Austria: VAT Registration Threshold Increased

August 4, 2024

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On July 19, 2024, the Austrian Amendment Act 2024 was published in the Official Gazette. This act introduces significant changes, including amendments to the Income Tax Act 1988, the Corporation Tax Act 1988, the Minimum Taxation Act, the Sales Tax Act 1994, and the Federal Tax Code.

Some of the more significant changes relate to defining requirements for all businesses that operate in other EU Member States and to procedures and criteria for the special regime for small businesses in Member States.

Impact on Small Businesses

The amendments that took effect on July 20, 2024, increased the value-added tax (VAT) registration threshold from EUR 35,000 to EUR 42,000 for the turnover in the previous calendar year, not exceeded in the current year. This limit does not include turnover from ancillary transactions, including the sale of businesses and tax-free turnover.

For this rule to apply, there are additional conditions if the business operates in another Member State:

The EU-wide annual turnover must not exceed the threshold of EUR 100,000 in the previous calendar year and is not exceeded in the current year, and
the businesses applied for the exemption in another Member State.

If a small business operating in another Member State exceeds the threshold for the EU-wide annual turnover, the tax exemption is no longer applicable from that point onwards. However, if the small business threshold is not exceeded by more than 10%, the tax exemption can still be claimed until the end of the calendar year.

Small businesses that want to use a special scheme for EU small businesses and who operate their business in Austria may be identified for the procedure after submitting a prior notification via the portal set up for this purpose at the Federal Ministry of Finance (FMoF). They can do this only if the businesses' annual EU-wide turnover did not exceed EUR 100,000 in the previous calendar year and has yet to exceed EUR 100,000 in the current year. In addition, at least one Member State confirms the application for graduated tax relief.

If these conditions are met, small businesses will receive a small business identification number within 35 working days of receiving the advance notification unless a more extended period is necessary to prevent tax evasion or tax avoidance.

Small businesses must report the turnover generated in the individual Member States for each calendar quarter via the FMoF portal. The report must be submitted within one month of the end of the calendar quarter. If the threshold is exceeded, small businesses must report the excess within 15 working days and the number of deliveries and other services provided since the beginning of the current calendar quarter up to the point when the threshold was exceeded.

Conclusion

These amendments to Austrian law relate to implementing the new EU-wide SME scheme, which will take effect on January 1, 2025. More and more EU Member States are changing national legislation to prepare for the new SME rule.

Source: Federal Law Gazette I No. 113/2024

What changes have been made to Austria's VAT registration threshold?

On July 19, 2024, Austria's Amendment Act 2024 was published in the Official Gazette, increasing the VAT registration threshold from EUR 35,000 to EUR 42,000. This change took effect on July 20, 2024.

How does this new threshold apply to small businesses operating in multiple EU Member States?

For small businesses operating across EU Member States, the EU-wide annual turnover must not exceed EUR 100,000 in both the previous and current calendar years to qualify for the VAT exemption. Additionally, these businesses must apply for the exemption in another Member State.

What happens if a small business exceeds the EU-wide turnover threshold?

If a small business surpasses the EUR 100,000 EU-wide turnover threshold, the VAT exemption ceases to apply from that point forward. However, if the threshold is exceeded by no more than 10%, the exemption can still be claimed until the end of that calendar year.

How can small businesses register for the special EU small business scheme in Austria?

Small businesses wishing to utilize the EU small business scheme must submit prior notification through the Federal Ministry of Finance's designated portal. Eligibility requires that the business's annual EU-wide turnover did not exceed EUR 100,000 in the previous year and has not exceeded this amount in the current year. At least one Member State must confirm the application for graduated tax relief.

What are the reporting requirements for small businesses under this scheme?

Eligible small businesses must report turnover generated in each Member State quarterly via the Federal Ministry of Finance portal, with submissions due within one month after each quarter's end. If the turnover threshold is exceeded, businesses must report the excess within 15 working days, including details of deliveries and services provided since the quarter's start up to the point the threshold was surpassed.

How do these amendments align with the EU-wide SME scheme?

These legislative changes align Austria's VAT regulations with the forthcoming EU-wide SME scheme, set to take effect on January 1, 2025. This harmonization facilitates a consistent tax framework across EU Member States, simplifying compliance for small businesses operating internationally.

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