Austria VAT Rate 2020: Reduced Tax Rates, VAT Exemption, Refund

In Austria, like in all other EU member states, VAT is paid by consumers. Business customers also have to pay the legal VAT, but are refunded. The VAT is shown on the invoice and the entrepreneur must claim it from the customer. All self-employed Austrians are considered entrepreneurs, regardless of whether they are freelancers or tradesmen. In this article you find all you need to know about VAT, issuing invoices and VAT rates in Austria.

Which sales are subject to Austrian VAT?

Most sales from the most diverse areas of life are subject to VAT in Europe. The following are subject to Austrian VAT:

• Services
• Handicraft services
• Deliveries
• Renting and leasing
• Import of goods from third countries
• Intra-community acquisition

This means that you have to pay VAT on goods deliveries and services, on rentals and leases, on goods imported from third countries, as well as on intra-community acquisitions.

How high is the Austrian VAT rate (including reduced rates)?

The Austrian VAT rate of 20% must be paid on the delivery of goods and the provision of services. 20% is the Standard VAT rate in Austria and it applies to most goods and services.

In addition to the standard rate of 20%, there are two reduced tax rates which apply for certain product categories and certain services, a reduced VAT rate of 13% and 10%.

Reduced Austria VAT Rate 1: 13%

The first reduced tax rate of 13% (only since 2016) is applicable in Austria for:

• Deliveries of live animals and plants
• Hotel accommodation
• Firewood
• Artist sales and art imports.

VAT liability ensures that companies collect VAT from customers and pass it on to the relevant tax office.

Reduced Austria VAT Rate 2: 10%

In addition to the standard VAT rate of 20% and the reduced rate of 13%, there is a further reduced VAT Rate in Austria. This rate is 10% and it applies in the following areas:

• Accommodation and costs incurred, such as heating costs or renovation work
• Renting or leasing, but the heating costs are to be taxed regularly.
• Food
• Passenger transport: tickets and cab receipts (no rental cars)

VAT Exemption in Austria

As in actually all EU countries, companies subject to VAT can also benefit from input tax deduction in Austria. This means that the VAT already paid on services or supplies by other companies is deducted from their own VAT liability. Under certain circumstances, the tax office can provide a refund if, for example, the VAT already paid is higher than the own VAT debt.

Exempt from VAT are:

1. Insurances
2. Banks
3. Doctors
4. Under certain conditions: cultural institutions and associations
5. Entrepreneurs with an annual turnover of less than 35.000€ -> small businesses

Delivery Threshold, Small Business Regulation, Acquisition Threshold in Austria

• The delivery threshold for intra-community dispatches of goods not subject to excise duty is 35.000€.

• Small business regulation in Austria: All entrepreneurs who have their registered office (business or residence) in Austria and turn over less than 35,000€ (until 31.12.2019: 30,000€) annually are considered small businesses. They do not charge VAT from their customers, but must point out that they do not charge VAT because as small entrepreneurs they are exempt from tax liability. This has to be stated in the invoice. Small entrepreneurs do not have to pay VAT to the tax office. They are therefore not entitled to deduct input tax and must pay the VAT on their activities independently. If a small entrepreneur wishes to incur the VAT liability, this is possible. This means that a small entrepreneur is also entitled to deduct input tax.

• The acquisition threshold for intra-community acquisitions by flat-rate farmers, small entrepreneurs and tax-exempt entrepreneurs is 11,000€.

Refund and reclaim of the Austrian VAT

To get the VAT refunded, the entrepreneur must submit an online application to the relevant tax office.

Companies that have not yet registered with the Federal Central Tax Office have approximately 15 days to complete the procedure of whether or not a company is entitled to a refund of VAT.

VAT incurred on company cars or rental cars cannot be refunded. In the case of official catering, the reason and the participants must be stated, otherwise a refund is not possible here either.

Intra-community supplies & Reverse Charge

An intra-Community supply is exempt from tax if the recipient of the supply submits the VAT to the tax office in his country, i.e. in the country in which the recipient and his company are registered.

For this purpose, a reverse charge invoice must be issued by the service provider. A reverse charge invoice is an invoice that reverses the tax liability. This means that the recipient of the service bears the tax liability and not the service provider. The reverse charge invoice must contain all data of both parties: address, VAT number and the indication that it is a reverse charge invoice and that no VAT is to be shown.

This type of invoice saves the service provider from having to work with foreign tax offices and at the same time prevents double taxation and minimizes tax fraud.

What Austrian entrepreneurs should also know

For transactions within the EU, both business partners must provide their VAT ID. This is checked by the tax authorities to minimize tax fraud, among other things.

The Austrian company must issue the invoice by the 15th of the month on which the delivery arrives. In order to benefit from the tax exemption, the Austrian company has to present all documents and proofs to the tax office.

What applies to intra-community acquisitions?

An intra-community acquisition is given if an Austrian entrepreneur imports goods or services from another EU member state. The Austrian entrepreneur must pay VAT in Austria, the supplier does not have to report VAT. For this purpose both VAT numbers must be known to both parties.

In Austria, the service recipient must independently add the VAT to the purchase price and also mark it as a VAT liability in his VAT return. At the same time, the Austrian entrepreneur deducts this added VAT from his input tax liability and in the end, no VAT is paid, but he only indicates the VAT to the tax office.

Cross-Border Services: B2B & B2C

Cross-border services are taxed differently. A distinction is made between private customers and business customers, so between B2B and B2C transactions.

1. B2C: In the case that the beneficiary is a private customer, the place of performance is the registered office of the service provider. This means that the service provider in Austria must pay VAT in Austria and no reverse charge can be applied.
2. B2B: If the service recipient is a business customer, the place of performance is at the customer’s premises. This means that the service provider from Austria does not have to pay VAT and acts tax-free -> Reverse Charge

Austrian VAT rate changes in 2020

• Since 01.01.2020 the small business limit has increased from 30.000€ to 35.000€.
• At 10%, the Austrian VAT rate for electronic publications is the same as for conventional printed materials.
• The transfer of an agricultural holding is considered a non-taxable turnover.

Obligation to submit a VAT return

Every Austrian company that reports VAT is obliged to submit a VAT return at the end of a calendar year and in most cases to also submit regular (monthly/quarterly) advance VAT returns and other reports.

Foreign companies trading in Austria must already submit VAT returns during the calendar year.

Summary

There are 3 Austrian VAT rates. There is the standard rate of 20% and the reduced VAT rates of 10% and 13%.

• Austria Standard VAT Rate of 20%: Most deliveries of goods and services
• Austria Reduced VAT Rate of 13%: Delivery of live animals, firewood, plants, hotel accommodation
• Austria Reduced VAT Rate of 10%: Food, accommodation, passenger transport

In principle, every company that provides services must pay VAT. Insurance companies, banks, doctors and cultural institutions are exempt from the VAT liability. Even small businesses with an annual turnover of less than 35,000€ do not have to pay VAT, but are therefore not allowed to claim input tax.

The reverse charge procedure is about the reversal of the tax liability between the supplier and the recipient. The service recipient, who is located in Germany, for example, has to pay VAT. The service provider does not have to pay VAT. Double taxation and bureaucracy with foreign tax offices are thus prevented.