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Austria Announces Five Percent Digital Tax

Monday, April 15, 2019

The Austrian Government announced on April 3, 2019, a package of tax measures aimed at the digital economy, including a five percent tax on revenue derived from the sale of digital advertising services and the removal of the low-value VAT exemption threshold.

According to the Ministry of Finance's announcement, the digital tax will apply to companies with global sales of at least EUR750m (USD842m) and with digital advertising sales in Austria of EUR25m or more. EUR15m of the revenue collected from the digital tax has been earmarked for a "digitalization fund" intended to support Austrian media companies through the digital transformation process.

In other measures intended to tighten that tax rules surrounding the digital economy, from 2020, digital platforms will assume full liability for tax disclosure obligations. In practice, this will mean that booking platforms will be required to report all sales to the tax authority.

The digital tax package would also ensure that all goods purchased from third country foreign suppliers via online retail platforms will be subject to VAT. Under existing rules, packages imported into Austria from third countries with a value EUR22 or less are exempt from VAT.