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  • Service: Tax, Global Indirect Tax
  • Type: Regulatory update
  • Date: 6/1/2013

Austria: VAT essentials 

Essential information regarding VAT as it applies in Austria.


Scope and Rates

What supplies are liable to VAT?


Value-added tax (VAT) is due on any supply of goods or services made in Austria, where it is a taxable supply made by a taxable person in the course or furtherance of a business carried on by said person. Supply includes all forms of supply. It is not restricted to the provision of goods and services by way of sale but can apply equally to other forms of transaction, including the leasing or hire of goods, the grant, assignment, or surrender of a right, or even an agreement not to do something (see Sec 3 and 3a Austrian VAT Code).


Supply does not include anything done otherwise than for a consideration. However, certain actions carried out for no consideration are deemed to be supplies; for example, giving business gifts and samples, and private use of business assets. Applications for the giving of samples or the making of gifts of small value for the purposes of the taxable person's business shall not be so treated (see Sec 3 para 2 Austrian VAT Code).



What is the standard rate of VAT?


The standard rate of VAT is 20 percent (Sec 10 para 1 Austrian VAT Code).


Are there any reduced rates, zero rates, or exemptions?


Yes (Sec 10 para 2 Austrian VAT Code). There is a reduced rate of 10 percent for certain goods and services, including:


  • food including restaurant services without certain drinks
  • livestock
  • plants and flowers
  • books
  • passenger transport
  • hotel accommodation
  • residential property letting
  • cultural services
  • certain medical care
  • pharmaceuticals

In addition, there is a reduced rate of 12 percent for wine and grapes purchased directly from the wine grower. (Note also that there is a reduced rate of 19 percent for supplies in the geographic areas of Jungholz and Mittelberg).


There is an extensive list of zero-rate supplies, including (see Sec 6 Austrian VAT Code):


  • the supply of goods dispatched or transported to a destination outside the territory of the European Union (exports)
  • intra-Community supplies
  • the supply of services consisting of work on movable property acquired or imported for the purpose of undergoing such work
  • supplies of gold to central banks
  • the supply of services including transport and ancillary transactions when these are directly linked to the transit or the export of goods, or to the imports of goods under certain circumstances.

The list of exemptions includes:


  • health and welfare services
  • supplies by public theaters, orchestras, and museums
  • supplies by charitable organizations
  • finance
  • education
  • betting
  • insurance
  • specific postal services
  • the leasing or letting of immovable property
  • the supply of land and buildings
  • services supplied by brokers and other intermediaries, acting in the name and for account of another person, where they form part of certain exempt transactions.

Note: it is not possible to recover VAT incurred in making exempt supplies.


What are the other local indirect taxes beside VAT?


Excise duties, insurance tax, car registration tax, advertising tax.

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Registration

Who is required to register for Austrian VAT?


Austrian Entities


If a business makes taxable supplies in Austria, it is required to register and account for Austrian VAT. No VAT registration threshold exists in Austria.


Non-Austrian Entities


The registration rules that apply to Austrian entities also apply to non-Austrian entities, which are making taxable supplies in Austria. According to Sec 19 para 1 Austrian VAT Code the general reverse charge mechanism regarding services and contract work provided by foreign entrepreneurs to service recipients who are in business or are public entities was implemented (from 2004 onwards). In all other cases (supply of goods, except the supply of scrap electronic devices or electricity) the foreign entrepreneur in principle must register for VAT. If in the case of a supply of goods the customer is an entrepreneur or a public entity the latter must withhold and remit the VAT to the tax authorities in the name of the supplier.


To deal with its VAT affairs an overseas business may appoint a VAT representative with no liability to the tax authorities (Sec 27 para 7 Austrian VAT Code).


If a business is not registered for VAT in Austria but sells and delivers goods from another European Union (EU) Member State to customers in Austria who are not VAT registered (distance sales), where the value of those sales exceeds a threshold of EUR 35,000 (as of 1 January 2012), it is required to register and account for VAT in Austria.


Access the VAT registration form on the Austrian tax authority’s website: http://www.bmf.gv.at/service/formulare/_start.htm.


Are there penalties for not registering or late registration?


Penalties may become due for failing to register for VAT promptly, even if it is unlikely from a practical point of view. If the deliberate failure to register for VAT is not connected with a late payment of VAT, the penalty is limited with EUR 3,625; otherwise it may be considered as a criminal offense.


A late payment penalty of 2 percent of the net tax payable is levied.


In addition, a late filing penalty of 10 per cent can be levied, VAT returns are not filed in time because of a late registration.


Is voluntary VAT registration possible for an overseas company?


No.


Are there any simplifications that could avoid the need for an overseas company to register for VAT?


If a business makes supplies of goods or services in Austria, then it is required to register and account for Austrian VAT. However, it is possible to avoid registering and accounting for Austrian VAT when making certain supplies.


A general reverse charge mechanism regarding supplies of services, scrap, and contract work provided by foreign entrepreneurs to service recipients, who are in business or public entities is applicable, thus avoiding registration.


If in case of a supply of goods the customer is in business or is a public entity the recipient must account for VAT rather than the supplier. However, this does not avoid registration of the foreign entrepreneur.


In the following situations the obligation to account for the VAT due can be shifted to the customer provided that the latter is registered for Austrian VAT.


Triangulation


If a business is an intermediate supplier to a Austrian buyer of goods which it purchases from a business in a different EU Member State and goods are delivered from there to Austria, VAT due can be accounted for by the Austrian customer (see section Invoices) provided that it is not VAT registered in Austria.


Call-Off Stock


The simplification is only applicable if the country of dispatch knows a similar simplification, which allows Austrian companies to avoid a tax registration in similar situations.


Where a business stores goods at customer’s premises under their control, the customer accounts for VAT on the supply as an acquisition. If goods on consignment transferred from another Member State into Austria are meant to be purchased by one single customer (call-off stock) the transaction may be treated as an intra-Community dispatch by the foreign entrepreneur and an intra-Community acquisition by the Austrian customer (consignee) at the time of resale. This applies only if the resale occurs within the period applied by the Member State of departure (within six months at the latest). If not, an intra-Community transfer of goods takes place after the six-month period (VAT registration necessary in this case). Foreign entrepreneurs not registered in Austria or registered but only performing taxable supplies related to the consignment stocks may apply these rules (see Directive of the Ministry of Finance (UStRl Rz 3603)).


Supply and Install


If a business supplies goods and installs or assembles them in Austria without having a permanent establishment rendering such supply in Austria, its customer must account for any VAT due, in effect, as an acquisition, if it qualifies as business or public entity.


Reverse Charge Services


These services are covered in more detail in the section International Supplies of Goods and Services.


Does an overseas company need to appoint a fiscal representative?


A fiscal representative must only be appointed, if the company is not resident within the EU or Norway.

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VAT grouping

Is VAT grouping possible?


Yes, provided various criteria are met (see Sec 2 para 2 subpara 2 Austrian VAT Code). VAT grouping is automatic if there are financial, economic, and organizational links between the proposed members of the group. It is advisable to write to the tax authorities to notify them that the conditions have been met.


Can an overseas company be included in a VAT group?


No. However, it is possible for two Austrian subsidiary companies of a foreign parent to be VAT grouped.

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Returns

How frequently are VAT returns submitted?


Registered businesses are required to submit VAT returns on a monthly basis. However, if the turnover did not exceed EUR 100,000 in the prior year, then business may opt to submit quarterly VAT returns.


In addition to periodic returns, a business must also submit an annual summary VAT return.


Failure to submit VAT returns may result in a surcharge of up to 10 percent of the tax due. Failure to settle any outstanding VAT payments on time may result in late payment penalty of 2 percent of the net tax payable.


Failure to file VAT returns deliberately may be considered as a criminal offense under certain circumstances.


Generally, VAT returns must be filed by electronic means.


Are there any other returns that need to be submitted?


European Sales List (ESL)


If a business has performed intra-Community supply of goods, transferred goods as a reseller in a triangular transaction or has provided a services to a taxable person of another Member State the place of supply of which is not Austria and which is subject to taxation by the recipient of the services in another Member State it is required to complete ESLs. ESLs are completed on a monthly basis.


Failure to file an accurate and complete ESL deliberately is a criminal offense. The negligent violation of failing to complete an accurate and complete ESL is not a criminal offense; however it is subject to penalties.


Intrastat Supplementary Declarations


VAT registered businesses with a value of dispatches or arrivals to or from other EU Member States, which exceed a certain threshold (EUR 500,000 per calendar year) must complete supplementary declarations each month.


Non-compliance with Intrastat reporting requirements may result in a penalty of up to EUR 1,090.


Statistical reporting documents can be accessed on the Austrian tax authority’s websites: http://www.bmf.gv.at/service/formulare/_start.htm and https://www.statistik.at/IntraWeb/.


If a business receives a purchase invoice in foreign currency, which exchange rate should be used for VAT reporting purposes? (e.g. central bank’s exchange rate applicable on the date of the invoice)


The taxpayer may use the central bank’s exchange rate on the date of the supply or the average monthly exchange rate published by the Austrian Ministry of Finance. Furthermore, the tax payer may also use any other daily exchange rate used by a bank provided that proof of evidence is possible.

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VAT recovery

Can a business recover VAT if it is not registered?


Yes. If a business is established in another EU Member State then it should make a claim under what is known as the Council Directive 2008/9/EC. A non-EU business should recover the VAT under the 13th Directive.


The claim form for non-EU companies can be accessed on the Austrian tax authority's website: http://www.bmf.gv.at/service/formulare/_start.htm.


Does your country apply reciprocity rules for reclaims submitted by non-established businesses?


Austria does not apply reciprocity rules.


Are there any items that businesses cannot recover VAT on?


Yes. There are certain items that business cannot recover VAT on (Sec 12 para 3 Austrian VAT Code). For example:


  • Exempt supplies: where VAT relates to both taxable and exempt supplies, an apportionment is required.
  • Non-business (including private) activities: where VAT relates to both business and non-business activities, an apportionment is required.
  • Motor cars (excluding commercial vehicles): with certain exceptions businesses cannot recover VAT on the purchase of a motor car.
  • Business entertainment: VAT is not generally recoverable on business entertainment costs unless it can be demonstrated that the expenses are related to promotion activities or are predominately caused by business purposes.
  • Purchases falling within the Tour Operators' Margin Scheme: the VAT on goods and services which fall under this scheme cannot be reclaimed.
  • Goods sold under one of the margin schemes for second hand goods: there are a number of schemes which provide for VAT to be accounted for on the goods' sales margin, but do not allow VAT recovery on the purchase of those goods.

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International Supplies of Goods and Services

How are exports of goods and services treated?


Goods


If a business sells goods to a customer who is registered for VAT in another EU Member State and the sale involves the removal of those goods from Austria (either by the business or the customer) to that Member State, then it does not need to charge VAT and may zero rate the supply as an intra-EU dispatch. It must obtain its customer's VAT number and quote it on its invoice. It should also obtain evidence of the goods' removal from Austria (Art 7 Austrian VAT Code).


If a foreign entrepreneur sells goods to a customer who is not registered for VAT in another EU Member State, the entrepreneur will have to charge Austrian VAT, if the sales exceed a certain threshold for that Member State. The foreign entrepreneur may have to register in the Member State under what is known as the Distance Selling Scheme.


If a business exports goods to a customer (business or private) outside of the EU, then it does not need to charge VAT; but, as for intra-Community sales, it should make sure to keep proof of dispatch/delivery in all cases to support the zero rating.


Services


Supplies of services by business established in Austria to a foreign business customer (B2B) is taxable in the country of the recipient under the reverse charge mechanism. If it however supplies services to a private consumer (B2C), the services are in general taxable in the country of the supplier and therefore subject to Austrian VAT.


The following exceptions apply to the B2B and B2C main rules as described above:


  • services connected to real estate (taxable in the country where the real estate is located)
  • restaurant and catering services (taxable in the country where these services are performed. Other rules apply if these services are performed on board a ship, aircraft, or train)
  • passenger transport (taxable in we country here the transport services are actually performed)
  • services with regard to cultural, artistic, sporting, scientific, educational, entertainment, and similar activities, along with the ancillary services (taxable in the country where those activities are physically carried out). Since 1 January 2011, this exception has applied to services performed for VAT entrepreneurs only with respect to admission to the aforementioned events and the appurtenant admission-related services.
  • short-term hiring of transportation vehicles (for ships maximum 90 days/for other means of transport maximum 30 days; taxable in the country where the vehicle is actually put at the disposal of the customer.

The following exceptions apply to the B2C main rule:


  • intermediary services (taxable in the country where the underlying transaction is taxable)
  • intra-Community transport of goods (taxable in the country of departure). For other types of goods transportation for non-taxable customers, the place of service is the place where the transportation is actually performed.
  • Transportation-related services (taxable in the country where the services are physically carried out)
  • services involving movable tangible goods (taxable in the country where the activities are actually carried out)
  • services performed electronically by a VAT entrepreneur not established in the EU to non-taxable customers (taxable in the country where the customer of the service is located)
  • long term hiring of transportation means is taxable, where the customer is seated.

The following services performed for non-taxable customers that are established or resident outside the EU are taxable in the country where the customer is established:


  • the transfer of licenses and similar rights
  • advertising services
  • services performed by consultants, as well as data-processing and information-provision services
  • the obligation to refrain, in whole or in part, from pursuing a business activity
  • banking and insurance services
  • supply of staff
  • hiring out of movable property, with the exception of means of transport
  • operating natural gas and electricity-distribution systems
  • telecommunications services
  • radio and television broadcasting services and
  • services performed electronically.

How are goods dealt with on importation?


When goods are imported into Austria from outside the EU, import VAT and customs duty may be due (Sec 1 para 1 subpara 3 Austrian VAT Code). This has to be paid or secured before the goods will be released from Customs' control. Under certain circumstances (importer is a VAT-registered business) payment of VAT on importation of goods may be deferred until the 15th of the second following month after importation. In the VAT return to be filed input VAT deduction is possible at the same date, thus avoiding a cash-flow disadvantage (Sec 26 para 5 Austrian VAT Code).


How are services which are brought in from abroad treated for VAT purposes?


If a business buys in certain services from outside Austria, it will be required to apply the reverse charge (Sec 19 para 1 Austrian VAT Code). This is intended to take away any VAT advantage of buying those services from outside Austria. If a business


  • does not perform taxable supplies in Austria or
  • performs only supplies falling under the reverse charge system and
  • is the recipient of supplies falling under the scope of the reverse charge mechanism and
  • is fully entitled to recover the reverse charge VAT as input VAT

it is not required to register for VAT in Austria, although it may opt for registration.


Under the reverse charge businesses are required to account for a notional amount of VAT as output tax on their VAT return covering the period in which the supply is made and recover this VAT as input tax on the same return.


If a business is able to recover all of its VAT, the reverse charge has no cost effect and is a VAT compliance matter only. However, partly exempt businesses are likely to bear a VAT cost depending on the level of recovery allowed under the partial exemption method applied.


The reverse charge applies to all kind of services and contract work provided by foreign entrepreneurs to service recipients, who are in business or public entities. Please consider that the taxable supply of goods in Austria is not subject to reverse charge. The only exception is the supply of scrap, electronic devices or electricity which is subject to the reverse charge.

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Invoices

Is a business required to issue tax invoices?


A business is required to issue tax invoices, if the recipient of the supply is a business.


What do businesses have to show on a tax invoice?


Tax invoice it should contain the following data (Sec 11 Austrian VAT Code):


  • date of issue
  • a sequential invoice number. If the invoice adjusts an earlier invoice (such as, a credit note), unambiguous reference should be made to the original invoice
  • supplier VAT identification number
  • customer VAT identification number (on intra EU supplies and supplies falling under the reverse charge regime). If the VAT on a transaction will be accounted for by the customer and not the supplier such as the reverse charge mechanism applies, then an invoice is required and the invoice requires a written explanation for the basis of the transaction or a reference to the respective paragraph in the VAT Directive or local country VAT Act.
  • customer VAT identification number, if the total exceeds EUR 10,000 and the supplier is resident in Austria
  • supplier’s name and address
  • customer’s name and address
  • the quantity and nature of the goods/services supplied
  • tax point (date of taxable supply). In case of supplies invoiced repeatedly it is sufficient to state the period for which the invoice was issued, if not longer than one month
  • the taxable amount per rate
  • there is no requirement in Austria to state the unit price; however, it is necessary to state the amount of units supplied and the total value. From this information, the unit price can be calculated.
  • the Austrian legislation does not specifically require the rate of discount be shown; however, it is recommended that this is shown to meet the requirements of the European legislation.
  • the VAT rate applicable
  • exempt and zero-rated supplies (reference to the legal basis for the exemption is not required)
  • invoices are also required for exempt and zero-rated supplies (if supplies are made to customers being in business or to legal entities).

Can businesses issue invoices electronically?


Yes. Electronic invoices may be issued provided that the conditions stated in Sec 11 para 2 Austrian VAT Code and in the Directive of the Ministry of Finance are fulfilled.


Is it possible to operate self-billing?


Yes, provided it has the agreement of its customer before doing so (Sec 11 para 7 Austrian VAT Code).


Can a business issue VAT invoices denominated in a foreign currency?


Yes.

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Transfers of Business

Is there a relief from VAT for the sale of a business as a going concern?


No, there are no specific rules applicable to the sale of a business as a going concern unless the transaction is subject to special Mergers and Acquisitions transactions (Austrian Restructuring Act).

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Options to Tax

Are there any options to tax transactions?


There is an option to tax certain types of transactions in immovable property and consumer credits granted by the seller of the product. In addition, there are also provisions that allow option for taxation for small entrepreneurs and agricultural and forestry entrepreneurs.


Regarding the rental of immovable property the option is only possible, if the tenant uses the property for supplies entitling for input VAT deduction.

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Head Office and Branch transactions

How are transactions between head office and branch treated?


Services rendered between head office and a branch are outside the scope of Austrian VAT. Goods transferred from a branch situated in a non EU Member State to an Austrian head office will trigger VAT on imports. The transfer of goods from a branch belonging to another EU Member State to the Austrian head office may be deemed as intra community supply (see Art 1 para 3 Austrian VAT Code).

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Bad Debt

Are businesses able to claim relief for bad debts?


Businesses are able to claim VAT back on the unpaid element through their VAT return. If they subsequently receive payment for the supply then they will have to pay back the VAT element to the tax authorities in the same way.

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Anti-Avoidance

Is there a general anti-avoidance provision under VAT law?


In case of carrousel-fraud and other VAT frauds the input VAT deduction can be refused, if the applicant should have known that he/she was involved in a carrousel-fraud (Art 12 para 1 VAT Act).


According to Sec 22 Federal Fiscal Code artificial transactions may be challenged under the misuse of law clause in case there is an unusual legal structure not appropriate to the business purposes, which is exclusively created to obtain a tax benefit violating tax principles.

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Penalty Regime

What is the penalty and interest regime like?


There are a number of penalties that apply in the Austria for compliance failures.


In case of late VAT returns penalties may be levied up to 10 percent of the tax due. Failure to settle any outstanding VAT payments on time may result in late payment penalty of 2 percent of the net tax payable.


Under certain circumstances criminal charges may be levied.  

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Tax authorities

Tax audits


How often do tax audits take place?


There are no rules how often a tax audit must take place. According to our experience tax audits take place between 3 and 5 years.


Are there audits done electronically in your country (e-audit)? If so, what system is in use?


It is unlikely that audits are done electronically. If so, Austrian tax authorities use AOL.


Advance rulings and decisions from the tax authority


Is it possible to apply for formal or informal advance rulings from the (indirect) tax authority?


It is possible to apply for an informal ruling. Formal rulings do not cover VAT.


Are rulings and decisions issued by the tax authorities publicly available in your country?


No. 

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Miscellaneous

In your country, are there unique specific indirect tax rules (regimes) that differ from standard indirect tax rules in other jurisdictions?


No.


Are there indirect tax incentives available in your country (e.g. reduced rates, tax holidays)?


Residential property renting is subject to a reduced tax.

 

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