How Austria taxes a retirement plan

We model these and we know we do not get them exactly right. Where the size could be measured, it is stated.

• Austria taxes each partner separately, so we split a couple's income down the middle and tax each half. That is exact when both partners draw similar pensions. When one partner has all of it, we cannot say so, and half the pension is taxed as though it belonged to someone with no income at all. A couple living on one 60,000 pension therefore shows about 7,570 a year less tax than they would really pay.

  Your real tax is higher/up to €7,570 a year/couples where one partner has all or most of the pension income

• Austria pays a pension in fourteen instalments, and the two extra ones are taxed on their own far lighter schedule: nothing on the first 620 and 6 percent above that. We put the whole pension through the ordinary scale, so the tax we show on an Austrian pension is too high. On a 25,000 pension that is about 850 a year too much and on a 40,000 pension about 1,440. It is the largest single gap in our Austrian model and it always runs against you.

  Your real tax is lower/up to €1,441 a year/anyone drawing an Austrian pension large enough to pay income tax

• Austria charges 25 percent on bank deposit interest and 27.5 percent on everything else, including bond interest. We carry bonds and cash together and charge both at 27.5, because bonds dominate, so interest on cash is overtaxed by 2.5 points of its yield. On a 750,000 portfolio that is about 23 a year at a realistic cash weight, and 469 if you held the whole thing in deposits.

  Your real tax is lower/up to €469 a year/anyone holding cash or bank deposits in an Austrian taxable account

• An Austrian fund holder is taxed each year on 60 percent of the gains the fund itself makes inside the wrapper, on top of its interest and dividends. We can only see the income we model, so that part is missing and you are priced as though you held the shares directly rather than through a fund. It runs at about 0.02 percent of what you hold each year, which is 148 a year on a 750,000 portfolio.

  Your real tax is higher/up to €297 a year/anyone holding funds rather than shares directly in an Austrian taxable account

• Austria lifts its tax bands with prices automatically, but only by two thirds of measured inflation, and we lift them by all of it. So the bands in our model drift above the real ones and the gap compounds: over 30 years it is worth about 17.8 percent of the bands' value at 2 percent inflation, and 25.5 percent at 3 percent. Every Austrian tax figure in the later years of a long plan is too low for that reason.

  Your real tax is higher/anyone whose Austrian plan runs for decades, because the gap compounds every year

These exist in law and we leave them out, usually because applying them would need a question we do not ask.

• A fund that does not report its income to Austria is taxed on an estimate instead, and the estimate has a floor: at least 2.75 percent of its year end value, every year, including years when it falls. We leave it out because it depends on the funds you happen to hold rather than on the country. On a 750,000 portfolio held entirely in such funds it is about 20,600 a year against the 8,400 we would show. If you hold funds in Austria, this is the one thing worth checking with your broker.

  Your real tax is higher/up to €20,625 a year/anyone holding funds that do not report to Austria, typically funds based in the United States held at a broker outside Austria

• Investment income in Austria is taxed at a flat rate, but you can ask for the ordinary scale instead, and the tax office grants it only where it comes out cheaper for you. We always charge the flat rate. The choice can only pay while your pension is low: it is worth nothing above a gross pension of roughly 27,300, and up to about 1,300 a year below that.

  Your real tax is lower/up to €1,296 a year/anyone with Austrian investment income and a gross pension below about 27,300

• Austria gives a credit to a sole earner or a single parent supporting a child, 612 or 828 a year, plus 273 for each further child. It turns on having a dependent child and on what your partner earns, and we ask about neither, so the tax we show is too high for anyone entitled to it.

  Your real tax is lower/up to €828 a year/retirees supporting a dependent child, either as a couple on one income or alone

• If your income tax comes out below zero, Austria refunds 80 percent of the compulsory contributions taken from your pension, up to 723 a year. Our credits can only reduce tax to nil, never turn into a payment, so that refund never appears. On a 15,000 pension it is worth 720 a year you would actually receive.

  Your real tax is lower/up to €720 a year/a pensioner whose pension is small enough to pay no income tax

• A pensioner whose partner has almost no income of their own gets a larger version of the pensioner credit, 1,502 a year instead of 1,020. We never ask what your partner earns, so we always give the smaller one and the tax we show is too high, by up to 482 a year.

  Your real tax is lower/up to €482 a year/a retired couple where one partner has almost no income of their own

• Austrian councils charge a yearly property tax, but on values last set in 1973, so a family home pays roughly 100 to 400 a year. We do not charge it. Buying property carries its own taxes and a registration fee on top, and those only bite in the year you buy.

  Your real tax is higher/up to €400 a year/anyone who owns an Austrian home, and anyone planning to buy one

• A pensioner with a little income from outside the pension gets the first 730 of it free of tax, tapering away to nothing at 1,460. It does not reach investment income, so for a retiree it is really a rent allowance. We do not apply it, so if you have a small amount of Austrian rental income the tax we show is slightly too high.

  Your real tax is lower/a pensioner with a small amount of Austrian rental income

Separate tax systems, or rules that only bite outside a retirement plan.

• Selling Austrian property carries a 30 percent charge on the gain, with reliefs if it was your main home or you built it yourself. For property bought long ago the charge can instead be worked out from an assumed cost, coming to 4.2 percent of the sale price. We do not tax a property sale, so none of this reaches your plan.

  Could go either way/anyone planning to sell Austrian property that is not their main home

• Members of a recognised church in Austria pay a contribution of about 1.1 percent of their income, of which up to 600 a year is deductible. It is a private membership fee rather than a tax, it is not taken from your pension at source, and you can end it by leaving the church, so no figure here includes it.

  Your real tax is higher/members of a recognised Austrian church