Taxation of Motor Insurance Policies: Austria

Edit Buliczka
May 1, 2024

In Austria, the insurance premium tax law regulates the indirect tax that applies to elements of coverage under a motor insurance policy. This blog details everything you need to know about this particular indirect tax in the country.

As with our dedicated overviews of the taxation of motor insurance policies in Spain and Norway, this blog will focus on the specifics in Austria. We also have a blog covering the taxation of motor insurance policies across Europe.

Which taxes are payable concerning motor insurance policies in Austria?

In Austria, Vehicle Insurance Tax (VIT), or the so-called motor-related insurance tax, is payable in relation to:

  • Motorcycles (classes L1e, L2e, L3e, L4e and L5e)
  • Passenger cars (class M1) under 3.5 tons of total gross weight
  • All other types of motor vehicles (e.g. light commercial vehicles of class N1) under 3.5 tons of total gross weight, though some exclusions apply (tractors, for example)

VIT is payable in addition to the 11% insurance premium tax (IPT).

How is VIT calculated for motor insurance policies in Austria?

The calculation of VIT is complex. The tax is determined by the type of vehicle, the engine capacity/displacement and CO2 emissions for motorbikes, the performance of the combustion engine and the emission in grams per kilometer for passenger automobiles and the power of the combustion engine for all other engine types.

The date of registration is another item to consider when calculating the amount of VIT. The computation for automobiles registered before 1 October 2020 is different, however.

The following rates are effective for passenger cars registered after 1 October 2020 are as follows:

  • EUR 0.72 per Kwatt of the power combustion engine
  • EUR 0.72 per gram of the value of CO2 emissions in grams per kilometre

In 2020, the first component, power, was lowered by 65 Kwatt, while the second component, emission, was reduced by 115 grams per kilometre. Since 2021, the deduction has been lowered annually. Every year, the first component is reduced by one and the second by three. As a result, in 2024, the deductions are 61 Kwatt and 103 grams per kilometre.

To complicate this further, the aforementioned calculation only applies to M1 passenger cars whose CO2 emissions were established using the WLTP (Worldwide Harmonised Light Vehicle) test method. If this process is not followed, the calculation will be different.

Special rates apply to motorhomes, motorcyclists and other multi-track motor vehicles.

The computed amount is due monthly. Prior to 2020, the regularity of the payment was another aspect to consider in the computation.

What vehicles are exempt from tax in Austria?

First and foremost, VIT is required on motor vehicles weighing up to 3.5 tonnes. If the vehicle’s weight exceeds this limit, another type of tax – motor vehicle tax – is due.

The exemptions in Austria follow the usual considerations mentioned in our blog on taxation of motor insurance policies across Europe. Exemptions are dependent on:

  • Who uses it (e.g. people with disabilities)
  • Why the vehicle is used (e.g. vehicle with test drive licence plates, rental cars or taxis)
  • Environmental reasons (e.g. motor vehicles with a CO2 emission value of 0 g/km, such as electric or hydrogen vehicles)

Read our IPT Guide to learn more about Insurance Premium Tax compliance.

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Edit Buliczka

Edit is a senior regulatory counsel. She joined Sovos in January 2016 and has extensive IPT knowledge and experience. Her role ensures the IPT teams and systems at Sovos are always updated with legislative changes. She is a Hungarian registered tax expert and chartered accountant and has worked for companies in Hungary including Deloitte and KPMG and as an indirect tax manager she worked for AIG in Budapest. She graduated with an economist degree from Budapest Business School, faculty of finance and accountancy and also she has a postgraduate diploma from ELTE Legal University in Budapest.
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