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Income Tax is a personal tax. The basis of the income tax is Income. Income is not only the basis of assessment but also the subject and source of this tax. It is based on the generation of income and its amount varies in relation to total income. The tax-paying capacity of the subject is taken into account and a minimum amount of income is exempted from taxation. The computation of income tax is based on the income of a certain period of time. Income tax is a joint Federal levy which is collected by Federal authorities and is shared out between the Federal Government, the provinces and the municipalities.

The legal basis for collecting income tax is the Income Tax Act of 1988. The calculation of income tax is based on the total amount of incomes in the 7 classes of income. Income tax does not apply to incomes from other sources, i.e. not included in the 7 classes of income (e.g. lottery prizes), these are taxed under separate rules. Income tax is a progressive tax and can be reduced by various deductions, e.g. special expenses and extraordinary burdens can be deducted from the income tax. The calculation of income tax is based on an income-tax return; the taxpayer has to pay the tax in advance until the formal assessment note is issued. Spouses are taxed separately. The Federal Taxation Act provides for tax levy regulations. If the taxpayer is employed, the income tax is collected at source, i.e. it is collected from the payer of the income and delivered to the fiscal authorities ( Lohnsteuer(wage tax)).


O. Herzog, F. Jirecek and P. Matusek, Steuerhandbuch ´94, 1993.