How much is VAT in Austria, and what do you pay it on? And which tax rate actually applies in which circumstances? Find out this and much more here.
4 min read
Coffee to-go, newspapers, monthly rent—whether we know it or not, we’re paying VAT every day. Because VAT is already included in the price of most goods, we rarely notice it. Did you know that in Austria, customers pay 20% VAT on most drinks, 13% for cinema tickets, and just 10% on groceries? The reason for this is that the country has three different tax rates: one standard VAT rate and two reduced VAT rates. Which tax rate applies when is—like Austrian tax law itself—rather complex. But don’t worry, you’ll find everything you need to know about VAT in Austria here.
What is VAT?
VA—or value-added tax—is a consumption tax, meaning it’s a tax that end consumers pay on all goods, products, and services. Ultimately, it’s the consumer who pays the actual tax on items they buy or services they use—unless they’re freelance. Companies add VAT to the price of their goods and services and then pass it on to the tax office. But at this point, the tax is referred to as sales tax instead of value-added tax. Companies can claim some of their sales tax back from the tax office through input tax deduction. So, essentially, “value added tax”, “sales tax,” and “input tax” all refer to the same type of tax, just at different points in the process.
What do I pay VAT on?
In Austria, you pay VAT on the following:
Services
Trade work
Goods
Rentals and leasing
Imports of goods from other countries
Intra-community acquisitions
There are rare cases where VAT does not apply in Austria, such as for investment advice and various cultural institutions. Medical treatments, psychotherapists, and midwives are also exempt. But apart from these few exceptions, VAT must be paid on all goods and services sold. The amount depends on the applicable rates—let’s take a look at what these are.
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In Austria, there are two reduced VAT rates and one standard rate:
Standard rate of 20%: applies to most goods and services
Reduced rate of 13%: applies to cinema tickets, swimming pool visits, or importing works of art, for example.
Reduced rate of 10%: applies to groceries, rent, and public transport tickets, for example
However, figuring out which tax rate applies and when isn’t always straightforward. For example, soy and oat milk are taxed at 20%, while cow’s milk is only taxed at 10%. You can find further details about exactly which tax rates apply and when on the Austrian Federal Economic Chamber’s information page (in German).
Who is subject to VAT?
In Austria, all companies with an annual turnover of more than €35,000 are subject to VAT. Small businesses with an annual turnover of less than €35,000 don’t have to pay (or charge) sales tax—but they can’t claim input tax either. The same applies to insurance companies, banks, doctors, psychotherapists, midwives, financial advisors and various cultural institutions.
VAT in Europe
The VAT rate is at least 20% in most European countries. EU countries have to apply a standard rate of VAT of at least 15% and a reduced rate of at least 5%, but they can also apply a rate of zero. Each country determines which rate applies to which goods and services—and the exact amount. In Hungary VAT is 27% VAT, in Greece it’s 24%, in Spain it’s 21%, and in Luxembourg it’s 17%.Many countries have at least one other reduced rate in addition to their standard VAT rate. For example, in Germany the reduced VAT rate of 7% applies to groceries, books, and cultural offerings.In Switzerland, as in Austria, there are two reduced VAT rates: 2.5% (for things like food, medications, and books) and the “special rate for accommodation” of 3.7%. The only EU country that does not have a reduced rate is Denmark, where there is a standard rate of 25%. As you can see, VAT rates in Europe vary as much as the countries themselves.
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Not sure whether you need to submit a tax return—or when to do it by? No problem: we’ve put together the key info for you on your tax return in Austria.
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