Date: May 2019
Austria publishes draft digital advertising tax bill
The Austrian Federal Ministry of Finance recently published a draft bill that would introduce a new digital advertising tax (Digitalsteuergesetz 2020).
As the EU member states were unable to reach agreement for an EU-wide solution in March 2019, the Austrian Government seeks to implement unilateral measures.
Austria’s draft bill introduces a 5% tax on Austrian digital advertising revenue for all groups with worldwide revenues of at least EUR750 million and Austrian digital advertising revenue of at least EUR25m, effective from 1 January 2020. This measure aims to levy taxes on international groups that currently pay minimal taxes in Austria, according to the Austrian Government.
Austria´s plans in detail:
- Sales of traditional advertising space, such as in print media, broadcasting, posters and billboards, are subject to Austrian advertising tax. The new digital services tax would apply to revenues generated in Austria through sales of online advertising space, such as banner advertising and search engine advertising.
- Tax revenues would be collected if the recipients are located in Austria. Selling online advertising space would thus be subject to the digital services tax if the online advertising targets Austrian internet users and is displayed on an Austrian user’s device. The location at which an Austrian user’s device is used would be determined using the Internet Protocol (IP) address of the device or, if more accurate, any other method of geolocation, such as geotargeting.
- The digital services tax would only apply to large digital corporations with total annual worldwide revenues exceeding EUR750m and domestic revenues deriving from sales of online advertising space exceeding EUR25m.
- The tax rate would be 5%.
- The digital services tax would be calculated and payable by the entity in receipt of the taxable revenues. After fiscal year end, the company would have to file a digital services tax return.
- Record-keeping requirements would apply with regard to the online advertising services rendered, the customers and the calculation base.
- The new digital services tax would be evaluated regularly and would be adapted in future as soon as global solutions might be found at EU and OECD levels.
E-commerce package from January 2021
A second measure in the same bill, which shall enter into force as from 1 January 2021, strengthens Austria’s value added tax (VAT) regime for imports from non-EU countries. At the same time, the simplifications for businesses (one-stop-shop), which avoids a VAT registration in every destination Member State, shall be extended.
- In general, distance sales within the EU as well as services provided electronically to non-businesses in other Member States should be taxed where the transportation of the goods ends or where the recipient of the electronic services is resident. The distance selling threshold will be abolished and, as a simplification, supplies of goods or services up to a total revenue of EUR10,000 per year will be taxed at the place of origin of the goods or where the supplier has established his business. To simplify the procedure, the one-stop-shop (OSS) will be extended to include all intra-EU distance sales and all services provided by EU businesses to non-taxable persons resident in another Member State.
- The tax exemption for the import of small value items with a total value of EUR22 or below will be abolished. A comprehensive new distance selling regime shall be introduced. In accordance with this, import of goods with a value up to EUR150 will be exempt if a VAT identification number is provided in the import declaration and the supply of goods is taxed under a special regime (Import One Stop Shop – IOSS). The IOSS will apply to all services provided by a non-EU business to non-taxable persons within the EU.
- Where a taxable person facilitates, through the use of an electronic interface (such as a marketplace, platform, portal or other similar means), distance sales of goods imported from third territories to a non-taxable person, the taxable person who facilitates the supply shall be deemed to have received and supplied the goods himself. The interface will therefore owe the VAT for the distance sales themselves, whereas the deemed supply of the supplier to the interface shall be tax exempt. Tax point for the supply will arise at the end of the month in which payment was received.
Increased reporting obligation from 2020
A third measure aims to increase the reporting obligations of online platforms that connect the buyers and sellers of goods and services. Operators would be obliged to report all bookings and revenue in Austria to the tax authorities from 2020 onwards. In addition, operators could be held liable for taxes in order to enforce reporting obligations.
Author: Peter Kopp, managing partner of CONSULTATIO Austria, firstname.lastname@example.org
Austria’s draft bill introduces a 5% tax on Austrian digital advertising revenue for all groups with worldwide revenues of at least EUR750 million and Austrian digital advertising revenue of at least EUR25m, effective from 1 January 2020. This measure aims to levy taxes on international groups that currently pay minimal taxes in Austria, according to the Austrian Government.Date: May 2019