Austria’s far-right Freedom Party (FPÖ) and the conservative People’s Party (ÖVP) are working on a coalition agreement with a clear financial goal: saving €6.3 billion to avoid EU deficit penalties, all without introducing new taxes.
But what does this mean for people living in Austria, including foreign residents?
Here’s what we know so far.
A bold budget plan - without new taxes
At the centre of the FPÖ-ÖVP coalition talks is a plan to restructure Austria’s budget and avoid EU deficit proceedings. The country’s deficit is projected to reach 3.7 percent of GDP in 2025, exceeding the EU’s 3 percent limit.
To address this, FPÖ leader Herbert Kickl and ÖVP interim leader Christian Stocker have unveiled a seven-year roadmap to save €6.3 billion and made it clear that hitting the public with taxes was not the answer.
"Anyone who claims things can be improved with new taxes and burdens isn’t curing Austria but acting like a charlatan," Kickl said at a press conference, as reported by Die Presse.
Instead, the savings will come from ministry budget cuts, reforms to subsidies like the Klimabonus, and closing tax loopholes, the far-right leader said.
Kickl argued that this plan was about ensuring Austria’s financial independence, saying, "It is about Austria being able to shape its future independently and not being controlled by Brussels."
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What will happen to the Klimabonus?
The Klimabonus, introduced in 2022, is a climate-related payment aimed at offsetting carbon emissions. While the bonus amounts range from €100 to €200 per person annually, it has been an additional benefit for residents, including foreign workers.
Under the proposed cuts, the Klimabonus could be significantly reduced or even eliminated altogether.
The coalition negotiators argue that such subsidies are unaffordable in the current economic climate, prioritising deficit reduction over these payments.
Educational leave could face major changes
Educational leave, or Bildungskarenz, is another popular program under threat. This benefit allows employees to take time off work for further education while receiving government support.
However, FPÖ negotiator Arnold Schiefer has called it a luxury that Austria can afford “only in good times.”
Proposed changes could include stricter eligibility criteria, shorter benefit periods, or reduced financial support.
These adjustments could make it harder for employees - particularly foreigners hoping to upskill or retrain in Austria - to take advantage of Bildungskarenz.
READ ALSO: What are the Austrian far-right's most controversial plans if they get into power?
No new wealth or inheritance taxes
Both the FPÖ and ÖVP have ruled out introducing taxes on wealth, inheritance, or corporate profits.
Instead, they plan to address Austria’s budget shortfall by “closing tax privileges and loopholes.” However, specific details about these measures remain vague.
Critics argue that this approach benefits the wealthy while putting more pressure on workers to cover the gap.
What’s the impact on foreign residents?
Foreign workers in Austria could feel the effects of these budget cuts in several ways.
If the Klimabonus is reduced or scrapped, they’ll lose access to an annual benefit that offsets everyday costs. Similarly, changes to Bildungskarenz could make it harder to pursue further education, which has been a valuable tool for foreign residents adapting to Austria’s job market.
While the coalition negotiators emphasise that their approach avoids new taxes, the focus on spending cuts could reduce public services and benefits, indirectly impacting the quality of life for residents.
What’s next?
The FPÖ and ÖVP are racing to finalise their budget plans before January 21st, the deadline for submitting Austria’s roadmap to the EU Commission.
While the parties promise no new taxes, their focus on savings means significant changes to subsidies and programs like the Klimabonus and Bildungskarenz.
Residents in Austria - both citizens and foreigners - will need to prepare for a leaner financial landscape in 2025.
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