Insurance Premium or Policy Taxes
Austria is most unusual in Europe in levying a premium tax on life, health and pension products. Premiums and contributions are paid by the insured and are taxed at the following rates:
- Life insurance – 4%
- Pensions – 2.5%
- Health insurance – 1%
Single premium life contracts with a term of less than 10 years are taxed at the higher rate of 11%.
Contracts qualifying for a government bonus within the so-called “1,000 Euro Model" pension framework are taxed at 2.5%.
Although the insured is subject to the tax, the insurer or the agent is liable. The tax must be paid on behalf of the insured. Policies bought from non-domestic, non-EEA insurers are subject to an increased premium tax of five times the normal rate, subject to a limit of 50% of the premium. If the insurer has neither domicile nor agent responsible for collecting premiums in the EEA, the tax must be paid by the insured.
Insurance companies established in another EEA member state insuring risks by way of freedom of services must designate a tax agent in Austria. Upon request, foreign insurers writing business in Austria must provide the tax authority with a complete list of insurance contracts including any information required for calculating the tax.
Benefits are paid free of tax for all regular premium life policies. In theory, private pensions/annuities are only tax-free for the period during which the original capital is used up. In practice, this provision does not appear to be enforced strictly.
Benefits from single premium policies with a period of less than 10 years are taxable on the difference between the premium and the benefit, if this is not taken in the form of an annuity.