Interested in expanding your market reach to Austria? Let these eight surprising facts on Austrian VAT help you navigate the challenges of tax compliance.
- 1 A Guide on Austrian VAT
- 1.1 1. VAT Rates Vary
- 1.2 2. There’s No Need to Set Up a Local Company
- 1.3 3. A Fiscal Representative Is Required
- 1.4 4. Mind the Lower Thresholds for E-commerce
- 1.5 5. You Only Need to Register in One EU Member State
- 1.6 6. IOSS Simplifies VAT Declaration and Collection for Distance Sales
- 1.7 7. As VAT-Registered, You Have Obligations
- 1.8 8. VAT Compliance Can Be Complicated
- 1.9 Frequently Asked Questions
- 1.10 Conclusion
A Guide on Austrian VAT
Tapping into the Austrian market is an excellent growth opportunity for your company. However, doing business in an unfamiliar landscape can be tricky, particularly regarding local tax legislation. Here are key insights about VAT in Austria.
1. VAT Rates Vary
As a member state of the European Union (EU), Austria follows the EU’s directives on VAT. It is free to set the standard or upper rate as long as it is not less than 15%. The country’s VAT currently stands at 20%, applicable to most goods and services, but it was temporarily reduced during the COVID-19 pandemic.
However, not all areas in Austria follow the standard rate. In the town of Jungholz and the Mittelberg municipality, their consumption tax is lower at 19% since they are located in the German region but remain under Austria’s jurisdiction.
Like most countries, Austria has a tiered VAT system. It has reduced rates of 13% and 10% for certain products and services but also applies a zero rate and exempts specific services from VAT.
Because of the different VAT rates, knowing the correct one to apply can be tricky. You are liable for the uncollected difference when you charge the wrong rate, not your customer.
Avoid such costs by consulting with an accountant or tax adviser specialising in Austrian taxation. Let a professional from Sterlinx Global assist you.
2. There’s No Need to Set Up a Local Company
Non-resident businesses may register for Austrian VAT without establishing a local company. This simplifies declaring and collecting taxes from transacting parties, especially overseas enterprises.
To be VAT-registered in Austria, you must submit the duly accomplished registration form to the Graz-Stadt tax office along with the following documents:
● A copy of the Articles of Association
● An extract from the business’s trade register
● VAT certificate if registered in other EU member states
● Proof of economic activity in the country
You can download the VAT registration form from the Ministry of Finance website. Once registered, you’ll receive a unique 9-character ID starting with a ‘U’ and followed by a string of 8 digits.
3. A Fiscal Representative Is Required
When registering for Austrian VAT, non-EU companies must have fiscal representation to do so. They should appoint a local agent, such as an accountant or tax advisor, to facilitate the registration on their behalf. In this case, you also have to execute a power of attorney.
Besides registering, the appointed fiscal agent will manage your VAT obligations and handle relations with tax authorities in Austria. That’s why some fiscal representatives ask for a deposit—like a bank guarantee—to ensure a smooth working relationship.
4. Mind the Lower Thresholds for E-commerce
The EU’s VAT system, including Austria’s, was outdated to keep pace with the steady growth of online retail, which was further accelerated by the COVID-19 pandemic.
To ensure that VAT due on these sales is collected and paid to the proper tax authorities, the European Commission issued revised VAT rules on cross-border e-commerce sales.
Beginning 1 July 2021, the country-specific turnover threshold for VAT registration was abolished and replaced with an EU-wide floor of €10,000. If you’re a non-EU online seller with Austrian buyers, register for VAT at the onset in anticipation of annual sales exceeding the limit.
Moreover, all goods imported into Austria and other EU countries are subject to VAT—the tax exemption was abolished to prevent abuse from sellers outside the EU. They often understate the value of goods sold to less than €22 to avoid taxation.
5. You Only Need to Register in One EU Member State
Another significant reform with the revised rules is that e-commerce businesses can register in only one EU member state but can declare and pay VAT from customers as long as they’re within the EU.
For example, if you obtain an Austrian VAT tax number, you may use it to settle collected VAT from your cross-border online sales in Belgium or Cyprus. You don’t have to be VAT-registered for each country you sell to.
The rationale behind streamlining registration is to simplify doing business in the EU and minimize fraud by reducing red tape. Also, it aims to improve VAT payments by overcoming barriers through digital technology.
6. IOSS Simplifies VAT Declaration and Collection for Distance Sales
The Import One-Stop Shop (IOSS) was another measure introduced to ease VAT collection on online sales from third territories or non-EU countries like the UK. IOSS is a web platform for imported items valued at €150 or less.
Thanks to the electronic portal, you don’t have to keep track of the different standard VAT rates in each country. While the IOSS offers convenience to entrepreneurs like you, it doesn’t eliminate the fact that you still have obligations to meet as VAT-registered.
7. As VAT-Registered, You Have Obligations
When registered for Austrian VAT, your primary responsibility is filing periodic returns on covered transactions. The frequency, however, depends on the previous year’s annual turnover.
You must file preliminary returns monthly if you recorded yearly sales of more than €100,000. On the other hand, businesses with turnover below €100,000 may submit VAT returns quarterly.
Returns must be filed electronically by the 15th of the second calendar month following the covered tax period. It is also the VAT payment due date. For example, the tax charge for June should be settled on 15 August, and the corresponding return should be filed no later than 15 August.
You are obliged to file VAT returns via Austria’s electronic portal, FinanzOnline. If you are unable to do so due to lacking technological resources, you may submit using the official form U30. When filing returns through a tax representative from Sterlinx Global, the requirements relating to them will apply.
8. VAT Compliance Can Be Complicated
Complying with Austrian VAT legislation is never a straightforward matter. There are instances when reforms are implemented, and keeping track of the changes that apply to your business can be confusing.
Non-compliance, such as late VAT return filings or incorrectly declared transactions, results in the following penalties:
● Late payment: 2% of the VAT payable
● Late filing: 10% of the VAT due
EU member states often have different deadlines for paying VAT due and filing corresponding returns. When it gets confusing as you trade with several EU countries, it’s recommended to work with a tax advisor or accountant.
Frequently Asked Questions
Can I compute the Austrian VAT due myself?
Yes, you can if you are familiar with how to derive it. However, it is advisable to leave the estimation of VAT due to a local accountant or tax specialist. Doing so minimises errors, including incorrect figures, rates, and transactions, that may result in fines.
When do I register for Austrian VAT?
Ideally, you should file your application to be VAT-registered in Austria before commencing business activities in the country. If you register late, you may be subject to financial penalties. Avoid such pitfalls by consulting with a professional from Sterlinx Global
How long does VAT registration in Austria take?
After submitting your application and pertinent documents through a fiscal representative, the processing takes several weeks or a month to receive your VAT number. You can only begin business activities once you have a unique VAT identification number for charging consumption tax.
Tapping into the Austrian market can be an excellent growth opportunity for your business. However, venturing into it without knowing crucial information about its VAT system may not work in your favour.
Don’t let it blindside you. Let these eight facts guide you while working with a qualified local accountant from Sterlinx Global.