The taxation of goods and services (value added tax)

As a self-employed person, you are an entrepreneur and therefore generally liable for VAT if you fulfil the following requirements:

• You are an entrepreneur;
• You work in Austria;
• You supply goods or services as part of your entrepreneurial activity;
• You are paid in return for these goods or services.

Example: You work as a freelance artist in Austria and sell works of art. You also hold workshops for aspiring artists. You are liable for VAT.

Self-employed artists and cultural workers are generally subject to VAT. However, there are cases in which self-employed people are exempt from offsetting and paying VAT.

If you are liable for VAT, you will receive a VAT identification number (UID number) from the tax office. You include this number on your invoices so that your business partners recognise that you are an entrepreneur and subject to VAT.

This VAT number is particularly important for the supply of cross-border goods or services to other companies in the EU and EEA. By providing the VAT number, your business partners recognise that you are concluding a transaction between entrepreneurs and where the respective business partner operates their business (B2B). 

If your annual turnover does not exceed a certain limit, you are considered to be a small business owner (see the subchapter on small business owners). Small business owners can also be assigned a VAT number upon application to the tax office. This can be particularly important in international business transactions.

To do: The VAT number is often issued to you automatically when you start your business activity. If this is not the case, you must apply for a UID number from the tax office local to your residence or company. To do this, fill out form U15 and send it to the tax office.

The regular VAT rate in Austria is 20% of the price of the goods or services. There are certain goods and services that are taxed at a lower rate:

• 10% for food, housing rent, and books, for example;
• 13% for artistic activities. It is important to note that artists are not always automatically allowed to charge 13% VAT, but that different tax rates may apply depending on the nature of their work;
• If non-profit organisations run a business and this is compatible with their non-profit activities, they are allowed to charge just 10% VAT (see the subchapter on taxes and non-profit organisations). 

Example: You are a choreographer and write a fee invoice for a piece that you have choreographed for a client. As this is an artistic service, you can charge your client 13% VAT.
You also give dance lessons once a week at a dance studio. As teaching is not classed as an artistic service, you must charge 20% VAT for this.
Your clients transfer your fees to you, including VAT. You are obliged to pay the tax to the tax office.

In the end, VAT is not charged to entrepreneurs, but to the people who ultimately consume the goods and services: the end consumers.

If entrepreneurs purchase goods or services for business purposes, they must pay the invoiced VAT provisionally. However, they will receive a refund of the provisionally paid VAT—referred to as input tax—from the tax office upon request (input tax deduction).

The VAT that you have provisionally paid as an entrepreneur is offset against the VAT that other entrepreneurs have provisionally paid to you. Depending on whether the VAT owed or the deductible input tax is higher, you will have to pay additional tax or receive a credit note from the tax office. 

To do: In order to offset this, you must submit regular advance VAT returns (UVAs) to the tax office as well as an annual VAT return once a year.

Input tax can only be deducted for purchases that are related to your business activity. If you buy goods or services for private purposes, you must pay VAT—just like any end consumer.

Example: You are a freelance artist and sell your works of art in Austria. You are liable for VAT. If you buy a workbench for your studio, you are entitled to deduct the input tax included in the price and provisionally paid by you. However, if you buy a dining room table for your private home, input tax deduction is not permitted.

Example: You are a musician and play a gig for which you charge a fee of €500. You also give lessons as a private music teacher and have earned €800 net this month: 

Performance fee	€500
13% VAT	€65
Total	€565
Tuition fees	€800
20% VAT	€160
Total	€960
You had the following expenses in January:
Studio rent	€400
+ 20% VAT	€80
Total	€480
Fee for a commercial artist who designed a folder	€300
+ 20% VAT	€60
Total	€360
Printing costs for a folder	€80
+ 20% VAT	€16
Total	€96
Results of the calculation for the tax office:
Value added tax owed: (€65 + €160)	€225
Creditable input tax: (€80 + €60 + €16)	€156
VAT payable	€69

If your total net entrepreneurial income in one year is no more than €35,000 net and you operate your business in Austria, you are a small business owner. Section 6 para. 1 no. 27 of the Value Added Tax Act applies to small business owners. This means the following:

• As a small business owner, you do not have to charge VAT to your customers;
• In return, you are not allowed to deduct input tax from your business expenses (so-called non-deductible input tax);
• You must indicate on your fee invoices that you are a small business owner and therefore do not charge VAT. 

To do: Note the following wording on your fee invoices, for example: "In accordance with Section 6 para. 1 no. 27 UstG, this amount does not include VAT". 

To establish whether you are a small business owner, you need to calculate your net turnover. To do this, you subtract the VAT charged from all of your business income. If it turns out that this income amounts to a maximum of €35,000, you are classified as a small business owner. 

Attention: Entrepreneurial income includes all income from self-employment. This also includes rental income from renting out an apartment.

Example: You had entrepreneurial income of €38,000 in 2023. This income came from two different activities:
- Income as a freelance artist: €32,000.
- Income from renting out an apartment: €6,000.
You must deduct the VAT from this gross income. The VAT rate of 13% applies to your work as an artist; the VAT rate of 10% applies to renting. You calculate as follows:
- Net turnover as a freelance artist: €32,000 gross / 1.13 = €28,319 
- Net turnover from rent: €4,400 gross / 1.1 = €4,000
Your net turnover therefore totals: €32,318, making you a small business owner.

Info: If you work exclusively as an artist, the "real" gross limit of your income is €35,000 net sales + 13% VAT, i.e. €39,550.

There is a tolerance range for the limit of €35,000: you may exceed this limit by a maximum of 15% once within five years and therefore generate net sales of €34,500 without losing your status as a small business owner.

If you have high operating expenses, it may be advantageous for you not to make use of the small business regulations. This is because as a small business owner, you cannot claim input tax deduction and thus save on operating expenses.

To do: If you do not wish to benefit from the small business regulation, you must waive the tax exemption for small businesses vis-à-vis the tax office (form U12). As such, you switch to VAT liability.

You must inform the tax office in the current year how much VAT you have charged and how much input tax you will deduct. You do this as part of an advance VAT return (UVA). Based on this advance VAT return, the tax office calculates whether you are in credit or debit (whether you owe a payment or are due a refund).

Depending on your level of VAT in the previous year, you do a VAT return on a monthly or quarterly basis:

• If you had a turnover of up to €100,000 in the previous year, you must do the UVA quarterly.
  • If it has been established that you owe more VAT, you must transfer this on certain key dates.
  • In the case of quarterly billing, the cut-off dates are as follows: 15^th May for the period from January to March, 15^th August for the period from April to June, 15^th November for the period from July to September, and 15^th February for the period from October to December.
  • Alternatively, you can also pay your UVA monthly, but you need to arrange this with the tax office.
• If you had a turnover of over €100,000 in the previous year, you must submit your VAT return every month. If you are not in credit, you must make the payment by 15^th of the month after next (e.g. VAT for January must be reported and paid by 15^th March at the latest).

Info: Small business owners do not have to submit VAT returns, even if they have waived the tax exemption for small businesses.

In addition to advance VAT returns, you must submit an annual VAT return every year. The U1 form issued by the tax authorities must be used to do so. You will then be assessed for VAT or receive a VAT assessment notice for the previous year.

To do: You must submit your VAT return at FinanzOnline by 30^th June of the following year at the latest. If you submit your return in paper form, the latest submission date is 30^th April.

As a VAT-exempt small business owner, you do not have to submit a VAT return. You only have to submit a VAT return if you have to pay VAT for special reasons (e.g. for taxable acquisitions within the European Economic Area).

Attention: If, as an entrepreneur, you generate sales in other EU countries, you may also have to submit a recapitulative statement in addition to your advance VAT returns. The corresponding reporting periods are the same as for advance VAT returns: up to a turnover of €100,000, you must submit a recapitulative statement of this turnover to the Austrian tax office on a quarterly basis (at the end of the month following the end of the quarter: 30.04, 31.07, 31.10, 31.01). If your turnover exceeds €100,000, you must submit the recapitulative statement on a monthly basis.

Entrepreneurs are obliged to issue invoices for their goods and services. The invoices must fulfil certain requirements so that purchasing entrepreneurs can deduct input tax on the basis of them.

A proper invoice contains the following information:

• Issue date of the invoice;
• Name and address of the supplier(s);
• Name and address of the service recipient;
• Type and scope of the service or quantity and designation of the delivered items;
• Day of the service delivery or period over which the service is provided;
• The net fee invoiced;
• VAT rate and the calculated tax amount;
• Consecutive invoice number;
• The VAT number of the service provider;
• For invoices over €10,000, also the VAT number of the recipient of the service.

Attention: If you benefit from the tax exemption for small businesses and incorrectly charge VAT, you will also owe this and must pay it to the tax office. This is referred to as "tax liability by virtue of invoicing".

Invoices totalling up to €400 (including VAT) are called low-value invoices. The name and address of the entrepreneur providing the service, the recipient of the service, and the specific amount of tax can be omitted from these invoices. It is sufficient to state the tax rate in addition to the gross amount. 

Info: Electronic invoices that are sent by e-mail or provided as a web download also fulfil the requirements for input tax deduction. There is no need for them to contain an electronic signature, provided that the authenticity of their origin, the integrity of their content, and their legibility are guaranteed by other means.