Leslie Massey
Value-added tax (VAT) is a consumption tax, meaning it is a tax that end consumers pay on goods, products, and services. In Austria, the VAT is known as Umsatzsteuer (USt) and companies must apply for VAT registration with the Austrian tax authorities before starting their business activities. Austria has a standard VAT rate of 20% and reduced rates of 13% and 10% for certain goods and services.
| Characteristics | Values |
|---|---|
| What is VAT? | Value-added tax |
| Who pays VAT? | End consumers pay VAT on all goods, products, and services. |
| Who collects VAT? | Companies add VAT to the price of their goods and services and then pass it on to the tax office. |
| Who is exempt from paying VAT? | Freelancers are exempt from paying VAT. Small businesses with an annual turnover of less than €35,000 don’t have to pay (or charge) VAT—but they can’t claim input VAT either. |
| What is the standard VAT rate in Austria? | 20% (19% in the regions of Jungholz and Mittelberg) |
| What are the reduced VAT rates in Austria? | 13% and 10% |
| When is VAT due? | 10 days after the VAT reporting period (monthly or quarterly) |
| What is the statute of limitations in Austria? | 5 years |
| What is required for VAT registration in Austria? | Companies must apply for VAT registration with the Austrian tax authorities before starting their activities. |
| What is the deadline for filing an annual recapitulative VAT return? | April 30th of the next calendar year (or by June 30th for electronic filing) |
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What You'll Learn
The standard VAT rate in Austria is 20%
In Austria, the standard VAT rate is 20%. This applies to most goods and services, except for those that are exempt or fall under reduced VAT rates. The standard VAT rate is the same across the country, except in the regions of Jungholz and Mittelberg, where it is 19%.
The Value-Added Tax (VAT) in Austria is known as 'Umsatzsteuer' (USt) in German. It is a consumption tax, which means that it is levied on the end consumers of goods, products, and services. Ultimately, it is the consumer who pays the actual tax on the items they buy or the services they use. Companies add VAT to the price of their goods and services and then pass it on to the tax office, where it is referred to as sales tax.
Companies can claim some of their sales tax back from the tax office through input tax deduction. This is allowed as long as the VAT is incurred for business purposes and all formalities are met. For example, input VAT for the purchase, lease, repair, and fuel for vans, trucks, and certain cars used for business purposes and without CO2 emissions is 100% deductible. Similarly, input VAT for hotel accommodations, entertainment costs for business partners, training, conferences, books, mobile phone expenses, business gifts, and taxis is also 100% deductible under certain conditions.
In addition to the standard VAT rate, Austria has two reduced VAT rates. A reduced rate of 13% applies to cinema tickets, swimming pool visits, tickets to sports and cultural events, domestic flights, pet food, and artists' services or products, among others. A reduced rate of 10% applies to most food products, books, hotel accommodations, rentals for residential purposes, newspapers, magazines, restaurants, passenger transport, pharmaceuticals, and repair of certain products, among others.
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There are two reduced rates: 13% and 10%
In Austria, there are two reduced VAT rates: 13% and 10%. The 13% reduced rate applies to cinema tickets, swimming pool visits, tickets to sports and cultural events, domestic flights, pet food, artists' services or products, and imports of works of art, among other things. The 10% reduced rate applies to most food products, books, hotel accommodations, rentals for residential purposes, newspapers, magazines, restaurants, passenger transport, pharmaceuticals, and repair of certain products.
The standard VAT rate in Austria is 20% and applies to most goods and services. However, there are some goods and services that are taxed at a reduced rate. These reduced rates are determined by the Austrian government, which has the freedom to set them. Businesses registered for VAT in Austria must apply these rates to the goods and services they provide.
It is important to note that the VAT rates in Austria can be complex and may vary depending on the specific product or service. For example, while most food products are taxed at 10%, cow's milk is taxed at a lower rate of 10%, while soy and oat milk are taxed at the higher rate of 20%.
Companies with a VAT number in Austria must comply with specific regulations and deadlines for filing VAT returns and paying VAT. They are also required to maintain detailed records and ledgers to facilitate VAT control by the Austrian tax authorities.
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Companies can reclaim input VAT
In Austria, companies can reclaim input VAT, or value-added tax, on a variety of business expenses. Input VAT is essentially the sales tax that companies add to the price of their goods and services. This can be deducted as long as it was incurred for business purposes and all formalities are met. For example, input VAT on the purchase, lease, repair, and fuel for vans, trucks, and certain cars used for business purposes without CO2 emissions is 100% deductible. Similarly, input VAT on hotel accommodations, entertainment costs for business partners, training, conferences, books, mobile phone expenses, business gifts, and taxis is also fully deductible.
To reclaim input VAT, companies must meet certain requirements. In Austria, all companies with an annual turnover of more than €35,000 are subject to VAT and must charge it on their goods and services. Small businesses with a turnover of less than €35,000 are exempt from charging VAT but are also unable to claim input tax. For companies established outside the EU, it is important to note that they must be VAT registered in Austria to reclaim input VAT on fuel purchases. This is not a requirement for EU-established companies, who can claim back input VAT via the 8th directive if they have not carried out any taxable activity in Austria.
Additionally, entrepreneurs in Austria are entitled to deduct input VAT as long as it is not linked to goods or services purchased for VAT-exempt sales, such as interest income or insurance premiums. To be eligible for this deduction, entrepreneurs must obtain an invoice from their supplier that meets specific formal requirements. They must also file monthly or quarterly VAT returns by the 15th day of the second month following the relevant period. The balance of VAT due and the input VAT deducted is then paid to or refunded by the tax office.
It is worth noting that Austria does not apply the Rule of Reciprocity, meaning they can grant VAT refunds to non-EU businesses even if the non-EU country does not offer similar refund arrangements. Travellers not domiciled in the EU can also be refunded the VAT by the seller for goods bought in Austria if certain requirements are met, such as a minimum purchase amount and proof of export.
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Businesses must register for VAT
In Austria, businesses with an annual turnover of more than €35,000 are subject to VAT. Small businesses with an annual turnover of less than €35,000 are exempt from paying and charging sales tax, but they also cannot claim input tax. Non-resident businesses do not have a threshold and must register for VAT regardless of their turnover.
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. If an exempt business decides to apply for a VAT ID, it must explain the reason for the registration, and the tax authorities will only grant a VAT ID if the business can demonstrate a legitimate need for it.
Businesses that sell taxable goods to non-business customers in Austria through remote means are subject to special registration and tax rules. If the business is in another EU country and their sales to Austrian customers exceed a certain threshold, they must register for Austrian VAT. As of July 1, 2021, the EU adopted a unified threshold for distance selling across member states, set at €10,000. Therefore, if a company's annual turnover from cross-border trade with an EU country exceeds €10,000, they must register for VAT in Austria. Registration is also necessary if the company stores products in Austria or participates in programs like Amazon's Fulfilled-by-Amazon (FBA) which includes Austria.
To obtain an Austrian VAT number, businesses must complete and submit form U15 to the Austrian tax authorities, including all the requested information. The form must be completed in German and submitted to the relevant tax authorities. For Austrian residents, this is usually the tax office in the city or area where the business is located. Non-resident taxpayers must register with the tax office in Graz-Stadt. Austrian taxpayers who are eligible for a VAT identification number (VAT ID) will automatically receive it when applying for a general tax number using forms such as “Verf15,” “Verf26,” etc. Non-resident businesses selling digital products to Austrian consumers need to appoint a fiscal representative, who will share responsibility with the company for any Austrian VAT.
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Exemptions and reduced rates apply to certain goods and services
In Austria, certain goods and services are either exempt from VAT or subject to reduced rates. Small businesses with an annual turnover of less than €35,000 are VAT-exempt and do not need to charge their customers VAT or submit annual VAT returns. However, they also cannot claim input tax deductions. Small businesses can voluntarily apply for VAT taxation, which entitles them to deduct input tax, but they are then bound to it for five years.
Real estate transactions with a tax base of €1,100 or below are also exempt from VAT in Austria. Additionally, there is no VAT on export transactions or cross-border passenger transport by air or sea. Intra-community acquisitions, such as investment advice and cultural institutions, are other examples of transactions that are VAT-exempt in Austria.
Austria has two reduced VAT rates: 13% and 10%. The 13% reduced rate applies to cinema and sports event tickets, swimming pool visits, domestic flights, pet food, and artists' services and products, among other things. The 10% reduced rate applies to food products, books, hotel accommodations, rentals, newspapers, magazines, restaurants, passenger transport, pharmaceuticals, and repair services, to name a few.
It is important to note that the reduced VAT rates in Austria may vary depending on the specific product or service. For example, while most food products are taxed at 10%, cow's milk is taxed at a lower rate of 10%, whereas soy and oat milk are taxed at the standard rate of 20%.
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Frequently asked questions
VAT stands for Value-Added Tax in Austria. It is a consumption tax, meaning it is a tax that end consumers pay on all goods, products, and services.
In Austria, there is one standard rate and two reduced rates. The standard rate is 20% (19% in Jungholz and Mittelberg). The first reduced rate is 13% and applies to cinema tickets, swimming pool visits, tickets to sports and cultural events, domestic flights, etc. The second reduced rate is 10% and applies to groceries, rent, books, hotel accommodations, etc.
"Value-added tax", "sales tax", and "input tax" all refer to the same type of tax but at different points in the process. Companies add VAT to the price of their goods and services and then pass it on to the tax office, where it is referred to as sales tax. Companies can then claim some of their sales tax back from the tax office through input tax deduction.
