Comprehensive Guide to VAT in Austria: Rates, Registration, and Compliance

VAT in Austria - Three Types of Rates

There are three types of VAT rates in Austria:

1. Standard VAT rate,

2. Reduced VAT rates,

3. Zero VAT rate.

How Much is VAT in Austria’s Regions?

Under the VAT Austria Law, a special 19% VAT rate is applicable in two regions in Austria: Jungholz and Mittelberg. This is also approved and noted in the EU VAT Directive under Article 104.

VAT Registration Threshold

VAT rules and regulations, as well as official guidelines and comments from governing bodies such as the Ministry of Finance and Tax Authority, provide important information about the VAT threshold in Austria.

According to the rules, small businesses can benefit from VAT registration exemption if their annual turnover does not exceed EUR 42,000. Once this threshold is reached, the obligation to register for VAT Austria is triggered.

However, this rule applies only to domestic taxable persons, whereas foreign taxable persons are not subject to it. Moreover, no VAT registration threshold exists for non-resident taxable persons.

As an EU country, Austria implemented all EU-wide VAT rules into its national legislation, including those referring to the VAT registration threshold for intra-EU distance sales of goods, B2C supplies of services, and non-EU established suppliers of electronically supplied services.

The threshold for intra-EU distance sales of goods and B2C supplies of services is EUR 10,000, set at the EU level, whereas there is no such threshold for non-EU supplies of electronically supplied services.

Types of Taxable Activities in Austria

Individuals and business entities that supply goods and services for a fee in Austria are considered taxable persons from the VAT point of view. Apart from supplying goods and services, other business activities are vital when determining VAT liability, such as importing goods, intra-EU acquisition of goods, or exporting to countries that are not EU members.

Engaging in any of these activities means involvement with taxable activities subject to VAT rules and regulations.

VAT Registration Process

There are differences between the requirements for domestic and foreign businesses registering for VAT in Austria.

Austria VAT Registration for Domestic Businesses

One of the critical components of the VAT registration process is obtaining the VAT Identification number (VAT ID number). The competent Tax Authority usually automatically issues the VAT ID number when obtaining a tax number is initiated. However, suppose the taxable person does not receive a VAT ID number on that occasion. In that case, taxable persons must apply for it using a VAT Identification Number – Application for issue – U15 form.

Domestic businesses can submit applications for a VAT ID number to the nearest Tax office.

Austria VAT Registration for Foreign Businesses 

Foreign taxable persons, like businesses, must register for VAT before engaging in taxable activities in Austria. To complete this process, they must submit the application form and other necessary documents to the Tax office in Graz-Stadt. 

Appointing the tax representative is optional for EU-based businesses, although it might help them complete this procedure more efficiently. In contrast, hiring a tax representative is obligatory for non-EU companies registering for VAT in Austria.

VAT Returns in Austria

Taxable persons must electronically submit monthly or quarterly VAT returns via FinanzOnline, depending on their annual turnover. Taxable persons whose turnover for the previous calendar year is less than EUR 100,000 can submit quarterly returns. However, they can submit monthly VAT returns, like taxable persons whose annual turnover exceeds EUR 100,000.

The deadline for submitting monthly or quarterly returns is no later than the 15th of the second month following the reporting period.

In addition to this, certain groups of taxable persons must also submit yearly returns. However, the annual return generally serves only as a summary of all monthly or quarterly VAT returns.

Penalties for Failure to File Tax Return

Non-compliance with registration and Austria VAT return filing obligations can, and in most cases will, result in fines and penalties. The amount of the penalty the Tax Authority imposes on the taxable person at fault depends severely on the type of misconduct and whether it is repeated or the first omission.

An interest of up to 10% can be imposed for late submission of VAT returns. In addition, a 2% interest, or sometimes even 4%, is due on late payments.

VAT Rules for Electronically Supplied Services 

Digital services, digital products, and electronic services are all terms used as synonyms for electronically supplied services (ESS). Regardless of which one is in use, they refer to services provided automatically over the Internet or similar networks that do not depend on human intervention. In some cases, the supply of these services may rely on human intervention, but it is minimal. 

The EU VAT Directive introduced this definition of the ESS to the EU-wide VAT framework. All the EU Member States, including Austria, followed and implemented the EU guidance and taxability rules into their national laws.

Taxability Rules for ESS:

Under the EU-harmonized legislature, the general place of supply rules applies to B2B supplies of ESS, whereas for B2C supplies, the VAT rate is the one of the consumer's residence.

The EU VAT Directive also introduced the EUR 10,000 threshold for defining which VAT rate applies to supply rules for distance sales of goods and B2C ESS. When the annual turnover for said supplies is below EUR 10,000, suppliers can apply their home country's VAT rates or choose to register for the One Stop Shop system and utilize a single registration.

Different rules apply to those whose annual turnover is above the threshold. They must apply the VAT rate of the country where their consumer is located, such as the VAT rate Austria.

How much is VAT in Austria on ESS?

The Austria VAT rate for ESS is 20%.

E-Commerce Rules

Apart from introducing rules related to the supply of ESS, the EU VAT Directive made significant changes and innovations to the EU e-commerce market. These rules were also implemented in the national legislation of EU countries, thus creating a unified and harmonized market. Although these rules were implemented on the EU level, they also greatly impact non-EU taxable persons operating in the EU market.

Main changes and novelties include introducing rules for importing goods from third countries and territories whose value is EUR 150 at most, also known as distance sales of low-value goods. In addition, deemed supplier rules applicable to platform operators were introduced, further reshaping the e-commerce landscape.

The EU made notable efforts to simplify the reporting of cross-border transactions, otherwise known as cross-border or intra-EU distance sales of goods.

As part of the simplification process, the Mini One Stop Shop (MOSS), established in 2015, underwent a noteworthy transformation into a more extensive and efficient One Stop Shop (OSS) system. Therefore, an additional Import One Stop Shop (IOSS) scheme was introduced to two previously established. At this point, the OSS counts three schemes, each important for e-commerce businesses in different ways:

• Union Scheme,

• Non-Union Scheme,

• Import Scheme.

VAT EU Reporting

In Austria, taxable persons must submit recapitulative statements, also known as EC Sales Lists and Intrastat reports.

EC Sales List

The EC Sales List (ESL) is a type of tax return about the intra-EU supply of goods and services to another taxable person not located in Austria but in another EU country that must be submitted monthly or quarterly. 

Taxable persons whose annual turnover on intra-Community supplies subject to ESL is less than EUR 100,000 file quarterly, while those with their sales of goods and services to other EU VAT-registered entities must submit monthly ESLs.

The filing deadline for ESL is the end of the month following the reporting period, and it is submitted electronically through the FinanzOnline portal.

Intrastat 

Intrastat is a statistical report on the movement of goods between EU countries and EU businesses. Once the Intrastat thresholds have been exceeded, the obligation to submit an Intrastat report arises. 

In Austria, two Intrastat thresholds are defined. Suppose businesses import or export goods to another EU Member State, and the value of those transactions is above EUR 1,1 million for either arrivals or dispatches. In that case, the standard Intrastat report must be submitted within one month of exceeding the threshold.

However, if the total value of intra-EU arrivals or dispatches is more than EUR 12 million, a more detailed Intrastat report with individual calculation of the statistical value is mandatory.  

Digital Reporting

Local Businesses

Local taxable persons, such as businesses, must issue and transmit e-invoices related to the public sector, a B2G transaction. B2G e-invoices are transmitted through the government portal Unternehmensservice or Peppol eDelivery Network.

There are still no mandatory rules regarding B2B e-invoices, but businesses can agree to use this solution voluntarily.

Non-Resident Businesses

Non-resident taxable persons, including non-resident businesses, must follow the same B2G e-invoicing rules as locals do when engaged in any contractual agreement with federal agencies. However, the e-invoicing rules state that foreign companies must issue and receive B2G e-invoices under their technical possibilities.