Special Issue, April 2019
Consultation Draft of the Austrian Digital Tax Act 2020
On the 4 April 2019, the Austrian Ministry of Finance submitted the draft Digital Tax Act 2020 for consultation. In addition to the introduction of a new digital tax on online advertising services, the Digital Tax Act 2020 will implement the EU E-Commerce Package into the Austrian Value-Added Tax Act:
Digital services tax on online advertising services from 2020
Digitalization and the business models of “digital MNEs” present challenges for international taxation. At EU level, the proposed “Council Directive on the common system of a digital services tax on revenues resulting from the supply of certain digital services” has recently been rejected. On a global level, there are discussions on digital taxation within the G20/OECD with a view to developing digital PEs and a digital services tax. Nevertheless, some states have chosen not to wait for international solutions and have started to implement unilateral measures.
Austria plans to introduce a digital services tax in 2020:
- 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 EUR 750m and domestic revenues deriving from sales of online advertising space exceeding EUR 25m.
- 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.
- Further, 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 are found at EU and OECD levels.
E-Commerce Package from January 2021
The e-commerce package shall enter into force from 1 January 2021. The goal is to better ensure taxation in the destination state. 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 EUR 10,000 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 EUR 22 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 EUR 150 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.
Obligation to keep records and liability for online platforms from January 2020
From January 2020, an obligation to keep records will apply to businesses that enable supplies or other services using online platforms or marketplaces (so-called electronic interfaces), but which do not owe VAT themselves.
These records must be provided to the Austrian tax authorities electronically on request, in order to ensure that VAT has been correctly accounted for. The obligation will affect services in the context of the ‘sharing economy’ or distance sales within the EU. The records must contain specific pieces of information, to be stipulated in an implementing regulation (“Sorgfaltspflichten-Umsatzsteuerverordnung”). If the obligations are breached, the electronic interface will be held liable for the tax.
Furthermore, liability will also apply for suppliers in non-EU countries, whose supplies to non-taxable persons are nominally deemed to be made by the electronic interface in accordance with the legal fiction. The precondition for the liability is that the non-EU supplier cannot assume with due care that the electronic interface observes its tax obligations. In line with the Austrian Implementing Regulation, this will also apply to certain businesses that carry out import distance sales, distance sales within the EU, or provide other services to non-taxable persons.
Christine Weinzierl
Martin Jann
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Tax Partners
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Editor: Christof Wörndl, christof.woerndl@at.pwc.com
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