Which income replacement benefits must I declare?

Wage or salary replacement benefits are received when your employer no longer pays you your full salary for various reasons. These benefits are tax-free, but they are included in the calculation of your tax rate (progression clause). This means they are used to determine your tax rate, which can lead to a higher percentage being applied to your other income. Therefore, you must declare all wage replacement benefits in your tax return.

These include:

• Unemployment benefit I,
• Short-time work allowance and seasonal short-time work allowance,
• Insolvency benefit in the event of employer insolvency,
• Parental allowance under the Federal Parental Allowance and Parental Leave Act,
• Maternity benefit and maternity benefit supplement,
• Sickness, injury, and transitional benefits for disabled persons or similar wage replacement benefits,
• Top-up amounts and partial retirement bonuses under the Partial Retirement Act or civil service law,
• Income security benefits for older employees from the employment agency.

Obligation to submit: Tax return

If you receive tax-free wage replacement benefits of more than 410 Euro per year, you are obliged to submit a tax return. The recipient receives a certificate of the wage replacement benefits received to declare them in their tax return.

Most wage replacement benefits are provided by social security institutions, such as the employment agency and health insurance, and are reported using a special "certificate for the tax office". In addition, since 2011, the benefit providers have been reporting the income replacement benefits paid electronically to the tax office, stating the respective tax identification number.

If the employer pays the benefits, they are certified in the "printout of the electronic payslip", e.g. short-time work allowance, maternity benefit supplement, top-up amount and partial retirement bonus.

Note: The "Corona Tax Assistance Act" made employer subsidies to short-time work allowance and seasonal short-time work allowance tax-free, provided they do not exceed 80 percent of the difference between the target income and the actual income together with the short-time work allowance. This regulation was initially limited from 1.3.2020 to 31.12.2020. The tax exemption for employer subsidies to short-time work allowance was then extended until 30.06.2022. The employer subsidy has been taxable again since July 2022.