20. April 2026 Flexible working models such as teleworking and workation have become an integral part of modern working life and have been established in Austria as well. Temporary or permanent work performed abroad however may lead to tax and social security issues, which are examined in the following article.
Teleworking primarily refers to working from a home office but also includes working from another location chosen by the employee, using information and telecommunications technology. The term “workation” is a combination of “work” and “vacation” and refers to temporarily working from a holiday destination.
Teleworking or Workation in Austria
In the case of teleworking or workation within Austria, there are generally no changes:
- Taxation continues through payroll tax withholding in Austria.
- Social security contributions continue to be paid in Austria.
- The home office lump sum (up to EUR 3 per day for a maximum of 100 days) can be claimed.
- If at least 26 home office days are worked, costs for ergonomic furniture of up to EUR 300 per year are tax deductible.
Workation or Teleworking Abroad
Workation or teleworking outside Austria may become tax-relevant for the employer and/or the employee:
1. From the employer’s perspective:
Depending on the duration and nature of the activity, a permanent establishment of the employer may be created abroad, particularly in the case of long-term (exceeding six months) or recurring stays of the employee. The risk increases if the employer rents the workspace abroad. Due to the lack of clear OECD guidance regarding the creation of a permanent establishment in the context of workation, national regulations and case law must be taken into account. In some cases, parallels may be drawn with a home office permanent establishment.
2. From the employee’s perspective:
a) Workation
Short-term stays are generally unproblematic from a tax perspective. The decisive factor is the 183-day rule. If the stay exceeds 183 days in a calendar year or a 12-month period, the income becomes taxable on a pro rata basis in the state where the work is performed, to the extent that working days are carried out there. All days spent in that country count toward the 183 days (i.e. both working days and leisure or vacation days). If fewer than 183 days are spent in the workation state, taxing rights remain entirely (100%) with the state of residence.
b) Teleworking
If the activity is carried out in the employee’s foreign state of residence, income attributable to working days in that state and in third countries is taxed in the state of residence. Income attributable to working days in the employer’s state is subject to taxation there.
Social Security for Teleworking and Workation in Austria
For teleworking and workation with the place of work in Austria, social security remains unchanged:
- Austria stays responsible for social security, and social security contributions continue to be paid in Austria.
Social Security for Teleworking and Workation Abroad
Special rules apply to workation and teleworking abroad:
1) EU/EEA and Switzerland:
Within the EU/EEA and Switzerland, a person may only be insured in one country. Social security coverage may remain in the employer’s state provided that no substantial activity is carried out in the member state of residence. A substantial activity exists if at least 25% of the activity is performed and is measured based on working time and/or remuneration. If, in addition to workation at a holiday destination, at least 25% of the activity is carried out in the member state of residence, social security responsibility shifts to the state of residence; otherwise, it remains with the employer’s state.
An A1 certificate must be applied for in the competent social security state. This certificate confirms which state is responsible for social security, preventing other states from levying social security contributions.
If an exception agreement is concluded on the basis of the multilateral framework agreement for habitual cross-border teleworking, up to 50% of the activity may be carried out in the member state of residence without triggering a change in social security responsibility.
Requirements:
- Both involved states are signatory states
- Employees regularly perform teleworking using IT
- The extent of teleworking is between 25% and less than 50%
2) Third countries:
The relevant bilateral social security agreements must be examined to determine whether they provide rules for allocating social security responsibility in cases of multi-state employment. If not, the instrument of an exception agreement may still be used to prevent double social security contributions in two countries. If no social security agreement exists with the respective third country, there is likewise a risk of double social security contributions.
Summary of Recommendations to Avoid Tax and Social Security Risks
- Establish clear workation and teleworking policies
- Define maximum durations and permitted countries
- Carry out tax and social security assessments in advance
- Apply for A1 certificates in a timely manner
In addition, labor law aspects should also be taken into account.
Conclusion
If work is physically performed in other countries—whether from a foreign residence or a holiday destination—this might entail tax and social security risks. To ensure that neither the employee nor the employer becomes subject to taxation abroad (e.g. at a holiday destination), it must be ensured that the employee does not stay abroad for more than six months. However, if the employee works from a foreign home office where they are also tax resident, tax liability arises there from the first working day.
In order for social security responsibility to remain with the employer’s state in cases of multi-state employment within the EU/EEA/Switzerland, it must be ensured that the employee does not perform a substantial activity in the member state of residence.
With clear regulations and careful planning, Austrian employers and their employees can make legally compliant use of the advantages of flexible working models.
Your ARTUS advisors are happy to assist you with advice and support (info@artus.at).
