[thargor]

I call bullshit on the tax rate in Austria.

"Capital gains" through GmbH is 25% KÖSt (Körperschaftssteuer) and then 27,25% KESt on Profit. The highest VAT rate is 20%, there are also lower ones. This results in 56.35% percent including VAT (1-((1-25%)(1-27.25%)(1-20%)).

If you go through income tax as a freelancer this is even lower when you claim the default deductibles (Pauschalierung), which is common in IT jobs, because you have very low expenses. The later is also cheaper if you factor in health insurance.

[knuthsat]

Well, having a GmbH does not really allow a clean profit extraction without having employees, so when you eventually employ yourself you'll get to around 70%.

Austria is one of the worst countries in the world to do any kind of small business. Self-employment is also taxed aggressively.

A form of self-employment in Croatia allows a fixed tax payment of about 5k EUR a year with an income cap of 39k EUR per year, leaving you with 34k EUR after taxes. Similar thing in Serbia but even more money.

In Austria there's nothing like that.

It would be nice if it was possible to assign a significant amount of life expenses to business but that also is heavily bureaucratized and regulated that even buying a 5k EUR computing machine has weird tax consequences (not immediately deductible as expense in the full amount or now, because expenses are higher, you might not be able to take that 12% of profit untaxed).

I mean, I guess I'm just miserably following every word of law and my accountant's advice and maybe other people just ignore a bunch of these guidelines and hope that inspection never comes.

[thargor]

39k EUR a year in Austria is 33% tax+insurance+pension:

20% "forced savings" (Pension + Vorsorgekasse) 7% health insurance 6% income tax

But 39k a year is definitely not a freelance programmer in Austria.

80-120k is the average I see at my colleagues and enterprise customers for freelance programmers with regular working hours compared to regular employees (5 week vacation, sick absence, ...). I know people scratching at 200k, but they are senior consultants.

So a more realistic view would be 100k 40,5% tax+insurance+pension 15% "forced savings" (Pension + Vorsorgekasse) 6% health insurance 19,6% income tax

This calculation assumes that you do not really have significant expenses of business. Having those actually makes the picture look worse.

You can calculate here for yourself, no "cheating" required: https://abrechnen.wko.at (official chamber of commerce calculator)

A GmbH is always better at 220k+/year. But there may be reasons you would want one earlier (liability, employees, IP, investments, ...)

Employing people in Austria is expensive ("cost of labor"). Beeing self employed is not bad, if you factor in benefits and costs of life and quality of life.

[knuthsat]

Well, 34k after taxes in Zagreb, Croatia is about 50k after taxes in Vienna. Given the increased cost of living and quite similar bureaucratic and regulation heavy state I'd say the self-employment is very aggressively taxed. For 50k after taxes you need to earn quite a lot compared to 39k in Croatia and the benefits are not that much different.