Crypto notes in the music capital: an overview of Austria’s crypto tax and regulatory regime

1. Introduction to the Republic of Austria

The Republic of Austria (Austria) is located in the interior of Central Europe. It is a parliamentary democratic country with a total of 9 federal states. In 1995, Austria joined the European Union and is also one of the founding countries of the OECD. Austria is one of the earliest countries in the European Union to reform its cryptocurrency tax system. This article will sort out the Austrian cryptocurrency tax system and the latest regulatory trends.

2. Austria's basic tax system 

2.1 Overview of Austria's tax system 

The Austrian Federal Ministry of Finance (FMA) is the competent authority in Austria responsible for enforcing all fiscal laws and collecting taxes. The department allocates tax revenue to public and social services to improve the living standards of residents. Its tax year follows the calendar year (January 1st to December 31st), and a progressive tax system is implemented based on income levels. The personal income tax rate ranges from 20% to 55%, which is at a relatively high level in Europe.  

According to the tax system, both residents and non-residents in Austria may become taxable persons. Individuals who reside in Austria and stay in the country for more than 180 days per year are considered formal tax residents, regardless of nationality. Tax residents are subject to tax on their global income, including income from employment, business, investment and property. For non-residents, Austria only taxes their income from Austrian sources, that is, "limited tax liability". However, if the non-resident's main income is derived from Austria (for example, more than 90% of the income is derived from Austria), it may be considered an "unlimited tax liability person" and be taxed on global income. Non-Austrian nationals who pay taxes to the Austrian government may benefit from the Double Taxation Agreement (DTA) of the Organization for Economic Cooperation and Development (OECD) Model Tax Convention to avoid paying taxes twice on the same income. According to the 2024 Global Tax Base Erosion Report, Austria loses $130 million (about 1% of fiscal revenue) each year due to cross-border tax abuse, and has increased the investigation time and punishment for major tax evasion cases (fines starting at €150,000). To prevent tax avoidance and tax evasion, Austria participates in the Automatic Exchange of Information (AEOI) system, which allows tax authorities in different countries to exchange information, helping to prevent and monitor tax violations. In the domestic tax system, an individual's social security number (Sozial versicherungs nummer) serves as a tax identification number, which is usually registered by the employer. Self-employed people can obtain this number through the Social Insurance Institution for Self-Employed Persons (SVS). At the same time, the taxable person also needs an individual tax number (ATIN), which will be issued by the tax bureau when registering at a new residence or tax authority. For enterprises, a VAT identification number (UID Number) should be obtained when registering a company for VAT registration. 2.2 Personal income tax Austria imposes income tax on resident individuals' global income and non-residents' income from Austrian sources. The tax rates are divided into six brackets of 20%, 30%, 41%, 48%, 50% and 55% in an excess progressive manner. Income below €13,308 is tax-free. The highest marginal tax rate (55%) is the third highest in Europe, second only to Denmark's 55.9% and France's 55.4% (for reference, the average EU top tax rate is about 42.8%).  

2.3 Corporate Tax 

From 2023, Austria's corporate tax rate is fixed at 24%, close to Spain's 25% and Belgium's 25%, but higher than Singapore's 17% and lower than South Africa's 27% and BRICS countries' 27.20%. When a company distributes profits, it is also required to pay a dividend withholding tax of 23% (for the company) or 27.5% (for other beneficiaries) at the shareholder level. 2.4 Value Added Tax (VAT) The standard VAT rate in Austria is 20%, and 19% in the Jungholz and Mittelberg regions, slightly lower than the EU average of 21.6%. Books and food are subject to a low tax rate of 10%, while cultural entertainment, wine and domestic flights are subject to a preferential tax rate of 13%, while some exports and cross-border services, medical care, education and financial services are exempt from VAT.  

2.5 Other taxes 

In addition to the above taxes, Austria also imposes property tax and real estate transfer tax on individuals. For enterprises, they need to pay municipal taxes to the municipalities with permanent establishments, withhold wage income tax for employees, and both employers and employees need to pay multiple levels of social security fees. In order to implement environmental protection, the Austrian government imposes vehicle taxes, one-time registration taxes (levied on vehicle emissions), carbon taxes, digital service taxes, etc. on a number of activities such as energy, transportation, and pollution.  

Unlike other regions, Austria abolished formal inheritance and gift taxes in 2008, with gifts that do not exceed the threshold exempt from review and reporting (gifts from immediate family or partners of more than €50,000, gifts from others of more than €15,000, artworks, household goods and occasional gifts of less than €1,000). In contrast, other European countries still adopt higher inheritance tax policies: the UK still imposes 40% on inheritances of more than £325,000, and France, Germany and other countries are generally in the range of 20–45%.  

2.6 Austrian tax regulations 

In 2025, in response to inflation, the Austrian government raised the income tax threshold. With the exception of a 55% tax rate on income over €1 million, the thresholds for all other tax rates have been raised to around 4%. This means that individuals with an annual income of more than €13,308 will be subject to income tax. In addition, some deductions, such as deductions for single parents and retirees, have also been slightly increased. The key change for small businesses is that the government has increased the threshold for value-added tax (VAT) registration from €35,000 to €55,000. This means that companies with an annual turnover of less than €55,000 do not need to register or pay VAT. 3. Austrian cryptocurrency tax system In January 2022, Austria passed an amendment to the Austrian Income Tax Act (EStG), which updated and revised Section 27b of the capital income-related provisions, and established a systematic tax framework for cryptocurrencies. From March 1, 2022, Austria, under the influence of the European Environment Agency (EEA), carried out Eco-Social Tax Reform, which had a certain impact on its cryptocurrency tax policy.  

At the same time, as one of the founding countries of the Organization for Economic Cooperation and Development (OECD), Austria also needs to comply with the OECD Model Tax Convention, which is committed to avoiding double taxation between countries, providing guidance on preventing tax evasion, and providing a standardized framework for the terms and structure of international tax agreements, helping governments coordinate and simplify cross-border tax affairs and promote tax information exchange.  

3.1 Austria's Characterization of Cryptocurrency 

The Austrian Ministry of Finance (FMA) regards cryptocurrency as an intangible asset rather than a fiat currency. However, Austria regards cryptocurrency as income for taxation, which is governed by the Austrian Income Tax Act (EStG).  

According to the Austrian Income Tax Act (EStG), cryptocurrencies are considered to be an expression of value in digital form, the value of which is not determined or guaranteed by the central bank or other state institutions, is not necessarily linked to any legal currency, and does not have the legal status of currency or legal means of payment, but can be accepted as a medium of exchange by natural or legal persons and can be transferred, stored or traded electronically. In addition, claims for repayment arising from the transfer of cryptocurrencies are also considered to be cryptocurrencies.  

This definition covers cryptocurrencies that are publicly issued and accepted as a medium of exchange, as well as stablecoins, but does not apply to non-fungible tokens (NFTs) and asset tokens (tokens backed by real assets). The taxation basis for these products is subject to general tax law rules according to their specific nature. 3.2 Specific cryptocurrency tax system 3.2.1 Income Tax on Cryptocurrency According to Section 27a, Paragraph 1 of the Austrian Income Tax Act (EStG), income from cryptocurrency holdings is subject to a special tax rate of 27.5% and is not included in the progressive tax rate range for other income. The income generated by cryptocurrency can be divided into current income and realized gain. The following will introduce their definitions and specific taxable behaviors in detail. 3.2.1.1 Current Income Current income generated by holding cryptocurrency assets is the remuneration or gain obtained by transferring or trading cryptocurrencies. Taxable activities such as interest earned on lending cryptocurrencies, providing liquidity to Decentralised Finance processes (DeFi), participating in liquidity mining, running master nodes, etc., or when income comes from transaction fees, whether or not new coins are generated, are considered current income for tax purposes. Activities that may be confused but are not taxed include: staking that only involves transaction verification rather than obtaining direct compensation, transferring cryptocurrencies to others without charging transaction fees (i.e. airdrops) and the proceeds (bounties) generated therefrom, and cryptocurrencies generated by "hard forks". Since the acquisition cost of the above situations is assumed to be zero, they are not taxed, but their full value will be taxed when they are sold in the future. It is worth noting that since mining income does not involve income from capital (Article 11 of the OECD Model Tax Convention) and does not belong to commercial activities (Article 7 of the OECD Model Tax Convention), the income from cryptocurrency mining by non-commercial enterprises is in principle classified as "other income" within the meaning of Article 21 of the OECD Model Tax Convention, and the taxpayer's country of residence has the priority right to tax this income. However, from the perspective of Austrian law, Article 27b, paragraph 2, item 2 stipulates that cryptocurrencies obtained through technical processes are defined as current income. 3.2.1.2 Realised Gain Tax is imposed on the realised gain on the value of cryptocurrency holdings, including the conversion of cryptocurrency into Euros or other legal tender, and the payment of goods or services with cryptocurrency. The gain is calculated as the sale proceeds minus the acquisition costs, where the sale price is assumed to be the fair market value, transaction costs (such as transaction fees and consulting fees) can be included in the costs for deduction, and expenses related to financial assets (such as electricity costs or the cost of purchasing hardware) are not included in the costs unless the taxpayer chooses to use the standard taxation option. The conversion between cryptocurrencies is not considered a "disposal" and is therefore not taxable. The fees incurred by such transactions (such as gas, platform fees) are not considered significant expenses and are not included in the tax deduction, so the purchase cost of the original cryptocurrency will be carried over to the new cryptocurrency. 3.2.2 Loss Compensation According to Austrian general tax regulations, profits and losses arising from income involving cryptocurrencies can be taxed together with profits and losses from other capital income. For example, dividends or gains from the disposal of shares.  

3.2.3 Business Income 

If the income from cryptocurrencies is classified as income from business (corporate) activities in Austria, the income needs to be classified as business profits. For the cryptocurrency industry, the equipment required for mining and staking is mostly professional and expensive, and needs to be installed and put into use at a specific location, which usually meets the definition of a "permanent establishment". If the generation of cryptocurrencies or income from cryptocurrencies is attributable to a permanent establishment, the Contracting State where the permanent establishment is located has the main taxing right. The company's country of residence usually exempts this income from tax, but it is still subject to progressive tax rates.  

In principle, the special tax rate for cryptocurrencies applies to business assets and traditional capital assets. However, if the income generated by cryptocurrencies is part of the company's core business, this special tax rate does not apply. This means that the crypto tax system does not apply to businesses that trade in cryptocurrencies commercially, or to businesses that engage in commercial crypto mining. Income from such activities will be taxed at progressive income tax rates. Loss balances resulting from cryptocurrency holdings, if they are part of the assets of the business, will be treated as loss balances of business capital assets. 3.2.4 Capital Gains Tax (Realized Capital Gain) From December 31, 2023 onwards, Austrian service providers will be subject to capital gains tax. From 2025 onwards, institutions that are obliged to withhold capital gains tax will have to issue tax reports for all their cryptocurrency income (upon request by the taxpayer).  

Starting from 2023, capital gains tax (usually 27.5%) will only be paid when profits are made from the sale of cryptocurrencies. If losses are incurred in transactions, they can also be used to offset profits from other cryptocurrencies, thereby reducing the overall tax burden. Compared with the old rules, the new rules limit taxable events to profitable transactions rather than all transactions, and add a favorable system that losses can be used to offset taxes. It should be clear that the transactions here are mainly limited to asset appreciation behaviors that make profits from the sale of cryptocurrencies, while income from mining, airdrops, etc. is regarded as active income and is not subject to capital gains tax. 3.2.5 Value-added Tax As a member of the European Union, Austria’s cryptocurrency VAT regime is based on the case law of the Court of Justice of the European Union (CJEU) on cryptocurrencies and Bitcoin. No VAT is levied on the conversion of Bitcoin into and from fiat currency. Institutions that provide Bitcoin or related services will be taxed in the same manner as institutions that provide fiat currency or related services, with the tax base determined by the value of the Bitcoin assets. At the same time, Bitcoin mining is not subject to VAT, as the CJEU case law does not specify the recipient of the service (see CJEU, 22 October 2015, Case C-264/14, Hedqvist). 4. Cryptocurrency Regulatory Regime 4.1 Markets in Crypto-Assets Regulation (MiCAR) The Markets in Crypto-Assets Regulation (MiCAR) aims to establish a unified European regulatory framework to regulate the public offering, trading access and service provision related to cryptocurrencies within the EU, while promoting innovation, leveraging the potential of cryptocurrencies, and maintaining financial stability and investor protection. MiCAR defines "cryptocurrency" in a technology-neutral way as: "a digital representation of value or rights that can be transferred and stored electronically through distributed ledger technology or similar technology." The regulations specifically regulate the transparency and information disclosure obligations of cryptocurrency issuance and trading, the authorization requirements and continuous supervision of cryptocurrency service providers (CASPs) and cryptocurrency issuers, the business organization norms of cryptocurrency issuers and service providers, and the protection rules for investors and consumers in the issuance, trading and custody of cryptocurrencies, and set relevant provisions for combating market manipulation in cryptocurrency trading venues. It covers powers such as issuing instructions, suspending services, and enforcing compliance requirements. It also establishes administrative penalty mechanisms, reporting obligations and procedural rules to ensure consistency with EU regulatory standards and directives. On July 3, 2024, the Austrian Parliament passed the Cryptocurrency Market Regulation Enforcement Act (MiCA-VVG), which will come into effect on July 20, 2024, designating the Austrian Financial Market Authority (FMA) as the competent authority and the Austrian National Bank as the partner to supervise crypto platforms operating in Austria to register and report in accordance with MiCAR. MiCA reclassifies the original utility tokens and payment tokens, and has different prospectus issuance requirements based on this. 4.1.1 Asset-Referenced Token (ART) ART is a cryptocurrency, different from electronic money tokens (EMT), whose value is stabilized by reference to some other value, equity or a combination thereof. (Article 3, paragraph 1, item 6 of MiCAR) According to Articles 16 and 20 of MiCAR, the entity that intends to issue ART must complete the authorization procedure before the issuance, and the issuer must be a legal person or an authorized entity established in the EU. The authorization procedure must be initiated through a formal application (refer to Article 18 of MiCAR). Currently, these technical standards are still drafts and the transition period may end on December 31, 2025. In addition, the application must include a legal opinion confirming that the cryptocurrency does exist and falls within the scope of the MiCAR definition and is not an electronic money token (EMT). Finally, the proposed issuer needs to submit a cryptocurrency white paper and can only issue the token after approval. 4.1.2 Electronic Money Token (EMT) The value of the electronic money token is intended to maintain stability by anchoring the value of a certain official currency. It can be regarded as a stablecoin anchored to a single official currency (such as the euro, the US dollar, etc.). It is specifically defined and subject to specific supervision in MiCAR.  

According to Article 81, paragraph 1 of MiCAR, only credit institutions or electronic money institutions can issue electronic money tokens (EMT). At the same time, since EMT is legally classified as electronic money, Chapters II and III of the Electronic Money Directive (EMD) must also be complied with. Compared to ART, MiCAR does not prescribe an authorization procedure for EMT issuers, but only requires notification to the Financial Markets Supervisory Authority (FMA) and publication of a white paper.  

4.1.3 Other Cryptocurrencies 

Utility tokens and Bitcoin are neither asset reference tokens (ARTs) nor electronic money tokens (EMTs), nor are they cryptocurrencies excluded from MiCAR. They do not need to obtain an issuance license, but they need to publish a white paper and comply with obligations such as fair marketing, anti-fraud and information disclosure.  

4.2 Anti-Money Laundry (AML) 

One ​​of the core goals of the Austrian financial sector is to prevent the financial markets and the financial system from being used to conceal or transfer assets of illegal origin and to finance terrorist activities. The Austrian government therefore requires financial market participants to take preventive measures (know your customer (KYC), transparent cash flow) to ensure this goal.  

Certain business activities related to cryptocurrencies may be subject to money transmission laws. If cryptocurrencies are used as a means of payment and are designed for payments between third parties, and the network is extensive in terms of geographical coverage, variety of goods/services or number of recipients, this may trigger licensing requirements. In addition, if operations are performed in accounts related to currency, payment instruments or means of payment, entities holding these accounts may need to obtain a payment service provider (PSP) license. Carrying out the following business activities: keeping encrypted private keys for holding, storing and transferring cryptocurrencies for customers (custodial wallet services), exchange services between cryptocurrencies and legal currencies, exchange services between cryptocurrencies, transfer services of cryptocurrencies, providing financial services for issuing and selling cryptocurrencies; all need to register as virtual asset service providers (VASPs) with the Austrian FMA and comply with anti-money laundering (AML), customer identification (KYC) and customer due diligence obligations. 4.3 Scope of Cryptocurrency Policy and Regulation In line with the Eco-Social Tax Reform, Austria’s requirement to tax income from cryptocurrency holdings will take effect on March 1, 2022, and will apply to cryptocurrencies acquired after February 28, 2021 (referred to as “new assets”). Cryptocurrency holdings acquired before this date are considered existing holdings and are not subject to the new tax arrangements. These assets will continue to be taxed as economic property in accordance with the regulations prior to the environmental tax reform.  

However, if cryptocurrency holdings acquired before March 1, 2021 (old assets) are used to obtain current income from cryptocurrency, or cryptocurrency is acquired as part of an arrangement such as staking, airdrop, bounty or hard fork, the new tax provisions under Article 27b (2) of the EStG will apply to such acquisitions, and any cryptocurrency acquired in such activities will be considered a new asset.  

4.4 International Regulation and Cooperation on Cryptocurrency 

At the international cooperation level, the Organization for Economic Cooperation and Development (OECD) provides Austria with an international tax coordination framework, guiding how to allocate tax rights on cryptocurrencies internationally through the Model Tax Convention. For example, mining income is taxed as "other income" by the taxpayer's country of residence, while for business income, the company's country of residence has the right to tax these business profits first, unless its activities are carried out in another contracting state through a permanent establishment (as defined in Article 5 of the OECD Model Tax Convention). At present, the OECD is also promoting the implementation of the Crypto-Asset Reporting Framework (CARF) tax transparency standard for cryptocurrencies, aiming to establish a global unified automatic exchange of information mechanism, and Austria will be required to comply with the automatic exchange of information (AEOI) standard. In addition, in order to prevent double taxation, Austria has signed the Double Tax Convention (DTC) formulated by the OECD with many countries to coordinate international taxation, prevent double taxation due to residents having tax obligations in multiple countries, and clarify the tax rights between countries. This also relies on close international information sharing and cooperation, and the mechanism can also achieve the role of anti-money laundering.  

As a member of the Financial Action Task Force (FATF), Austria's anti-money laundering standards are deeply influenced by FATF's Guidance on Virtual Assets and VASPs, which imposes compliance requirements on crypto assets and crypto service providers (exchanges, wallets, etc.), requiring crypto platforms to implement KYC and customer reviews, and at the same time, suspicious transfers must be reported to the Austrian Financial Intelligence Unit (Austrian FIU).