If you plan to carry out construction work in Austria, you have to reckon with the client deducting up to 25% from your invoice. Are they entitled to do that? And can you get your money back afterwards? You’ll find out in this blog.

Doing business in Austria has its specifics, and those who don’t know them can run into unpleasant surprises. That’s why it’s always a good idea to consult experts who can guide you safely through the maze of Austrian bureaucracy.

Protection against non-payers

One of the pitfalls awaiting foreign construction companies in Austria is a 25% deduction from the invoiced amount. This isn’t a penalty, but a legal mechanism designed to prevent failures to pay into the social and tax system.

The client commissioning your work is liable to ensure that, as a subcontractor, you pay statutory contributions and wage tax. If you have arrears, they can be held jointly liable for up to 25% of the invoiced amount (20% for social insurance and 5% for tax). For this reason, many prefer to automatically deduct the amount from the invoice and immediately pay it to the specialized DLZ office, which falls under the Austrian social insurance institution. Of course, such a deduction means you receive a quarter less than you invoiced, which can cause unexpected complications for your company’s liquidity.

Are Austrian contributions worth it?

Can the deduction be avoided? Yes, but it’s not simple. Your company must be listed in the so-called HFU list (companies exempting clients from liability). However, the conditions for registration are strict. You usually have to prove at least three years of performing construction work and meet other administrative and contribution criteria.

One of these is that at least one of your employees is registered in the Austrian social system. In other words, you must employ at least one worker for whom you pay Austrian contributions. From our experience, HFU is not a realistic solution for many foreign companies, since they usually keep all employees insured in their home country. For them, the option of registering in the HFU list falls away.

Ask for your money back!

If the client has already deducted 25%, that doesn’t mean you have to lose your money. You can ask the Austrian authorities to refund it. First, however, check whether your client actually paid the amount to the DLZ office. There are opportunists who don’t make the payment but still deduct a quarter from the invoice! If the amount was not transferred to the DLZ, your refund application will be rejected. Always request an official confirmation of payment from the client.

You must apply for the withheld amounts separately at the Austrian tax office and at the relevant health insurance fund. Our specialists will be happy to help you prepare the complete documentation for the refund of the deducted amounts.

We are experts in doing business in Germany, Austria, and other countries. ProfiDeCon has been helping entrepreneurs for more than 10 years. We’ll be happy to help you, too.