VAT: Exercise important VAT-related options at the beginning of the year in time

LBG Austria - Summary: If an entrepreneur wants to switch from actual taxation to imputed taxation or wants to voluntarily file monthly preliminary VAT returns or wants to return to small business exemption regulation it is necessary to pay attention to the corresponding deadlines for application.

Switch from actual taxation to imputed taxation
As a rule, tax liability takes effect in the month in which deliveries or services are provided (imputed taxation) or, in the case of taxation according to monies received (actual taxation), per the end of the calendar month in which they were earned. In Austria, entrepreneurs who work freelance (such as lawyers) or entrepreneurs not obligated to keep books of account, may apply for imputed taxation instead of actual taxation. The application therefore must be filed no later than the deadline for filing the first preliminary VAT return, as a rule therefore with the January preliminary VAT return by March 15 at the latest.

Voluntary monthly preliminary VAT return
Entrepreneurs with sales exceeding € 100.000 in the preceding calendar year are obligated to file their preliminary VAT returns monthly. If sales are between € 30.000 and € 100.000 preliminary VAT returns generally need to be filed quarterly. In that case, however, entrepreneurs may voluntarily opt for monthly preliminary VAT returns. In order to opt for this choice it is necessary to submit the preliminary VAT return for the first calendar month of a taxable period on time, as a rule therefore by March 15.

Return to small business exemption Regulation
Small business owners are entrepreneurs who operate their business in Austria (are resident or domiciled in Austria up until 31 December 2016) and who do not exceed a turnover limit of € 30.000 annually. They do not have to pay any sales tax on their income to the fiscal authorities; on the other hand they may not deduct input tax from expenses. If small business owners want to switch from being exempt from sales tax to sales tax liability they can waive it (option declaration). This waiver is binding for at least five years. In order to return to the small business exemption regulation the withdrawal must be declared no later than the end of the first calendar month. Otherwise sales remain subject to VAT. We recommend prior to making one of the choices described above to compare the options in terms of profitability and liquidity.

Contact & Advice: Our experts at LBG will be pleased to advise you in your individual situation. Please contact our consultants either directly at LBG at our 30 locations in Austria (www.lbg.at) or email us welcome@lbg.at – we will connect you with the right expert at LBG who is very familiar with your concerns.