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Value-added tax (VAT), or Umsatzsteuer (USt) in Austrian, is a tax on goods and services in Austria. The standard VAT rate is 20%, with some areas applying a 19% rate. There are also reduced rates of 13% and 10% for certain goods and services. Small businesses with an annual turnover of less than €35,000 are exempt from paying VAT. Companies can deduct input VAT on certain expenses, such as business entertainment costs and mobile phone expenses, and must file VAT returns monthly or quarterly.
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What You'll Learn
The standard VAT rate in Austria is 20%
In addition to the standard rate, there are two reduced rates of 13% and 10%. The 13% reduced rate applies to tickets for sports and cultural events, domestic flights, pet food, and artists' services or products, among others. The 10% reduced 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.
Entrepreneurs and companies are considered those with an annual turnover of more than €35,000, and they are required to charge and collect VAT. Small businesses with a turnover of less than €35,000 are not obligated to charge or pay VAT, but they also cannot claim input tax.
The time limit for taxpayers to request a tax credit is five years, and the statute of limitations for the Austrian tax authorities to investigate a tax liability is also five years. However, in cases of tax evasion, the authorities can go back up to ten years.
It's important to note that VAT rates and rules can change over time, and there may be specific exemptions or special cases not mentioned here.
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There are two reduced rates: 13% and 10%
Austria has two reduced VAT rates in addition to its standard rate. The first reduced rate is 13% and applies to tickets to sports and cultural events, cinema tickets, swimming pool visits, domestic flights, pet food, artists' services or products, and more. The second reduced rate is 10% and applies to most food products, books, hotel accommodations, rentals for residential purposes, newspapers, magazines, restaurants, passenger transport, pharmaceuticals, and more.
The 10% reduced rate was also applied to digital services. From 1 January 2020, large multinational companies with a worldwide revenue of at least EUR 750 million and a yearly domestic revenue of at least EUR 25 million from providing online advertising services in Austria were subject to a 5% digital services tax. However, this was increased to 10% in July 2022.
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Some goods and services are exempt from VAT
The standard VAT rate in Austria is 20%, but some goods and services are exempt from this tax.
Exemptions from VAT in Austria include certain medical and healthcare services, as well as social services. For example, medical treatments by doctors, dentists, and other healthcare professionals are typically VAT-exempt. In addition, the You may want to see also In Austria, companies must file monthly or quarterly VAT returns. The frequency of filing depends on the annual turnover of the company. If the annual turnover from the previous calendar year exceeds €100,000, companies are required to file monthly VAT returns. On the other hand, if the annual turnover is below the €100,000 threshold, a quarterly reporting period is applicable. The VAT return must be filed electronically by the 15th day of the second month following the tax period to which it relates. Late VAT returns may result in penalties of up to 10% of the tax due. The tax point or time of supply rules in Austria determine when the VAT is due. It is payable to the tax authorities 10 days after the VAT reporting period ends. For goods, the tax point is usually the time of delivery, while for services, it is the completion of the service. Invoices play a crucial role in the VAT process in Austria. As a supplier of goods or services, companies are generally obliged to issue an invoice with VAT to their customers. However, there are "reverse charge" situations where the obligation to pay tax is transferred to the customer. These situations typically involve foreign companies and specific types of transactions, such as major domestic supplies of services by a business not established in Austria. To ensure compliance and facilitate relations with the tax authorities, companies may appoint a proxy holder or agent to handle tax formalities on their behalf. Nevertheless, the ultimate responsibility for paying VAT debts rests with the company itself. Proper record-keeping is essential, as companies must maintain detailed ledgers to enable the application of VAT and its control by the Austrian tax authorities. You may want to see also In Austria, the VAT, or Value Added Tax, is known as Umsatzsteuer (USt) in the local language. The standard VAT rate is 20% and applies to most goods and services, including digital products like ebooks, software, and music. However, there are also reduced VAT rates of 13% and 10% for specific goods and services. It is important to note that Austrian VAT law is based on the 6th EU VAT Directive, and companies with an annual turnover of more than €35,000 are subject to VAT. Small businesses with a turnover of less than €35,000 are exempt from paying and charging sales tax, but they also cannot claim input tax. To ensure compliance with VAT regulations, foreign companies selling software or other digital products should collect customer addresses and tax IDs, even if they are not yet registered for VAT. This information can be crucial for future tax purposes. Additionally, foreign companies should understand their VAT obligations by cross-checking customer locations and the taxability of their products in Austria. Austria also has specific regulations for large multinational companies with worldwide revenue of at least EUR 750 million and a yearly domestic revenue of at least EUR 25 million from providing online advertising services in Austria. These companies are subject to a 5% digital services tax, which was implemented in 2020. You may want to see also The Value Added Tax (VAT) in Austria is known as Umsatzsteuer (USt) in German. The standard VAT rate is 20%, with some areas applying a rate of 19%. There are also reduced rates of 13% and 10% for certain goods and services. The reduced VAT rate of 13% applies to cinema and film screening tickets, swimming pool visits, sports and cultural events, domestic flights, pet food, and artists' services or products, among others. The reduced rate of 10% applies to most food products, books, hotel accommodations, rentals for residential purposes, newspapers, magazines, restaurants, passenger transport, pharmaceuticals, repair of certain products, and more. As a supplier of goods or services, your company is usually required to issue an invoice with VAT to its customers. However, there are "reverse charge" situations where this obligation is transferred to the customer. Invoices should include the name and address of both the company providing and receiving the service, as well as a detailed description of the delivery or service purchased. VAT is then payable to the Austrian tax authorities 10 days after the VAT reporting period ends (monthly or quarterly).Kindergarten Testing in Austria: What Parents Should Know
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Frequently asked questions
