On 15 June 2022, the government bill regarding the Tax Amendment Act 2022 (“Abgabenänderungsgesetz 2022”, AbgÄG 2022) was published. Below you will find an overview of the most important changes regarding VAT.
Last year, the ECJ caused a lot of uproar in the domestic real estate industry with its ruling Titanium, stating that a rented property in a Member State does not constitute a fixed establishment if the lessor of the property does not have its own staff for the provision of services in connection with the rental. This case law was incorporated into the VAT guidelines in course of the Maintenance Decree 2021 (effective as of 1 January 2022). As a result, foreign landlords who rent properties located in Austria to entrepreneurs or legal entities under public law would have had to claim their input VAT via the input tax refund procedure.
Fortunately, the government bill now provides that in case of leases of domestic real estate by entrepreneurs who neither operate their business in Austria nor have a permanent establishment involved in the provision of services ("foreign lessors"), there is no transfer of the tax liability to domestic entrepreneurs or legal entities under public law (reverse charge). Thus, the foreign landlords remain liable for VAT and have to declare it in the assessment procedure, which means that Austrian input VAT also has to be claimed in the assessment procedure (ie in the VAT returns). This largely restores the administrative practice prior to the decision in the Titanium case. It should however be noted that foreign landlords without corresponding personnel in Austria are to be considered as foreign entrepreneurs (without a permanent establishment in Austria) on the basis of the Titanium case, so that in the future no Austrian VAT shall be invoiced for services to these landlords within the meaning of Section 3a para 6 Austrian VAT Act (eg consulting services).
Since the government bill does not explicitly provide an entry into force of this provision, it shall enter into force upon publication in the Federal Law Gazette.
According to the current legal situation, only cross-border passenger transportation by air or sea (except of Lake Constance) is exempt from VAT. On the other hand, 10 % VAT is charged on international passenger transport by rail for the Austrian part of the route.
For ecological reasons and as a step towards increasing the competitiveness of international rail connections, cross-border passenger transportation by rail is to be exempted from VAT for the Austrian part of the route as of 1 January 2023. The input VAT deduction related to these sales will be retained.
Due to the ongoing pandemic-related situation, the applicability of the tax rate of 0 % for supplies and intra-community acquisitions of protective masks is to be extended until 30 June 2023.
To avoid contradictions in relation to other EU member states, the regulation on triangular transactions should in future also be applicable to chain transactions with more than three persons, which has not been lawful until now.
We refer to our article dated 20 June 2022 on the highlights in tax procedure law link for the planned independent interest rate regulation regarding VAT.
Verena Gabler ist Partner im Bereich Steuerberatung und leitet die Tax Management Consulting Abteilung bei Deloitte Österreich. Die Umsatzsteuer-Spezialistin hat sich auf die Prozessberatung spezialisiert und unterstützt ihre Klienten bei der Entwicklung und Implementierung von Steuerkontrollsystemen. Dabei begleitet sie ihre Klienten bei der Analyse und Reduktion von steuerlich relevanten Risiken, der Optimierung von Prozessen und der Erhöhung des Automatisierungsgrades der Steuerfunktion durch den Einsatz von steuerrelevanter Software.