value added tax austria

Understanding Value Added Tax Austria: Your Complete Guide

Do you find Value Added Tax Austria confusing? Need clarification on percentages and exemptions? Fear not! This article serves as your Austria VAT guide, uncovering the complexities of Austria's Value Added Tax.

Whether you need clarification on price changes or are a business owner trying to follow the rules, we're here to help. This blog explains standard and reduced VAT rates, answering who pays and why. It goes beyond everyday purchases and business transactions to look at how VAT impacts Austria's economy and the challenges it presents.

Value Added Tax Austria: An Overview

Value Added Tax Austria is a type of consumption tax. It's something you pay when you buy things or use services. Businesses include VAT in the prices of what they sell and then send that tax to the tax office. When it's included in prices, we call it sales tax.

The Austria VAT rate is 20% for most goods and services. There are also 13% and 10% reduced rates for specific things. Businesses usually pay VAT, but they can get some back later. The money collected through VAT helps the government fund essential services like healthcare and education. It's a contribution everyone makes based on what they spend.

Even though the European Union (EU) sets VAT rules, Austria can choose its own standard VAT rate. For financial reasons, Austria might sometimes use lower VAT rates for certain things. These rates apply to goods and services sold by Austrian businesses registered for VAT. If these businesses don't charge the right rates, they must take responsibility for unpaid VAT.

For instance, you're buying a new laptop in Austria, and the price listed is €1,000. If the standard VAT rate is 20%, the VAT added to the price would be €200 (20% of €1,000). So, the total amount you pay for the laptop would be €1,200 (original price + VAT). This additional €200 goes to the government as Value Added Tax.

If you're looking to calculate VAT for your purchases or services in Austria, consider using our VAT Calculator to simplify the process.

vat for austria

Goods/Services 20% Standard Rate 13% Reduced Rate 1 10% Reduced Rate 2
Electronics and appliances
Furniture and household goods
Clothing and footwear
Restaurants and catering services
Transportation (flights, trains, taxis)
Professional services (legal, accounting, consulting)
Food and non-alcoholic beverages (excluding restaurant meals)
Agricultural products and live animals
Newspapers and magazines
Pharmaceuticals and medical equipment
Hairdressing and barbering services
Books and ebooks
Public transport
Accommodation (hotels, campsites)
Water supply

Who is Subject to VAT in Austria?

Any business in Austria that generates more than €35,000 in revenue annually must pay VAT. Small companies with yearly sales under €35,000 are exempt from paying sales tax but are also not eligible to claim input tax. This also holds for banks, insurance companies, physicians, therapists, midwives, financial advisors, and other cultural organizations.

VAT Exemption in Austria

  • Revenue generated by qualifying small-scale businesses.
  • Income derived from fundraising events.
  • Mailing services are provided by postal operators.
  • Childcare services, such as those offered by daytime nannies.
  • Government-funded theaters, orchestras, and museums render services, including entrance fees.
  • Blood and organ donations.
  • Sales of goods initially purchased with VAT by a supplier unable to deduct it, later used for VAT-exempt services or goods.
  • Sales of immovable property, as Section 4.4 of the VAT Act outlines.
  • Transactions related to investment in gold.
  • Financial transactions meet specific criteria.
  • Services related to education. (Note: This entry appears twice and may need clarification or adjustment.)

Benefits of VAT for Austria

While VAT can sometimes feel like a burden for consumers and businesses, it does offer several advantages for the Austrian economy and government:

  • Significant revenue source

    VAT tax in Austria contributes to government revenue, accounting for roughly one-third of total tax income. This allows the government to fund essential public services like healthcare, education, and infrastructure.

  • Transparency and neutrality

    VAT is a transparent tax, as the amount paid is displayed on invoices and receipts. This can facilitate accurate financial planning and budgeting for businesses. Additionally, VAT is considered neutral in principle, meaning it doesn't distort competition between businesses by taxing inputs and outputs at the same rate.

  • Cash flow advantages

    Businesses can claim input VAT paid on purchases against output VAT collected on sales, resulting in a cash flow advantage. This can improve their working capital and liquidity.

  • Access to EU single market

    VAT tax in Austria aligns with the EU VAT system, simplifying cross-border trade and facilitating access to the European single market for Austrian businesses.

  • Efficiency and fairness

    VAT is a relatively efficient tax because it is collected at each production and distribution stage, reducing evasion opportunities. Additionally, it's a consumption tax, meaning everyone contributes based on their spending, promoting fairness in the tax system.

  • Economic growth

    VAT tax in Austria is a way to encourage specific economic sectors or activities by influencing consumer spending. For example, the reduced VAT rate on food can stimulate household spending and benefit agricultural producers.

Challenges and Compliance Issues

While VAT offers benefits, it also presents various challenges and compliance issues for businesses and individuals in Austria. Here are some key aspects to consider:

Challenges for Businesses

  • Administrative burden: Complying with Value Added Tax Austria regulations can be complex and time-consuming, requiring meticulous record-keeping, filing accurate returns, and adhering to reporting deadlines.
  • Mistakes and penalties: Errors in calculating, charging, or paying VAT can lead to significant penalties and interest charges. Therefore, compliance with the Austria VAT rate regulations is important for businesses to avoid penalties and ensure accurate financial transactions.
  • Cross-border trade: Dealing with Value Added Tax Austria for intra-EU and international transactions adds further complexity, with specific rules for reverse charge mechanisms, distance selling thresholds, and acquisition VAT.
  • Cash flow impact: Businesses must pay VAT to the government before receiving input tax credits, potentially impacting their cash flow, especially for those with high turnover and low-profit margins.

Compliance Issues

  • VAT evasion: VAT for Austria is crucial for businesses to avoid legal issues and ensure financial accuracy. Some businesses may attempt to evade VAT by underreporting sales, claiming false input tax credits, or engaging in fraud. This can create unfair competition for compliant businesses.
  • Missing registrations: Businesses exceeding the relevant turnover threshold must register for VAT. However, some may need more awareness to register, leading to potential penalties and back taxes.
  • Incorrect record-keeping: Inadequate or inaccurate record-keeping can make it challenging to comply with VAT regulations and lead to disputes with tax authorities during audits.

Also Read about; Postponed VAT Accounting (PVA): What Do You Need To Know About Its Working?


This blog simplifies Value Added Tax Austria by helping you understand the complexities of VAT and its economic impacts. Understanding the Austria VAT rate is essential for consumers to calculate the total cost of their purchases. Make the most of your newfound knowledge to advance with assurance and further the nation's economic development.


What is the threshold for VAT registration in Austria?

The VAT registration threshold in Austria is €35,000.

Is Austria included in the EU VAT system?

Yes, Austria is part of the EU VAT system.

Rían Doyle

I'm a VAT professional with years of experience helping businesses with compliance and reporting. My goal is to simplify VAT calculation and provide valuable insights through my engaging writing style and clear explanations of complex concepts.