Pensions and retirement income
A pension entitlement built up over a working life abroad does not travel untouched. Austrian residence changes who may tax it, how it is measured, and when.
In short
- Private and occupational pensions are, under most Austrian treaties, taxable only where the recipient lives — so Austrian residence normally moves the taxing right to Austria.
- Pensions for government service stay with the paying state; the German treaty goes further and leaves statutory social insurance pensions to the paying state as well.
- A lump sum can be allocated quite differently from a stream: under the 2018 Austria–UK convention a lump sum from a UK scheme is taxable only in the United Kingdom.
- Where a treaty exempts a pension, Austria still counts it when fixing the rate on everything else — the progression proviso.
- Benefits from a foreign pension fund are brought into charge at only 25% to the extent the contributions never reduced income at home or abroad.
- Working in Austria brings mandatory pension insurance at 22.80% of pay up to EUR 6,930 a month (2026), and a foreign pension can attract an Austrian health insurance contribution.
Which state may tax a pension
Most treaties in Austria's network answer the question in two articles built on the OECD Model, though the departures matter and are dealt with below. The Model's Article 18 covers pensions generally: "Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State." Its Article 19(2)(a) carves out the public purse: a pension paid by, or out of funds created by, a state or one of its subdivisions in respect of services rendered to that state is taxable only in that state — unless, under 19(2)(b), the recipient is both resident in and a national of the other state, in which case it reverts to the residence state.
The practical shape of that is easy to remember. The ordinary pension article follows the person: move to Austria and Austria acquires the exclusive right to tax the company pension, the personal pension and the private annuity, and the former home state must step back. The government-service article follows the payer: a career in a ministry, a state school, a public university or a municipal authority generally leaves the pension taxable where it was earned, whatever the retiree does next. German legal drafting calls the first group Ruhegehälter und ähnliche Vergütungen and the second Öffentlicher Dienst, and Austrian treaties keep those headings.
Both articles bite only once Austrian residence exists at all, which is a question of domicile and habitual abode rather than nationality or visa status — the tests are set out on the tax residence page. Where two states each treat a person as resident under domestic law, the treaty tie-breaker decides first, and only then does the pension article do its work. The general architecture of exemption, credit and relief at source is described on the double taxation treaties page.
Four treaties, four answers
The pattern is simple to state and easy to get wrong: the pension article usually follows the person, the government-service article follows the payer — and one treaty, Germany's, hands statutory social insurance pensions back to the paying state.
Summaries are no substitute for the applicable text, but the four treaties that matter most to people arriving in Vienna show how much the detail varies:
| Treaty | Private and occupational pensions | Statutory and public-service pensions |
|---|---|---|
| Germany (BGBl. III No. 182/2002) | Article 18(1): pensions, similar remuneration and annuities from the other state taxable only in the state of residence | Article 18(2): payments from the other state's statutory social insurance taxable only in that other state. Article 19(2): public-service pensions to the paying state, unless the recipient is resident in and a national of the other state |
| United Kingdom (signed 23 October 2018, in force 1 March 2019) | Article 17(1): taxable only in the state of residence. Article 17(2): a lump sum from a scheme established in one state is taxable only in that state | Article 18: government remuneration and pensions taxable only in the paying state, unless the individual is a national of the other state without also being a national of the paying state |
| United States (BGBl. III No. 6/1998) | Article 18(1)(a): pensions for past employment taxable only in the state of residence. Article 18(2): annuities likewise | Article 18(1)(b): statutory social security and other public pensions taxable only in the paying state, including where paid to a US citizen. Article 19: public-purse remuneration and pensions to a national of the paying state, that state only |
| Switzerland (BGBl. No. 64/1975, as amended) | Article 18: pensions for former employment taxable only in the state of residence, subject to Article 19(1) | Article 19(1): remuneration including pensions paid by a contracting state for services rendered to it may be taxed in that state — extending to cantons, municipalities and other public-law bodies |
Two consequences deserve spelling out. A German retiree in Austria whose income is a statutory pension from the Deutsche Rentenversicherung is taxed on it in Germany alone, and Austria may not reach it — a result the opposite of the intuitive one. A Swiss old-age pension, by contrast, is not paid for services rendered to the Swiss state, so Article 19(1) does not reach it — and whether it is treated as remuneration for former employment under Article 18 or as unenumerated income under Article 21, both articles assign it to the state of residence, so it lands squarely in Austria. For an American, the split runs through the middle of a retirement plan: social security to the United States, the private plan to Austria, with the treaty's savings clause in Article 1(4) preserving the US right to tax its own citizens on almost everything, subject to the exceptions listed in Article 1(5) — which do protect the social security rule in Article 18(1)(b). The double filing that produces is the subject of the US citizens page.
A lump sum is not an annuity
Pension articles are drafted around a stream of payments. Whether a single commutation payment is a "pension or other similar remuneration" at all has been argued in more than one jurisdiction, and the better treaties settle it expressly. The 2018 Austria–UK convention does exactly that in Article 17(2), assigning a lump sum from a scheme established in one state to that state alone — the reverse of the rule for the pension it replaces. Older treaties are often silent, and silence is where double taxation and unintended non-taxation both live.
Austrian domestic law then decides how a lump sum that does fall to Austria is taxed. A Pensionsabfindung — the commutation of a pension entitlement — is taxed at half the average rate under § 67(8) lit e of the Income Tax Act only where its present value does not exceed a small statutory ceiling: EUR 16,500 for 2026, against EUR 15,900 for 2025. Above that figure the concession falls away entirely and the whole payment is taxed under § 67(10) at ordinary rates, which means the progressive scale described on the income tax rates page, running to 55% at the top. A payment that was tax-privileged, or tax-free, in the departure country can therefore arrive in Austria as a single year's income at the highest marginal rate.
The date on which the payment is received, measured against the date Austrian residence begins, is therefore one of the few genuinely decisive levers in a retirement move. Taking the lump sum while still resident abroad, and only then arriving, removes the question altogether; taking it a fortnight after the removal van leaves can be an expensive fortnight. The sequencing point is developed further on the pre-immigration planning page.
Exempt, but not ignored
Where a treaty leaves a pension to the other state, Austria does not simply forget it. The Progressionsvorbehalt — the progression proviso — allows the exempt income to be taken into account in setting the rate applied to everything Austria may tax. Article 23(2)(d) of the German treaty puts it plainly: income of a person resident in Austria that is to be exempted from Austrian tax under the convention may nevertheless be included in Austria when fixing the tax on that person's remaining income. The Swiss treaty says the same in Article 23(1), and the Austria–UK convention preserves it in Article 21(1)(b) alongside its main relief mechanism, which for Austria is the credit method under Article 21(1)(a).
The effect is arithmetic rather than conceptual. A retiree with a large exempt German statutory pension and a modest amount of Austrian rental income does not pay Austrian tax on the pension, but pays Austrian tax on the rent at the average rate that the pension and the rent together would attract. Two people with identical Austrian income can therefore face very different Austrian bills. It also means that exempt foreign pensions must still be declared: the proviso cannot operate on income the tax office has not seen.
Where Austria does have the taxing right, a further practical point follows. A foreign payer does not operate Austrian wage tax, so the pension is not caught by payroll withholding and instead enters the annual assessment through an Einkommensteuererklärung. Pre-payments are then set for later years, and a first Austrian year commonly produces a back-payment once the assessment issues. Recipients of pension income can claim the Pensionistenabsetzbetrag, worth EUR 1,020 for 2026 and tapering to nil between pension income of EUR 21,614 and EUR 31,494. An increased credit of EUR 1,502 applies instead where the recipient has been married or in a registered partnership for more than six months of the year and is not permanently separated, the partner's income does not exceed EUR 2,720, and no sole-earner credit is available; that version tapers to nil between EUR 24,616 and EUR 31,494. To have a foreign payer apply a treaty rate at source rather than reclaiming later, an Austrian certificate of residence is generally required, as noted on the treaties page.
Pension capital, foreign funds and retirement accounts
Financial instruments, derivatives and crypto-assets brought to Austria are stepped up to market value on arrival, so gains accrued before the move stay outside the Austrian net. Pension entitlements are not in that regime — there is no step-up for a pension pot, and the question of what happens to value built up before residence is answered differently. § 25(1) Z 2 lit b of the Income Tax Act treats benefits from a foreign pension fund, including foreign institutions within the meaning of § 5 Z 4 of the Pension Fund Act, in the same way as benefits from an Austrian Pensionskasse attributable to the employee's own contributions: only 25% of them is brought into charge, to the extent that the contributions did not reduce income at home or abroad. Contributions made out of already-taxed income therefore continue to produce relief in Austria — but only for someone who can document, decades later, which contributions were relieved and which were not. Assembling that history before the move is far easier than reconstructing it afterwards.
Pensions paid by a foreign statutory scheme are treated under § 25(1) Z 3 lit c as employment income where the foreign scheme corresponds to Austrian statutory social insurance, which is what makes them ordinary progressive-rate income rather than investment income when the treaty leaves them to Austria. Individual retirement wrappers, by contrast, resist easy classification:
401(k) and other US employer plans
Austrian law has no equivalent of section 401(k) and nothing in the treaty protects the deferral inside the plan. The Finance Ministry's published view is that investment income arising inside such an account is attributed to the holder as it accrues once he or she is resident here, with the later withdrawals then generally triggering no further Austrian tax.
Traditional IRA
Not automatically a pension for Austrian purposes. The characterisation turns case by case on the account's actual legal and economic structure, and where the assets are invested on a risk-spreading basis the investment fund rules can apply instead — with the consequences set out on the investment income page.
Roth IRA
The US tax-free status of qualified Roth distributions has no Austrian counterpart. A mismatch in characterisation and timing between the two systems can produce double taxation that neither the credit mechanism nor the treaty cures, which is why the accounts and any intended withdrawals should be mapped against both systems before arrival.
UK SIPP and personal pensions
A self-invested personal pension is a wrapper the holder directs, so whether Austria respects it as a pension or looks through to the underlying investments needs to be settled before the first withdrawal. Article 17(2) of the convention allocates a lump sum from the scheme to the United Kingdom; it says nothing about how accruals inside the wrapper are treated in the meantime.
Two treaties also help people who arrive mid-career and want to keep contributing at home. Article 18(5) of the Austria–US treaty allows contributions to a pension fund established and tax-recognised in the other state to be deducted in the state of work on the same terms as domestic contributions, provided the person was not resident there immediately before taking up the activity, was already contributing, and the competent authority has accepted that the fund generally corresponds to a recognised domestic one. Article 17(3) of the Austria–UK convention does the same in more modern terms, extending the relief to the employer's profits and applying it to the extent the home state does not itself give relief.
Contributing here, and leaving again
Anyone who actually works in Austria joins the first pillar by operation of law. Pension insurance costs 22.80% of gross pay — 10.25% withheld from the employee and 12.55% borne by the employer — on earnings up to the Höchstbeitragsgrundlage, which for 2026 is EUR 6,930 a month, or EUR 97,020 a year once the customary thirteenth and fourteenth salaries are counted. The self-employed contribute 18.5% of profits under the parallel scheme, on a maximum base of EUR 8,085 a month. Nothing is levied above the ceiling, so a large salary carries a small effective rate; the full picture, including health, unemployment and accident insurance, is on the social security page. Within the EU and EEA, insurance periods completed anywhere count towards the eventual entitlement, which matters more to a fifty-year-old arrival than the contribution rate does.
A foreign pension can attract an Austrian contribution even where it attracts no Austrian tax. Under § 73a ASVG, where the recipient is entitled to Austrian sickness benefits, the pensioner's health insurance contribution — 6% of the pension under § 73(1) ASVG in 2026 — is levied on a foreign pension covered by the EU coordination regulations, or by a bilateral social security agreement containing health insurance provisions, as well.
The third pillar is modest by international standards. The prämienbegünstigte Zukunftsvorsorge attracts a state premium of 4.25% for 2026, on contributions capped at EUR 3,817.04 — a maximum premium of EUR 162.22 a year. It is worth taking up once resident, and too small to bear on a relocation decision. Life-insurance wrappers used as retirement vehicles in other countries are a more serious question: Austria respects or looks through them depending on their terms, and policyholder influence over the underlying investments is the danger sign. Each policy should be reviewed, and if necessary adjusted, before residence begins rather than after, alongside the other items on the pre-immigration planning page and in the relocation timeline.
Four things reward attention before the move. Read the pension article and the government-service article of the treaty with the departure state, and read them together — a career that mixed public and private employment produces a mixed answer. Decide whether any lump sum is to be taken, and take it, before Austrian residence begins. Collect the contribution history that the 25% rule depends on, and a valuation of every pot at the date of arrival. And obtain the certificates of residence that foreign payers ask for before the first payment date, not after the first over-withholding.
Leaving again reopens the same articles in reverse. Austrian residence ends only when both domicile and habitual abode genuinely end, and the departure triggers a deemed disposal of financial instruments, derivatives and crypto-assets — a pension entitlement is not among them, so the pot itself is not taxed on the way out. What changes is the allocation: the pension article that gave Austria the exclusive right hands it to the next state of residence, while an Austrian statutory pension paid to someone who has left remains within Austria's limited liability, with the treaty deciding the final answer. Those mechanics, and the confirmation duties that follow a deferred exit tax, are set out on the leaving Austria page.
Questions on this page
Will Austria tax my foreign pension once I live here?
Usually yes, for private and occupational pensions. The pension article of most Austrian treaties follows the OECD Model and gives the exclusive taxing right to the state where the recipient is resident, so Austrian residence moves that right to Austria. Pensions for government service, and under the German treaty pensions from statutory social insurance, are the main exceptions.
Who taxes a German state pension paid to a resident of Austria?
Germany. Article 18(2) of the Austria–Germany treaty departs from the residence rule and leaves payments from the other state's statutory social insurance to the paying state alone. Austria exempts the pension but counts it when fixing the rate on the rest of the income, under Article 23(2)(d).
How is a UK pension lump sum treated?
Article 17(2) of the 2018 Austria–UK convention provides that a lump sum from a pension scheme established in one state and beneficially owned by a resident of the other is taxable only in the state where the scheme sits. A lump sum from a UK scheme is therefore left to the United Kingdom; how the UK then taxes it is a question of UK domestic law.
Is a US 401(k) or IRA tax-free in Austria?
No. Austrian law has no equivalent of section 401(k), and a US retirement account is not automatically a pension for Austrian purposes — the characterisation turns on the plan's actual legal and economic structure. A Roth account's US tax-free status has no Austrian counterpart at all.
Do I pay Austrian social insurance contributions on a foreign pension?
Not pension contributions, but a health insurance contribution can be due. Where Austria is the competent state for sickness benefits, § 73a ASVG extends the pensioner's health insurance contribution to a foreign pension covered by the EU coordination regulation.
Does the Austrian entry step-up cover my pension pot?
No. The step-up to market value on arrival applies to financial instruments, derivatives and crypto-assets, not to pension entitlements. Relief for a foreign pension pot comes instead from the rule that benefits from a foreign pension fund are brought into charge only in part where the contributions never reduced income.
Considering a move to Austria?
Tell us where you stand — the country you are leaving, the shape of your family and your assets, and when you plan to move. We advise on the legal and tax consequences of relocating to Austria and coordinate with advisers in the country of departure.
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