The Quiet Green Light for Tax-Free Employee Bonuses in 2026

As reported in our May 2026 newsletter, the tax exemption applies only to employee bonuses that are provided for under one of the following wage-setting instruments:

1. A collective bargaining agreement (Collective Agreement);
2. A works agreement (between employer and works council) concluded on the basis of an explicit authorization in a collective agreement;
3. A works agreement (between employer and works council) where there is no employer party eligible to conclude a collective agreement (in practice, this applies to many associations, for example), provided that the agreement is co-signed by the competent trade union;
4. In businesses without a works council: an agreement applicable to all employees, provided there is an explicit authorization in a collective agreement to regulate the matter at company level or there is no employer party eligible to conclude a collective agreement.

As a result, the authority to regulate tax-free employee bonuses in 2026 lies, in principle, with the collective bargaining parties. This means that the relevant collective agreement must either regulate the bonus directly (option 1) or contain an opening clause allowing implementation through a works agreement (option 2). Options 3 and 4 serve as substitutes where there is no employer organization capable of concluding a collective agreement or where no works council exists.

In practice, this means that whenever an employer belongs to an organization eligible to conclude a collective agreement, such as the Austrian Economic Chamber or another recognized employers’ association, the granting of a tax-free employee bonus in 2026 requires a corresponding collective agreement provision. A company-level arrangement alone is therefore not sufficient, even where no collective agreement is currently in place.

It is also important to note that the exemption applies exclusively to payroll tax (income tax). No exemption is available for social security contributions, occupational pension contributions (severance pay scheme “Abfertigung Neu”), or ancillary payroll taxes such as the employer contribution to the Family Burdens Equalization Fund (DB), the surcharge to the employer contribution (DZ), and municipal tax (Kommunalsteuer).

Based on the information currently available, no relevant collective agreement provisions or opening clauses have yet been introduced. Given the limited attractiveness of the measure, particularly because it is restricted to payroll tax relief and capped at €500 per employee, it remains uncertain whether a significant number of collective agreement arrangements will be concluded during the remainder of the year.