The decades-long practice of tax exemption for the so-called Holiday pay in Austria has been terminated with effect from 1 January 2025. This change is based on a ruling by the Federal Finance Court (BFG) of 19 December 2024 and a subsequent statement by the Federal Ministry of Finance (BMF) Since the beginning of the year, payments for work on public holidays must be taxed as regular wages.
For employees, this means that while they will continue to receive their normal salary plus the holiday bonus for working on a public holiday, this bonus is now subject to income tax. This change particularly affects sectors with a high level of shift and holiday work, such as the hotel and restaurant industries. Georg Imlauer, the chairman of the Hotel Industry Association in the Austrian Chamber of Commerce (WKÖ), described this step as a “hard blow” for the employees.
Imlauer criticized the fact that employees who work on public holidays and overtime are now at a disadvantage from a tax perspective. He also pointed out the tax treatment of overtime premiums, which can only be claimed tax-free in the last month of an averaging period. The Austrian hotel industry has been pushing for months for a change in the law that would restore tax exemption for holiday work.
The Hotel Industry Association appeals to politicians and Unionsto advocate for a swift amendment to the law. The measure is not only the right thing to do from a tax policy perspective, but would also send an important signal of appreciation to employees and employers. The Austrian government is now being called upon to find a solution that will increase the net earnings of the affected employees.