Reduction of the VAT rate to 5% in selected industries

To support the hospitality, cultural and publishing industries in Austria, which have been particularly affected by the COVID-19 crisis, a reduced VAT rate of 5% will be introduced for specific items for a limited period. The reduced rate will apply from 1 July 2020 until 31 December 2020.

Hospitality (food and drink)

Deviating from Section 10 Austrian VAT Act (UStG), the VAT on all meals and drinks will be reduced to 5% if a trade registration for the restaurant trade is required for the sale (Section 111 para 1 Austrian Trade Regulation Act (GewO)). The legislative proposal indicates that activities for which no demonstration of specific competencies is required in accordance with Section 111 para 2 GewO 1994 (e.g. mountain refuge huts) will also be eligible for the reduced VAT rate. Furthermore, the parliamentary correspondence of 30 June 2020 states that the 5% VAT rate for the restaurant industry will also apply to butchers and bakeries.

The VAT rate of 5% within the restaurant trade will apply to all drinks, i.e. not only those drinks listed in Section 10 para 2 subpara 1 item (b) UStG in conjunction with Section 28 para 51 subpara 1 UStG. For these drinks, the additional tax under Section 22 para 2 UStG for agricultural food and drink businesses (Buschenschank, Almausschank) will be suspended to avoid distortion of competition.

Hotels and campsites

The reduced VAT rate of 5% applies to:

  • The provision of furnished accommodation and bedrooms (including provision of a standard breakfast)
  • The rental (lease for use) of land for camping purposes

Publishing industry

A reduced 5% VAT rate will also apply to supplies, imports and intra-EU acquisitions of the goods listed in Section 10 para 2 subpara 1 item (a) UStG, in conjunction with Annex 1 subpara 33 UStG. This covers the following main categories of goods:

  • Printed books, brochures, leaflets and similar printed matter, whether or not in single sheets, as well as dictionaries and encyclopaedias
  • Newspapers, journals and periodicals, whether or not illustrated or containing advertising material (heading 4902 of the Combined Nomenclature)
  • Children’s picture, drawing or colouring books
  • Music, printed or in manuscript, whether or not bound or illustrated
  • Maps and similar charts of all kinds, including wall maps, topographical plans and globes, printed

The reduced VAT rate of 5% also applies to electronic publications within the meaning of Section 10 para 2 subpara 9 Austrian VAT Act (UStG), such as e-books, e-papers and similar.

Art and culture

Specific artistic goods

A reduced 5% VAT rate will also apply to supplies, imports and intra-EU acquisitions of the goods listed in Section 10 para 3 subpara 1 items (b) and (c) UStG, in conjunction with Annex 1 subpara 33 UStG. The main items covered are as follows:

Imports of artistic goods, specifically:

  • Paintings (e.g. oil paintings, watercolours and pastels) and drawings executed entirely by hand, other than drawings under heading 4906 00 00 of the Combined Nomenclature, and other than hand-painted or hand-decorated manufactured articles; collages and similar decorative plaques (heading 9701 of the Combined Nomenclature);
  • Original engravings, prints or lithographs (heading 9702 00 00 of the Combined Nomenclature);
  • Original sculptures or statuary, in any material (heading 9703 00 00 of the Combined Nomenclature);
  • Hand-woven tapestries following original designs of artists, with a maximum of eight copies of each work (cf. heading 5805 00 00 of the Combined Nomenclature);
  • Textile items for use on walls following original designs of artists, with a maximum of eight copies of each work (cf. heading 6304 of the Combined Nomenclature);

The reduced tax rate of 5% also applies to supplies and intra-EU acquisitions of the artistic goods listed above if they are either:

  • Made by the creator of the goods or his/her legal successor
  • Or made by a taxable person who is not a reseller, if this person has either imported the goods independently, or has acquired them from the creator of the goods or his/her legal successors, or was entitled to a full refund of input VAT for the acquisition.

Photographs taken by artists

Imports of photographs taken by artists, prints of which have been made by or under the supervision of the artist, and which have been signed and numbered by the artist, are subject to the reduced VAT rate of 5% if the total number of prints (includes all formats and materials) does not exceed 30.

Supplies of such photographs are also subject to the 5% VAT rate if they are:

  • Made by the creator of the goods or his/her legal successor
  • Or made by a taxable person who is not a reseller, if this person has either imported the goods independently, or has acquired them from the creator of the goods or his/her legal successors, or was entitled to a full refund of input VAT for the acquisition.

Cultural and artistic activities

The 5% VAT rate further applies to the following transactions:

  • Sales from activities as an artist
  • Sales from operation of a theatre and, accordingly, theatre performances arranged by other taxable persons
  • Musical and singing performances by individuals or by groups, particularly orchestras, musical ensembles and choirs. Accordingly, this also applies to events featuring musical and singing performances arranged by other taxable persons
  • Sales from the operation of a museum, a botanical garden or zoo, as well as nature parks
  • Film screenings
  • Circus performances as well as fees for activities as a fairground worker/operator

The application of the reduced VAT rate of 5% will apply irrespective of any existing tax advantage in accordance with Sections 33 to 47 Austrian Federal Fiscal Code (BAO) and, in relation to the tax rate, will take precedence over Section 10 para 2 subpara 4 UStG. Accordingly, this will enable e.g. non-profit associations to benefit from the reduced VAT rate of 5% for corresponding activities (Section 28 para 52 subpara 1 UStG) if these are not tax-free.

Planned implementation

Announcement in the Austrian Federal Law Gazette (BGBl) is planned for calendar weeks 29 or 30. This is intended to limit the number of issues arising from retrospective application. According to Austrian Ministry of Finance (BMF) information, the corresponding VAT rate can be entered into cash register systems and applied from 1 July 2020, in order to avoid the need for subsequent changes to invoices and requests for refunds of VAT amounts. According to the Ministry of Finance (BMF), it is acceptable if the reduced VAT rate of 5% is indicated by a corresponding written note made on the receipt, or a correction by hand, or a correction using a stamp on the receipt. According to the Ministry of Finance, this approach will suffice to fulfil all legal requirements for the issue of receipts in accordance with Austrian cash register regulations from the perspective of the tax authorities.

Regarding the implications for cash registers, please see our newsletter of 23 June 2020.

Tax rate of 0% for respiratory masks – extension until 31 December 2020

The tax rate of 0% for supplies and intra-EU acquisitions of respiratory masks will be extended until 31 December 2020.

0% sparkling wine tax from 1 July 2020

The current levy of EUR 100 per hectolitre of sparkling wine has been reduced to zero in accordance with the 19th Austrian COVID-19 Act. The zero rating for sparkling wine is applicable if the tax liability for the wine is created after 30 June 2020.

For those amounts of sparkling wine, for which the tax liability was created before this change in the law, and for which the sparkling wine tax has been paid, it will be possible to obtain a refund or rebate of the tax within the meaning of Section 5 of the Austrian Sparkling Wine Tax Act. A tax refund or rebate is generally envisaged for sparkling wine, which was demonstrably taxed and stored in a tax warehouse within the tax jurisdiction. Detailed rules on stock-taking and inventory lists, as well as record keeping and checks are included in the BMF Decree of 18 June 2020, 2020-0.357.374. Update on the reduction of the VAT rate to 5% – changes since our article on 26 June 2020

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