Austria has a value-added tax (VAT) system affecting shoppers and entrepreneurs. Whether you are an Overseas Filipino Worker (OFW) shopping for essentials or planning to start a business, understanding VAT rules is crucial. This knowledge can help you make informed purchasing decisions, take advantage of VAT refunds, and comply with tax regulations.
If you regularly send money to Philippines from Austria, knowing how VAT works in Austria can help you manage expenses better. Let’s explore what OFWs should know about VAT when shopping or running a business.
VAT for Consumers – What OFWs Should Know When Shopping
Austria applies VAT to most goods and services, but not all at the same rate:
- The standard VAT rate is 20%, and it applies to most products and services, including electronics, clothing, and household goods.
- Items like cultural events, domestic flights, and hotel accommodations are subject to a reduced VAT rate of 13%.
- A further reduced VAT rate of 10% covers essentials such as food, pharmaceuticals, books, newspapers, and public transportation.
How to Claim VAT Refunds as a Non-EU Resident
As a non-EU resident, you may be eligible for a VAT refund on purchases made in Austria. Here’s how you can claim it:
- Eligibility: If you are an OFW on vacation or a short stay in Austria, you can apply for a VAT refund on goods purchased and taken out of the EU.
- Process: To claim a refund:
- Shop at tax-free shopping stores and ask for a VAT refund form at checkout.
- Keep your receipts and refund form safe.
- Before leaving Austria, present your purchased items, receipts, and passport at a VAT refund counter (e.g., at the airport).
- Get your refund immediately processed in cash or credited back to your card.
VAT-Free and Discounted Purchases
Not all goods and services in Austria are subject to VAT. Here are some VAT-exempt or discounted purchases:
- VAT-exempt essentials: Rent, medical services, education, and insurance are typically VAT-free.
- Duty-free shopping: Buying at duty-free airport stores allows you to avoid VAT on select products.
- Special schemes: Some retailers offer VAT-free shopping for non-EU residents, reducing costs on high-value purchases.
Smart Shopping Tips to Minimize VAT Costs
Understanding how VAT applies can help you save money. Here’s how:
- Look for tax-free shopping retailers that allow non-EU residents to claim VAT refunds.
- Check if prices include VAT before purchasing to avoid surprises at checkout.
- To minimize expenses, buy essentials with lower VAT rates, such as food and books.
VAT for Entrepreneurs – What OFWs Should Know When Running a Business
If you plan to set up your business in Austria, you must know the following VAT details:
Who Needs to Register for VAT?
If you plan to start a business in Austria, VAT registration depends on your revenue:
- Businesses earning over €35,000 annually must register for VAT with the Austrian Tax Authority.
- If your revenue is below this threshold, you may qualify for a VAT exemption, allowing you to operate without charging VAT on your goods or services.
- Freelancers and small businesses have special VAT schemes to ease compliance.
How to Charge and Collect VAT
Once registered for VAT, businesses must:
- Add VAT to the selling price of their products or services.
- Issue VAT-compliant invoices that clearly state the VAT amount.
- Collect VAT from customers and set it aside for tax filings.
Filing VAT Returns and Compliance
VAT-registered businesses in Austria must:
- File VAT returns monthly or quarterly, depending on their revenue.
- Submit accurate VAT reports to avoid penalties or audits.
- Keep detailed records of all VAT-related transactions.
Late filings can lead to fines, so staying updated with tax deadlines is best.
Special VAT Rules for Small Businesses
Austria offers VAT relief programs for small business owners:
- VAT Exemption: If your revenue exceeds €35,000, you may not need to charge VAT.
- Reduced VAT Schemes: Some sectors, like agriculture and cultural businesses, have special VAT rules.
- Input VAT Deduction: If you buy goods for business use, you can reclaim the VAT paid on those purchases.
Understanding Austria’s VAT system is essential for OFWs, whether shopping or running a business. Knowing VAT rates, refund policies, and compliance rules can help you save money and avoid unnecessary expenses. If you plan to start a business, consulting a tax professional can ensure you meet Austria’s VAT regulations and operate smoothly.
Managing expenses wisely allows you to continue supporting your loved ones back home. If you need to send money to Philippines online from Austria, always choose a trusted provider like ACE to ensure a secure and fast transaction.
FAQs
Can OFWs claim VAT refunds on all purchases in Austria?
No, VAT refunds apply only to eligible purchases taken out of the EU, and certain items like food and services are excluded.
Do I need to register for VAT to start a small business in Austria?
Only if your business earns over €35,000 annually; otherwise, you may qualify for a VAT exemption.
Are rent and medical expenses subject to VAT in Austria?
No, rent and medical services are generally VAT-exempt.
How often do businesses need to file VAT returns in Austria?
Businesses must file VAT returns either monthly or quarterly, depending on their revenue.
What is the best way to minimize VAT costs while shopping?
Shop at tax-free stores, check if VAT is included in the price, and take advantage of duty-free purchases when traveling.
