There are three tax rates under the Austrian VAT Law (1994): the regular rate of 20%, a reduced rate of 10% (books, press) and a third rate of 13% which has been established in the course of a tax reform in 2015. The latter specifically applies to cultural institutions, cinemas, theatres and concert tickets, but not to charitable public institutions, such as the national theatres and the Salzburg Festival. These institutions are subject to the reduced tax rate, as well as turnover related to artistic activities, museums, botanical gardens or nature parks, as well as services by the Austrian Broadcasting Corporation (ORF), cable TV companies, books, magazines and dailies. From 1 July 2020 to 31 December 2020, reduced tax rates were temporarily further reduced to 5% due to the COVID-19 pandemic. There is 20% VAT on music CDs.
The Income Tax Act allows tax deductibility of donations for scientific institutions and federal museums as well as nationwide, private museums. A list of cultural institutions from all artistic fields has been added in 2016 to make donations to those tax-deductible as well.
Income up to EUR 11 000 annually is tax free. Income from EUR 11 000 to EUR 18 000 is taxed at 20%, from EUR 18 000 up to EUR 31 000 35%, from EUR 31 000 to EUR 60 000 42%, from EUR 60 000 to EUR 90 000 48%, from EUR 90 000 to EUR 1 million 50%. Income above this is subject to a top rate of 55% tax (Steuertarif und Steuerabsetzbeträge). Owing to the progressive income tax tariff, it is most favourable if one earns roughly the same amount each year. For creative workers, however, it is normal for incomes to fluctuate greatly. For this reason, since 2000 they have been able to spread artistic income over three years: one third of the surplus of the current year is assigned to the current year and each of the two previous years.
On the basis of an amendment to the Federal Arts Promotion Act (1988) in 1997, certain public subsidies are tax free. These include: grants, prizes and supplements from the Austrian Film Institute for promoting the creation of film concepts and screenplays; income and assistance from public funds or from the funds of public or private foundations, as far as compensation for expenditure or expenses is concerned, or – with the exception of private foundations – for activities abroad.
Since 2000, artists from abroad have been able to apply for the partial or full cancellation of tax liabilities in Austria that are in excess of tax liabilities in their country of origin if their establishment of residence serves to advance art in Austria and if there is public interest in their work.
Under the Sponsors’ Ordinance regulation, adopted by the Federal Ministry of Finance in 1987 an enterprise / entrepreneur is granted a tax break on expenses for sponsoring cultural events. The ordinance lists various criteria that must be fulfilled in order to qualify for the tax break (sponsoring must be, for example, in the form of an advertisement). This regulation only allows for a very small amount of expenditure to be tax deductible.