In the "fight" against the COVID-19-crisis, the Austrian government has decided on further support measures for particularly affected industries. One of the measures includes a temporary reduction of VAT to 5% for certain sectors.
On June 30 the Austrian national council decided to amend the law, which provides a reduction of the VAT-rate to 5% for certain supplies and services for the period from 1st of July 2020 to 31st of December 2020. Compared to the draft, the Austrian national council extended the scope of the measures.
The affected industrial sectors are the gastronomy, the lodging industry, the cultural and the publishing sector. These sectors are particularly affected by the consequences of the COVID-19-crisis.
The reduction of the VAT-rate in Austria was introduced to support businesses; the entrepreneur is not obligated to reduce the gross price. He only has to pay 5% to the tax office, but he does not have to adjust the prices. However, it is important, especially on invoices to entrepreneurs, to show only the VAT of 5%. This is due to § 11 para 12 UStG which states that the entrepreneurs owe the amount on the invoice to the tax office.
In the field of gastronomy - in the period from 1st of July 2020 to 31st of December 2020 - the reduced tax rate of 5% is applicable for serving of food and of (alcoholic and non-alcoholic) beverages in the sense of § 111 para 1 GewO. This means that the entrepreneur, who is serving the food and beverages, generally needs a business licence for the gastronomy. However, it is also possible that he has another business licence (e.g. baker), which covers the serving of the food or beverages for consumption on the spot. The reduced tax rate is also applicable for serving of food and (alcoholic and non-alcoholic) beverages, if the activity is excluded from the trade regulations (e.g. Buschenschank according to § 2 para 9 GewO). The only relevant point is that the activity has to involve the serving of food and beverages in the sense of § 111 para 1 GewO. The regulation covers also the delivery or the collection of open drinks (e.g. coffee from the baker), hot meals or served cold meals.
The reduced tax rate also applies to accommodation services and the provision of land for camping purposes. The tax rate of 5% is for accommodation in hotels etc and for the rental of private rooms or vacation apartements (if the conditions of accommodation are fulfilled).
The reduction of the VAT-rate to 5% applies for books, brochures, magazines, newspapers and other periodicals, and also for electronic publications such as ebooks etc.
Examples for the application of the reduced VAT-rat for cultural industry are tickets for theatre, music and singing performances, museums, zoos, botanical and zoological gardens, nature parks and cinemas. This reduction shall also apply to transactions relating to the activities of artists and the supply of art objects (if the copyright owner or his successor in title supplies) and it is going to be valid for the import and intra-community acquisition in these industries.
The Austrian government has announced an extension until the end of the year 2021 for the reduction of VAT to 5% for the affected sectors. However, this extension was only an announcement; it still has to be determined by law.
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