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.
Broader scope for reduction of VAT to 5%
Following the tax measures related to investments, degressive depreciation, loss carry-backs and others, on 30 June the Austrian National Council decided to amend the law that provides for a reduction of VAT to 5% for certain supplies and services for the period from 1 July 2020 to 31 December 2020. Compared to the draft, the Austrian National Council has extended the scope of the measures.
The affected industrial sectors are gastronomy, the lodging industry, the cultural sector and the publishing sector. These sectors are particularly affected by the consequences of the COVID-19 crisis.
In the field of gastronomy – in the period from 1 July 2020 to 31 December 2020 – the reduced tax rate of 5% is applicable for the serving of food and (alcoholic and non-alcoholic) beverages under § 111 para 1 GewO. This means that entrepreneurs serving food and beverages generally need a business licence for gastronomy. However, it is also possible that they have another business licence (e.g. baker), which covers the serving of food or beverages for consumption on the spot. The reduced tax rate is also applicable for serving food and (alcoholic and non-alcoholic) beverages if the activity is excluded from the trade regulations (e.g. “Buschenschänken” according to § 2 para 9 GeWO). The only relevant point is that the activity has to involve the serving of food and beverages under § 111 para 1 GewO. The regulation also covers the delivery or collection of open drinks (e.g. coffee from the baker), hot meals or served cold meals.
The reduction of VAT to 5% 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 holiday apartements (if the conditions of accommodation are fulfilled).
The reduction of VAT to 5% applies for books, brochures, magazines, newspapers and other periodicals, and also for electronic publications such as e-books, etc.
Examples for the application of the reduced VAT rate in the cultural industry include 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 is the supplier) and it will be valid for imports and intra-community acquisitions in these industries.
The Austrian government has announced an extension until the end of 2021 for the reduction of VAT for the affected sectors. However, this extension was only an announcement; it still has to be put into law.
If you would like to know more about the reduction of VAT or other tax measures in Austria related to the COVID-19 crisis, please visit the website of WTS Austria. Their experts will be pleased to advise you in your individual situation.