In Austria, employees are entitled to two mandatory annual allowances, commonly known as the 13th and 14th month pay. These payments are often considered bonuses and are subject to specific regulations:
13th Month Pay ("Christmas Allowance")
Purpose: This is an additional payment typically made to employees as a Christmas bonus.
Payment Deadline: By December 1st each year.
Pro-Ration: Employees who join or leave the company during the calendar year receive a proportionate part of this allowance.
Formula: (Annual Salary ÷ 14) × (Days Worked ÷ 365)
14th Month Pay ("Holiday Allowance")
Purpose: This is an extra payment provided to employees as a holiday bonus, often intended to cover vacation expenses.
Payment Deadline: By June 30th each year.
Pro-Ration: Similar to the 13th month pay, this allowance is pro-rated for employees who join or leave the company during the year.
Formula: (Annual Salary ÷ 14) × (Days Worked ÷ 365)
Tax Treatment
The 13th and 14th month pays benefit from preferential tax rates. The tax rates are as follows:
For the first EUR 620: 0% tax rate
For the next EUR 24,380: 6% tax rate
For the next EUR 25,000: 27% tax rate
For the next EUR 33,333: 35.75% tax rate
These allowances provide additional financial support and are an important part of the compensation package for employees in Austria.