Austria's Vat Tax: What You Need To Know

Austria's Value Added Tax (VAT) is known as Umsatzsteuer (USt) in German. The country has three different tax rates: one standard rate and two reduced rates. The standard VAT rate is 20% and applies to most goods and services. However, in the regions of Jungholz and Mittelberg, a reduced rate of 19% is charged. The first reduced VAT rate is 13% and applies to tickets for sports and cultural events, domestic flights, pet food, and artists' services, among others. The second reduced rate is 10% and applies to most food products, books, hotel accommodations, rentals for residential purposes, and public transport tickets, to name a few.

What is VAT?

Value-Added Tax (VAT) is a consumption tax levied on the value added to goods and services at each stage of the supply chain. It is applied to nearly all goods and services bought and sold within and into the European Union, as well as in approximately 170 countries worldwide. In the local language of Austria, VAT is known as Umsatzsteuer (USt).

VAT is an indirect tax, meaning that the end consumer ultimately bears the burden of the tax, but it is not paid directly to the tax authority by the consumer. Instead, businesses are responsible for collecting VAT from their customers and remitting it to the government. It is typically charged as a percentage of the sales price and collected at each stage of the production and distribution chain.

The VAT system was designed to be more direct and less complicated than sales taxes or gross turnover taxes. It is easier to track because it is levied at each stage of the supply chain, and all merchants are required to maintain meticulous records of purchases, sales, and supplies.

While specific goods and services may be exempt from VAT in certain jurisdictions, it generally applies to all goods and services. In the EU, goods sold for export or services sold to customers outside the EU are usually not subject to VAT, but VAT is charged on most imports.

Austria has a standard VAT rate of 20% and two reduced VAT rates of 13% and 10%. The standard rate applies to most goods and services, while the reduced rates apply to specific goods and services as defined by Austrian law. For example, the 13% rate applies to cinema tickets, swimming pool visits, and importing works of art, while the 10% rate applies to groceries, rent, and public transport tickets.

Businesses VAT-registered in Austria must comply with the set VAT rates when supplying goods and services and are held liable for any unbilled VAT.

VAT rates in Austria

Austria has three different VAT or Value-Added Tax rates: one standard rate and two reduced rates. The standard VAT rate is 20% (19% in the regions of Jungholz and Mittelberg). This rate generally applies to all goods and services for which no exemption, 0% rate, or one of the reduced VAT rates is foreseen.

The first reduced VAT rate is 13%. This rate applies to cinema, swimming pool visits, tickets to sporting and cultural events, domestic flights, pet food, and artists' services or products, among others.

The second reduced VAT rate is 10%. This rate applies to most food products, books, hotel accommodations, rentals for residential purposes, newspapers, magazines, restaurants, passenger transport, pharmaceuticals, and the repair of certain products, among others.

Supplies and services at 0% are standard supplies, such as exports or intra-Community supplies. Additionally, some supplies are VAT exempt, such as health services and financial services.

VAT compliance

In Austria, the Value Added Tax (VAT) is known as Umsatzsteuer (USt) in the local language. Austrian VAT law is based on the 6th EU VAT Directive, and companies and individuals carrying out an active business on a permanent basis are qualified as entrepreneurs for VAT purposes. As entrepreneurs, they are required to charge VAT at a standard rate of 20% on the supply of goods or services provided to their customers.

There are also reduced VAT rates of 13% and 10% for certain goods and services. For example, the 13% reduced rate applies to tickets to sports and cultural events, domestic flights, pet food, and artists' services or products, while the 10% reduced rate applies to most food products, books, hotel accommodations, rentals for residential purposes, and pharmaceuticals, among others.

Entrepreneurs are entitled to deduct Austrian input VAT on purchases, but this does not include goods or services directly linked to VAT-exempt sales, such as interest income or insurance premiums. To be eligible for input VAT deduction, entrepreneurs must obtain an invoice from their supplier that fulfils certain formal requirements.

Austrian VAT registration imposes a significant burden on companies to prepare invoices and maintain their books according to exact rules. This includes issuing invoices with specific disclosure details, preparing e-invoices, and maintaining accounts and records for at least seven years. Companies must also correctly invoice customers for goods or services according to Austrian time of supply VAT rules and process credit notes and other corrections.

The tax point (time of supply) rules in Austria determine when the VAT is due, which is payable to the tax authorities 10 days after the VAT reporting period ends (monthly or quarterly). For most goods, it is the time of delivery or passage of title, while for services, it is the completion of the service.

VAT Registration and Returns

Companies must apply for VAT registration with the Austrian tax authorities before starting their business activities, and financial penalties may apply for late registration. The registration process typically takes one month to complete, provided all necessary documents are submitted. These documents include VAT registration forms, articles of association, an extract from the trade register, a certificate of VAT liability, and proof of activity in the country.

Companies with an annual turnover of more than €35,000 are subject to VAT, while small businesses with an annual turnover of less than €35,000 are exempt from charging and paying VAT but cannot claim input tax deductions.

VAT returns must be filed electronically by the 15th day of the second month following the tax period, and late returns may result in penalties of up to 10% of the tax due. The annual recapitulative VAT return is due by April 30th of the next calendar year or June 30th if filed electronically.

VAT registration

In Austria, the Value-Added Tax (VAT) is known as 'Umsatzsteuer' (USt). Austrian VAT registration is handled by the Austrian tax authorities, specifically the Federal Ministry of Finance and the tax offices (Finanzamt).

If you are a business owner selling goods or services in Austria, you may need to register for VAT and comply with Austrian tax regulations. Businesses that are VAT-registered in Austria must apply the relevant VAT rates when supplying goods and services. If they fail to charge the correct rates, they are held liable for any unbilled VAT.

The standard VAT rate in Austria is 20% (19% in Jungholz and Mittelberg). There are also reduced rates of 10% and 13% for certain goods and services, such as food, books, accommodation, etc.

Who Needs to Register for VAT in Austria?

Austrian businesses are obligated to register for VAT if they provide goods or services, regardless of frequency or their role as the main or secondary activity. Registration is also mandatory if the business needs to account for Austrian VAT on intra-community acquisitions of goods or intra-community supplies of services.

For foreign businesses trading in Austria that are VAT-registered in their home state, the VAT registration threshold is nil. For EU VAT-registered companies selling goods over the internet to consumers in Austria, the VAT registration threshold (distance selling) is €35,000 per annum.

Previously, distance sellers had to register for VAT once they reached the country-specific threshold of €35,000. However, since July 2021, this threshold was abolished and replaced with an EU-wide threshold of €10,000. This means that distance sellers only need to register for VAT in their country of origin unless they exceed the new threshold, in which case they must register in every EU country where they sell goods or services.

Small businesses in Austria with an annual turnover below €35,000 are exempt from VAT registration. When computing the turnover, some exempt activities, such as auxiliary transactions or activities performed outside Austria, are not considered.

Businesses that are not obligated to register for Austrian VAT can choose to do so voluntarily if they need a VAT identification number to transact with other businesses in different EU member states.

How to Register for VAT in Austria

To register for VAT in Austria, you need to fill out an application form and submit it to the competent tax office. The application form can be downloaded from the website of the Federal Ministry of Finance.

The following documents are typically required for VAT registration:

• Personal or company information: Full name/company name, address, contact information, and other relevant identification details.
• Nature of business activities: Description of the goods or services provided.
• VAT number in your country of origin: Non-Austrian companies usually need to provide proof of their VAT number from their country of origin.
• Additional documents: For natural persons, a copy of your ID card is typically needed. For companies, copies of articles of association, commercial register, and other legal documents may be required.

Timeframe for VAT Registration in Austria

It typically takes around 2 to 3 months to complete the VAT registration process in Austria. Once your application is approved, you will receive a confirmation letter with your Austrian VAT number, and you can start charging and collecting VAT on your sales in Austria.

VAT refunds

Austria's Value Added Tax (VAT) is known as Umsatzsteuer (USt) in German. The country has three different tax rates: one standard rate and two reduced rates. The standard rate is 20% (19% in the regions of Jungholz and Mittelberg). The first reduced rate is 13%, which applies to cinema and sporting event tickets, swimming pool visits, and importing works of art. The second reduced rate is 10%, which applies to groceries, rent, and public transport tickets.

Non-EU residents can request a refund for the VAT paid on goods purchased in Austria. The requirements for a VAT refund are as follows:

• The invoiced amount (excluding VAT) must exceed €75.
• The purchaser's passport or other cross-border travel document must indicate a domicile outside the EU.
• The purchased item(s) must be exported from the EU within the purchaser's personal luggage within three months of purchase.
• The item(s) must be presented to customs officials, who will stamp the purchaser's documents as proof of export.

It is important to note that VAT refunds are only available for purchases made in stores that offer tax-free shopping. Additionally, the tax-free forms must be filled out and verified by customs at the airport before departure from Austria. The purchaser will then need to visit the airport offices of the tax refund company to receive their refund, which can be credited to their credit card or provided in cash, depending on the airport.

Frequently asked questions