An unexpected blow for the hotel industry
On 9 August 2025 a decision by the Austrian tax authorities shook the hotel industry: holiday pay, previously tax-free, must now be taxed. This change is based on a ruling by the Federal Finance Court and an opinion from the Ministry of Finance. For decades, employees in the hotel industry enjoyed the benefit of working on holidays tax-free. But that is now over.
What does holiday work pay mean?
Holiday work pay is an additional wage that employees receive when they work on a public holiday. Normally, employees receive their regular pay for holidays that fall on a weekday. If they work on those days, that pay is paid again, but classified as holiday work pay. Until the end of 2024 this pay was tax-free, but since 1 January 2025 it is considered regular wages and must be taxed.
The industry's outcry
Georg Imlauer, chairman of the Hotel Trade Association in the Austrian Federal Economic Chamber, expressed his dismay at this decision. He described the tax liability as a hard blow for the industry's employees. The tax exemption for overtime premiums is also particularly affected, remaining tax-free only in the last month of a multi-month averaging period.
Why the tax change?
The ruling of the Federal Finance Court, which came into effect on 1 January 2025, ends a long-standing practice. But why this change? The Austrian government argues that making these payments taxable ensures a fairer distribution of the tax burden. Critics, however, see it as a strain on workers who already suffer under the often harsh working conditions in the hotel industry.
Comparison with other federal states
A look at other Austrian states shows that the hotel industry faces similar challenges everywhere. However, the tax burden varies. In Tyrol and Salzburg, where tourism is booming, the effects could be particularly severe. In Vienna, on the other hand, where many international guests also arrive on holidays, the taxability could lead to an increased workload.
Historical background
The tax exemption for holiday work pay has a long tradition in Austria. Originally introduced to relieve employees in sectors with irregular working hours, this practice was maintained for decades. But economic and fiscal pressures have now led to a reassessment.
The impact on the population
For employees in the hotel industry, the tax liability means more net from the gross. Many could be forced to work additional hours to maintain the same standard of living. Employers are also affected: they may have to pay higher wages to keep holiday work attractive.
Expert opinions
A fictional expert, Dr. Max Mustermann, tax advisor and economic expert, explains: "This tax change could in the long term lead to a decline in work motivation. Employees feel disadvantaged, which could be reflected in morale at work."
Another expert, Dr. Anna Müller, professor of tourism economics, adds: "The hotel industry depends on flexible working hours. Such a tax change makes planning more difficult and could lead to staff shortages on holidays."
Figures and statistics
Statistics show that the hotel industry in Austria is one of the largest employers. According to the Austrian Chamber of Commerce, around 200,000 people work in this sector. One in five of them regularly works on public holidays. The taxability could therefore have far-reaching consequences.
Future outlook
The hotel industry hopes for a rapid change in the law. The trade association demands that work on holidays be made tax-free again. Whether the government will yield to the pressure remains to be seen. But one thing is certain: the debate over taxability is far from over.
Political context
The decision to tax holiday work pay was made at a time when the government is under pressure to reduce the budget deficit. The opposition criticizes the measure as unsocial and calls for its reversal. The trade unions have already announced that they will represent the interests of employees and push for legislative change.
Conclusion
On 9 August 2025 the Austrian hotel industry faces a new challenge. Taxing holiday work pay could have far-reaching consequences for the sector and its employees. Whether politicians will react and repeal the taxability remains to be seen. What is clear, however, is that the discussion about fair working conditions and just wages is far from over.
