In Austria, VAT is the main type of indirect taxation.
It is a tax on consumption which is applied during the production and distribution process to most goods and services. It is also applied to goods and certain services, entering the country. Although VAT is ultimately borne by the consumer by being included in the price paid, the responsibility for charging, collecting and paying VAT to the tax authority at each stage of the process rests with the business making the supply, ie the sale.
A business registered for VAT purposes will charge VAT (output VAT) on its sales and incur VAT (input VAT) on its purchases (including any VAT paid at importation). The difference between the output VAT and the deductible input VAT in each reporting period will be the amount of VAT payable by the business to the Austrian tax authorities. In case input VAT exceeds output VAT, the reporting period results in a VAT credit.
Even if an entrepreneur conducts his business from abroad, certain transactions may be taxable in Austria (notably the supply of goods and services, the intra-EU acquisition of goods, imports). Where the supply of goods occurs in Austria or the supply of services is made in Austria (ie the place of supply of goods or services is in Austria) such supply is, in principle, taxable in Austria as well. The standard VAT rate is 20%, the reduced rates are 13% and 10%. In addition, there is currently a COVID-19-related temporary VAT rate of 5%, which is – as of the publishing date of this guide – limited with the end of the year 2021.
Businesses that make VAT-exempt supplies are unable to claim all of the input tax that they incur, resulting in VAT paid to suppliers being a cost factor.
Most goods imported into Austria from outside the EU are subject to import VAT. The import VAT will have to be paid by the importer at the time of the customs clearance. Where the importation is for business purposes and the importer is registered for VAT in Austria, it may be possible to reclaim the import VAT (there exist two schemes in this connection, each subject to certain rules and prerequisites).
It is also important to note the interaction between VAT and customs duty. Customs duty is levied across the EU at the place where goods are imported into the community. It is levied in order to bring the cost of goods produced outside the EU up to the same level as those produced within the EU. Once duty (and VAT) has been paid by the importer, the goods are deemed in ‘free circulation’ and they can then be released for use in the respective home market. Unlike other indirect taxes, such as VAT, once duty has been paid it is generally not recoverable by the importer. It therefore represents a bottom-line cost to the importing business, if it cannot be passed on at higher prices.
It is therefore very important to ensure that the correct rate of duty is applied. Import VAT is charged on the value of the importation, which consists of the customs value, certain freight costs as well as the customs duty itself.
In addition to VAT, a number of other indirect taxes are levied on certain transactions of specific products. An excise duty is levied on mineral oil, heating fuels, tobacco, alcohol and alcoholic beverages.
In Austria, advertising services are generally subject to an advertising tax (“Werbeabgabe”) of 5%, if inter alia advertisements are targeting Austrian customers/markets and are carried out in newspapers, TV, radio or physical billboards, banners, flags etc. Taxable persons are only subject to the advertising tax, if the advertising services provided exceed an annual threshold of €10.000 (if so, the entire annual amount is subject to taxation).
As advertising in digital form, especially on the internet (such as on banners, on webpages like search engines etc), is exempt from the above-mentioned advertising tax, Austria implemented a digital tax (“Digitalsteuer”) as of 2020. The tax rate of the digital tax amounts to 5% as well. Taxable persons are only subject to the digital tax if advertising services amount to at least €25 million in Austria and at least €750 million globally per year.
Furthermore, a specific tax (in German: “Normverbrauchsabgabe”) is levied on the supply of cars and motorcycles, mainly designed for the transport of passengers. The taxable event is defined as either the supply to the final consumer or the first licensing of the passenger car for general traffic. A number of exemptions are provided for (eg export supplies). The tax rate depends on the volume of CO2 emissions.
Other transactions subject to the following indirect taxes are in principle exempt from VAT:
Anyone who either makes or intends to make taxable supplies of goods or services in the course of its business must register for VAT purposes if the value of its taxable supplies in Austria exceeds the annual registration limit of €35,000, or is expected to exceed the limit in the near future. Registration is also necessary if there is an obligation to pay VAT (e.g. due to IC acquisitions) even if the €35,000 threshold is not exceeded. A business can register on a voluntary basis even if the registration limit has not been exceeded.
Once a person is registered for VAT, all of its business activities will be covered by the registration – even if the nature of some of those activities is very different.
Two or more corporate entities can be registered as a VAT group (“Organschaft”):
If a VAT group is established, the business activity of the integrated company is attributed to the parent company, meaning that the business of the integrated company and the parent company form one single enterprise for VAT purposes. The VAT returns filed by the parent company also comprise the enterprise of the integrated company and its taxable supplies. Transactions between the integrated company and the parent company are not taxable, ie they are outside the scope of VAT.
A corporate entity cannot be treated as a member of more than one VAT group at a time.
The main advantage of a VAT group registration is that, apart from a few limited exceptions, any supply of goods or services by a member of the group to another member of the group is disregarded for VAT purposes. This reduces the risk of VAT being accidentally omitted on supplies between separately registered affiliated companies.
A penalty may be imposed by the tax authority if a business fails to register at the correct time.
The VAT registration limit does not apply to businesses that are not established in Austria. For businesses making taxable supplies in Austria, they will need to register for VAT as soon as they commence business in Austria, irrespective of the level of turnover.
If foreign businesses do not carry out any supplies in Austria itself or only make supplies for which the tax liability is shifted to the recipient of the supply, they are still obliged to register for VAT and file a VAT return in cases where:
As of July 1, 2021, three different schemes of One-Stop-Shops were implemented in Austria (as was throughout the EU). Businesses not established in Austria may choose to declare certain supplies via EU-OSS, IOSS or non-EU-OSS.
EU-OSS:
Businesses not established in Austria but in other EU countries may opt to declare revenues via the EU-OSS and thus not having to register for VAT purposes in Austria. The following transactions can be declared via the EU-OSS:
Businesses established in other EU countries have to register for the EU-OSS in the respective country.
Businesses established in non-EU countries can only use the EU-OSS for intra-EU distance sales and for supplies in case of an online platform.
Once a non-established business opts to declare its eligible transactions via the EU-OSS, it must declare all of its transactions this way (i.e. cannot restrict its application to certain EU countries).
Non-EU-OSS:
Businesses established in non-EU countries can use the non-EU-OSS for declaring supplies of services to non-taxable persons located in the EU. In doing so, non-established businesses can avoid multiple VAT registrations in the EU.
IOSS:
The IOSS can be used to declare distance sales of goods imported from non-EU countries and a value not exceeding €150. By applying the IOSS, businesses only require to be registered for VAT purposes in one EU country.
Electronically supplied services and digital services to private consumers resident in Austria are taxable where the consumer resides. With regard to VAT registration and declaration of (inter alia) such supplies, we refer to our comments above.
A taxable person needs to appoint a fiscal representative in Austria to act on his behalf for VAT purposes if:
Permissible fiscal representatives include Austrian tax advisors, certified public accountants, lawyers, notaries, forwarding agents as well as – upon application – any other taxable person resident in Austria, including e.g. an affiliated Austrian group company.
VAT returns normally cover a period of one calendar month (regular pre-declaration period). Quarterly VAT returns (ie three calendar months) can be filed, if the consideration for supplies of goods and services did not exceed €100,000 in the preceding calendar year. It is, however, possible to opt for a monthly pre-declaration period for the entire assessment period by filing a pre-declaration in time for the first calendar month of the respective year.
The entrepreneur must file a monthly/quarterly VAT return electronically via the “FinanzOnline” portal with the competent tax office by the 15th day (due date) of the second calendar month following the end of the pre-declaration period (ie either a calendar month or a quarter). The pre-declaration is treated as a tax return. The entrepreneur must effect payment of VAT as assessed for the purposes of the pre-declaration on the due date.
The obligation to file a pre-declaration is waived if:
However, a pre-declaration must be filed in any case if the entrepreneur is instructed by the tax office to do so.
The entrepreneur must effect the prepayment within the time limit prescribed for the filing of the pre-declaration.
In addition to the pre-declarations, an annual VAT return has to be filed electronically by June 30th of the following year. If a certified Austrian tax advisor has been appointed as a tax representative, an extension until March 31st of the second year following the year concerned might be granted within a so-called quota agreement (however, earlier filing may be requested by the tax authorities).
If the pre-payment is not effected on time, the Austrian tax authorities are entitled to levy surcharges for late payment (“Säumniszuschlag”). The percentage is determined as follows:
If VAT returns are not filed in due time and this failure is not excusable, the tax authority may impose surcharges for late filing (“Verspätungszuschlag”) amounting up to 10% of the assessed VAT.
If EC Sales Lists are not filed in due time, surcharges for late filing may be triggered at a rate of 1% of the listed intra-EU transaction. However, the maximum amount of this surcharge is €2,200 per return.
Businesses that are registered for VAT in Austria and carry out supplies of goods or services to taxable persons in other EU countries are required to complete and submit EC Sales Lists (ESLs). The ESLs must show details of the recipients of the goods and services.
Generally, the ESLs must be submitted each calendar month. Only if the entrepreneur files quarterly (instead of monthly) VAT returns the ESLs must be submitted quarterly as well.
In addition, if the value of the intra-EU trade in goods dispatched or arriving from other EU state is above an annual threshold, a supplementary declaration (referred to as an Intrastat declaration) has to be submitted for either or both. Intrastat declarations also have to be filed in case cross-border services carried out within the EU exceed a certain annual threshold.
These declarations have to be submitted on a monthly basis.
Yes. A range of penalties can be imposed where businesses do not comply with the VAT rules.
Yes, it may be possible to reclaim the VAT incurred in certain circumstances.
Two schemes exist for this purpose – one for businesses established within the EU and another one for businesses established outside of the EU.
Foreign entrepreneurs who are established within the EU, but who have neither their registered office nor a fixed establishment within the Austrian territory may claim their input VAT in electronic form via the national electronic system of the member state of fixed establishment (Art 7 of the directive 2008/9/EC) if they:
The amount refundable is determined by the deduction rules that apply in the country making the refund.
The refund period must not cover more than one calendar year or less than three calendar months (unless it is covering the remainder of a calendar year). The claim has to be made by 30 September of the year following that in which the VAT was incurred.
Foreign entrepreneurs who are not established within the EU and have neither their registered office nor a fixed establishment within the Austrian territory, may claim their input VAT by completing the forms as noted below and enclosing the original invoices and import documents for which the refund is requested in original and forwarding them to the Austrian tax office Graz-Stadt if they:
The claim form, the certificate of entrepreneurial status, the invoices and import documents must be sent by postal mail and as originals to the tax office before 30 June the following year.
The amount to be refunded (with regard to both schemes) must at least be €400. This does not apply if the refund period is the calendar year or the last period of a calendar year. For these refund periods, the amount to be refunded must be at least €50.
If the invoice does not contain all of the following data, it will be insufficient for the deduction of input VAT:
If an invoice does not exceed €400, the name and address of the recipient is not a prerequisite and it is sufficient to show the total amount (consideration including VAT) and a reference to the VAT rate applied.
VAT invoices can be issued, received and stored in an electronic format and there is no need to inform the tax authority. However, it has to be ensured that invoices can be provided to the Austrian tax authorities in a reasonable timeframe upon request (e.g. in the event of a formal request for further information or an audit).
Electronic invoices must contain the same information as paper invoices. The method used to ensure the authenticity of origin, the integrity of content and legibility of the invoices is a business choice and can be achieved by any business controls which create a reliable audit trail between an invoice and a supply of goods or services.
No current obligations and no anticipated changes in the near future at the moment.
For further information on indirect tax in Austria please contact:
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Claudia Modarressy |
