Hire Contractors In Austria

Its highly skilled and motivated workforce and strong economy make it easy for businesses to hire contractors in Austria.

The labor force of this nation is characterized by high expertise, adaptability, and productivity. These qualities are essential, especially in a remote working environment. 

Austria also has an advanced technology ecosystem, particularly in cities like Linz, Graz, and Vienna.

However, a strong business environment is not the only criterion for a successful international hiring journey. You must also know the country’s unique labor laws, tax regulations, and other details. This is where most companies falter. 

Here, we have highlighted some challenges commonly faced by hiring independent contractors in Austria. We will also share a few important tips and tricks for overcoming these hurdles and enjoying a smooth recruitment process.

How to Hire Contractors in Austria

How do you hire independent contractors in Austria efficiently? There are two main ways to do this.

• Hiring an Austria contractor directly, or
• Hiring with a contractor management platform/AOR like Skuad.

Direct hiring

You must first set up a subsidiary in this region to hire an Austrian contractor directly. It involves various steps like,

• Selecting a company name and registering it with the Companies House
• Drafting the incorporation papers with a local notary office,
• Opening a corporate account with a local bank,
• Filing the necessary documents with the Trade Register, obtaining a TIN (Tax Identification Number), and
• Filing applications for the necessary licenses to start operating. 

If you’re thinking about how to find contractors in Austria, you can look for contractors from various job platforms like LinkedIn, Indeed, etc. 

Once you have shortlisted a few applicants, you must interview them, draft an employment contract, onboard them, and manage payroll.

Direct hiring an independent contractor in Austria is best suited for stable and long-term projects. 

Hiring contractors through Skuad AOR

Another approach to hiring a contractor is through an Agent of Record in Austria. It is a designated representative with the authority to manage all aspects of contractor hiring. 

These include handling international payments, overseeing the administrative and HR processes, and, most importantly, ensuring compliance. 

Take Skuad as an example. Skuad’s Austria AOR solutions simplify the international contractor onboarding process. Some of our many unique features are,

• Drafting locally compliant contracts
• Built-in IP protection for your company’s IP under the Austrian laws,
• Organized contractor processes ranging from expense approval to reimbursements and more.

How to pay contractors in Austria

If you hire contractors directly, you must pay them according to the contract between you and the worker. Various payment methods are available, such as direct deposit, checks, money orders, or digital payment platforms. 

Furthermore, you must understand Austria's tax requirements and comply accordingly. Failure to do so can result in expensive penalties and fines from Austrian authorities. While this may not seem much now, hiring multiple contractors at once can become very complicated. 

A wiser and simpler way to pay independent contractors in Austria is through Skuad’s AOR solution. We feature global payroll in over 100 currencies and ensure 100% compliance with all local tax laws. This way, you can always guarantee that your international contractors get paid accurately and on time.

Direct Hiring vs Hiring Contractors with Skuad

If you are still unsure which hiring method to choose, here is a detailed table to help you better understand.

Cost of Hiring Independent Contractors in Austria

The cost of hiring an independent contractor in Austria is heavily dependent on which method you choose. If you are hiring directly, then the cost will be quite high. You must incur business setup expenses, onboarding, HR operations costs, etc. 

However, if you partner with Skuad AOR, the total cost of hiring contractors will be significantly low. You will pay a nominal fee, and we will handle the rest. 

Furthermore, you must consider other factors, such as the contractor's experience level, industry, location, and even the type of project you are hiring for. 

A contractor with many years of proven work experience will charge you much more than a contractor who has just started freelancing.

How to Convert a Contractor into an Employee in Austria

Here are a few essential steps you need to follow to change your contractor’s status from a 1099 worker to a W2 employee. 

• Understand the laws of the country: You need to be knowledgeable about Austria's various employment laws and numerous guidelines. For example, the standard working hours in this country are eight hours a day, or 40 hours per week.
• Discuss employment conditions with your contractor: Before you switch, communicate the employee benefits, salary, work hours, and work expectations to your contractor.
• Draft an employment contract: Formulate an employment contract that follows the rules of Austrian labor laws. 
• Verify the candidate's background details: Once the contract has been signed, run a background check on the contractor-turned-employee.
• Start with onboarding tasks: If everything is good to go, begin with the onboarding tasks and add the new employee to your company’s payroll system.

Challenges of Hiring Contractors in Austria

Let’s take a look at some of the challenges that businesses face when they hire in Austria.

1) Decoding the employment laws

In Austria, different statutory regulations are in place to determine an employment relationship. This is not just limited to the employee-employer alone; it also includes an employee and independent contractor. 

• Labor Law: The main regulation handles all issues related to employment relationships in the country.
• Employment contract law: It includes legal provisions to regulate the relationship between employees and employers.
• Occupational health and safety: All statutory guidelines that aim to protect the lives and health of workers in Austria are included in this law.
• Collective labor law: It consists of regulations that address the relationship between unions, works councils, and employers and their associations. 

Each law has unique requirements. For example, to hire a contractor in Austria, you must draft a written employment contract, also known as a freier Dienstvertrag. 

It is not always possible to understand, let alone comply with, these different requirements, especially if you are new to the process. That is why most businesses partner with contractor management software to help them with the process. But this, too, has its challenges. Finding the desired solution can be expensive and require time and resources.

2) Tax liability for independent contractors in Austria

Independent contractors are treated as self-employed individuals in Austria. Therefore, their tax liabilities also differ from those of full-time employees. Contractor tax in Austria only consists of income tax. It is based on their taxable annual income. 

Furthermore, when you hire contractors in Austria, you must also pay certain taxes as an employer. They include,

• Municipal tax
• Employer’s contribution
• Surcharge to the employer’s contribution.

Understanding and fulfilling these tax requirements can be complicated without proper understanding. The best way to manage tax for your independent contractors is through Austria payroll solutions. But, if you are under budget constraints, implementing such tools can be tricky.

3) Bureaucratic hurdles in Austria

Austria's complex bureaucracy can often hinder swift decision-making and organizational innovation. Take residence and work permits, for example.

With a residence permit, an individual can live in Austria. However, they will need a work permit in the country. There have been many cases where both these permits are interconnected. This means that the person’s ability to work in Austria will be linked to their legal residence status.

Additionally, the wait time for a work permit can be quite long. If everything goes smoothly, obtaining a work permit for a non-EU citizen can take about seven weeks.

Hire Contractors in Austria with Skuad

With Skuad as your trusted AOR partner, you no longer have to worry about the complexities of international contractor hiring. Legal experts vet our country-specific employment contracts, meaning you no longer have to deal with noncompliance issues. 

Additionally, we automate all contractor invoicing and payments. Our global payroll solution enables you to send accurate and timely payments to all your workers. We handle everything, from developing timesheets to invoicing and multi-currency payouts.

Get started with Skuad and enjoy a seamless and successful hiring journey!

FAQs

Can you hire a contractor overseas?

Yes, you can hire an international contractor. It effectively fulfills your project requirements without incurring huge expenses typically associated with full-time employees.

What is the freelance tax in Austria?

The personal income tax for workers in Austria ranges from 0% to 55%.

Do I need to send a 1099 to a foreign contractor?

If you hire an international contractor based in the USA, you must file Form 1099.

How do you pay overseas contractors?

You can pay a foreign contractor directly (bank transfer/digital payment platforms) or through Skuad AOR. Skuad’s unified platform guarantees accurate and timely payments to all your workers. Additionally, we feature automated invoicing, meaning you no longer have to deal with huge amounts of paperwork.

Do overseas contractors pay taxes?

Foreign contractors must pay taxes in the country where they live and work.