Austria: Small entrepreneurs benefit from VAT exemptions

The VAT exemption for small entrepreneurs in Austrian VAT law recently underwent two changes.

From 2017, small entrepreneurs will be defined as taxable persons, who run their business in Austria and whose annual turnover is not higher than €30,000. Formerly, a permanent address or registered office in Austria was sufficient for this tax exemption, but now the regulations have been adjusted to union requirements.

Starting in 2017, the mere holding of a domicile in Austria is not sufficient, if the entrepreneur pursues the business abroad. Additionally, for the assessment whether the threshold is exceeded or not, not only auxiliary transactions (including sale of a business) but also exhaustively listed tax-exempt transactions, e.g. revenues for lecturers at institutions of adult education or revenues from curative treatment in the field of human medicine, are excluded.

These amendments may lead to a simplification for taxable persons, who have little taxable revenues beside their main VAT-exempt activity. Therefore many taxable persons will fall within the scope of the regulation even though the revenues remain unchanged. If a taxable person who has rendered taxable services up to now, overlooks the possibility of VAT-exemption in 2017 and continues to issue invoices with VAT, tax-liability arises from invoicing, but there is no right for VAT deduction for small entrepreneurs. However, taxable persons are allowed to waive the right of tax-exemption until the tax assessment is legally binding and therefore avoid a possible VAT adjustment.