exact circumstances.

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