Small business exemption regulation (sales tax) from 1 January

Small business owners are entrepreneurs whose turnover is exempt from sales tax up to a certain limit. This means:

• They do not have to pay any sales tax on their revenues to the fiscal authorities (→ no sales tax on outgoing invoices)
• On the other hand, they may not deduct input tax from expenses
  (→ no input tax deduction on incoming invoices)

Who is a small business owner?

Small business owners are entrepreneurs who operate their companies either in Austria or in another EU member state, and whose turnover, either in the current year or in the previous calendar year, does not exceed the limit of EUR 55,000.

In addition to the new turnover threshold, the tolerance limit will also be newly regulated from 1 January 2025: if the turnover limit is not exceeded by more than 10%, invoices may be issued without sales tax until the end of the year. If the turnover is exceeded by more than 10%, all further invoices will be subject to sales tax from that point onwards.

Example:

On 1 November 2025, an entrepreneur generated turnover amounting to EUR 52,000. On 5 November, the entrepreneur generated a further EUR 8,000 of turnover. As the overall turnover (EUR 60,000) only exceeds the small business limit by 9.1%, the invoice for this turnover can still be issued without sales tax. However, if the overall turnover were to exceed EUR 60,500, all invoices would be subject to sales tax from the point at which this amount was exceeded.

Entrepreneurs from third countries cannot claim small business exemption from sales tax.

The overall turnover for one year is what counts when calculating the limit. If you conduct various entrepreneurial activities (e.g. a commercial operation, letting, farming/forestry), the individual turnover must be added up. The annual turnover of a farming/forestry operation as a lump sum is estimated at 1.5 times the basic value.

The following are not included in the turnover limit:

• turnover from ancillary business (sale of fixed assets) and business disposals 
• imports and intra-community acquisitions (ICA) 
• turnover on which the small business owner is liable to pay tax (reverse charge)
• numerous transactions exempt from tax, such as
  • turnover of official stamps valid for use for postal services within Austria at their printed value
  • supply of investment gold in specific forms
  • compensation to members of a supervisory board, administrative board or other persons entrusted with supervising the management of the business, which are awarded for this function
  • certain betting revenues
  • under certain circumstances, the turnover of the businesses of blind persons
  • turnover of private schools and private teachers
  • event turnover of popular education associations
  • turnover of building associations and insurance agents
  • turnover of non-profit sports clubs
  • turnover of foster mothers and childminders or foster parents
  • turnover from various homes (institutions)
  • turnover of persons exercising various health professions (e.g. also curative massage therapists)
  • turnover of dental technicians
  • turnover from patient transportation
  • turnover of public bodies or non-profit institutions from the operation of theatres, musical and singing performances, museums, botanical or zoological gardens or nature parks
  • turnover from the supply of goods for which the entrepreneur could not deduct input tax at the time of acquisition

Note: 
The new limit of EUR 55,000 is the gross limit. Notional sales tax does not have to be subtracted as was the case until 31 December 2024.

Small business exemption regulation in other member states

Entrepreneurs have the option of applying the small business exemption regulation in another EU member state. The prerequisite for this is registration via a portal specially set up for the purpose, and compliance with an EU-wide turnover limit of EUR 100,000. To register in another EU member state, confirmation must be submitted in the form of a small business identification number, and the statutory regulations in the country in question must be observed.

Which turnover is tax-free in Austria?

Sales tax exemption includes deliveries and services performed in Austria, including ancillary transactions and business disposals. There is no exemption for intra-community acquisitions or imports and services from foreign businesses for which the tax liability is transferred to the small business owner (reverse charge).

Note:
Sales for which the place of delivery or service is located abroad, are not covered by the Austrian small business exemption regulation. Therefore, it is necessary to check whether, in the country in which the delivery or service is performed, a corresponding small business exemption regulation exists and whether it applies to the actual turnover.

Do small business owners have the right to deduct input tax?

The small business exemption regulation is a tax exemption “without credit”. This means that small business owners may not deduct input tax from invoiced sales tax. This also applies to input tax in connection with turnover that is tax-free in another EU member state.

Example 1:

The sales tax exemption includes supplies and other services, whose place of delivery or supply is in Austria, as well as turnover from ancillary business and business disposals. There is no exemption for intra-community acquisitions, imports and services from foreign businesses whose place of supply is in Austria and where the tax liability is transferred to the small business owner (reverse charge).

Example 2:

A consultant runs his company in Germany where he is exempt from sales tax as a small business owner. He also has taxable turnover in Austria where he leases a property. He travels to Vienna in his minibus, for which he is entitled to deduct pretax, to a consultation meeting with an Austrian individual and fills the vehicle with fuel there. The minibus is used exclusively for tax-free turnover in Germany. Therefore, the entrepreneur may not deduct as input tax the Austrian sales tax, invoiced to him.

Option regarding sales tax liability

Entrepreneurs who take the view that the small business exemption regulation brings disadvantages (e.g. due to high input tax during the start-up phase; customers are mainly companies who are entitled to deduct input tax) may waive the tax exemption (option declaration).

The waiver must be declared to the fiscal authorities in writing (form U12, can be downloaded from the home page of the Federal Ministry of Finance, BMF). Entrepreneurs from other EU member states must make this declaration on the portal of the respective fiscal authority.

After submitting the option declaration (at the latest by the day on which the sales tax notification takes legal force), the entrepreneur is committed for at least five years. Any revocation must be made after expiry of the commitment period at the earliest, and must be made before the last day of the month of the first calendar month of the calendar year from which it is to apply.

Example:

Small business owner K. submits an option declaration for 2020. 
K. must pay sales tax up to and including the year 2024. He can revoke the option declaration as of calendar year 2025 (revocation period until 31 January 2025) at the earliest. If no revocation is made, the sales tax liability will remain in force. Hence, K. has only one month after the commitment period has expired in which to submit the declaration of revocation.

The effect of a timely declaration (option/revocation) always comes into force on the first of January of the desired year. Sales made prior to the effective date of the declaration must be handled according to the rules as they previously applied. This also applies if the invoice is not issued or the payment is not made until after the effective date. However, these sales must only be taken into account in the sales tax advance return and in the annual sales tax return during the period in which the tax liability was incurred. 

Example:

An entrepreneur (who owes tax upon payment) waives the exemption from sales tax as a small business owner as of 1 January 2025. In December 2024, he provides one more EDP service for an Austrian customer. The invoice is not issued until January 2025, and the payment is not made until February 2025.

Solution:

Because the EDP service was provided during the time that the entrepreneur was still a small business with sales tax exemption, it remains tax-exempt despite the tax liability option as of 1 January 2025. Therefore, no sales tax may be charged. The sales must be entered in the sales tax advance return for February/for the first quarter of 2025 under item 000 and under item 016.

Input tax adjustment

If you switch from sales tax exemption to sales tax liability, you are allowed to carry out a positive input tax adjustment. This means that you may retroactively claim the entire input tax paid on current assets. A retroactive pro-rata claim is possible for fixed assets if the purchase or production took place within the adjustment period. The adjustment period is five years for moveable fixed assets, and twenty years for immovable fixed assets. For immovable assets used as fixed assets as at 31 March 2012, the adjustment period is ten years. For each year that the full adjustment period falls short of, one-fifth, one-tenth or one-twentieth of the input tax can be claimed retroactively.

Example:

In 2022, a small business owner buys a machine for EUR 20,000 plus EUR 4,000 in sales tax and switches to sales tax liability as of 2025.  

He can claim retroactive input tax amounting to EUR 1,600 (i.e. two fifths of EUR 4,000), EUR 800 of which in 2025 and EUR 800 in 2026. 

If you switch from sales tax exemption to sales tax liability, you must pay back the corresponding input tax amounts to the fiscal authorities. 

An input tax adjustment for fixed assets will cease to apply if the input tax to be adjusted does not exceed the sum of EUR 60 per year.

Small business owners in the Single Market 

A number of special regulations apply to small business owners who are exempt from sales tax in the trade of goods and services within the European Single Market:

A) Trade in goods between companies 

If you export goods to the EU area, this is not considered to be intra-community deliveries (ICD) as the tax exemption for small businesses takes priority. The delivering small business owner does not need a VAT ID number in this case and the delivery does not have to be entered in the recapitulative statement. This is the same as handling a domestic delivery.

If you import goods from the EU area and do not exceed the acquisition threshold (imports in the previous or ongoing calendar year up to a maximum of EUR 11,000), you do not realise any ICA. In other EU countries, you will be treated like a private customer – the supplier will charge you the Austrian sales tax (new mail order regulation since 1 July 2021) and you will not be allowed to deduct input tax. 

If you exceed the acquisition threshold or waive it, the following applies:

• You will need a VAT ID number, which you must communicate to the EU supplier.
• The EU supplier must draw up a net invoice (tax-exempt ICD).
• You must pay tax on the intra-community acquisition, i.e. you must calculate the sales tax yourself based on the net invoice (acquisition tax).
• The acquisition tax must be paid to the fiscal authorities, because small business owners are not entitled to deduct input tax.

You can waive the acquisition threshold by means of an informal application. The use of the VAT ID is also considered a waiver of the acquisition threshold and applies to “imports” from all EU member states. You are bound by the waiver for two calendar years.

B) Trade in goods to private individuals (mail order)

New rules have been applicable to intra-Community mail order transactions since 1 July 2021. Transactions become taxable in the destination country from the first euro.

An exception to this principle exists for entrepreneurs whose turnover from electronically supplied services, telecommunications, television and radio broadcasting services and turnover from intra-Community mail-order trade does not exceed the value of EUR 10,000 throughout the EU (see also Intra-Community mail order trade). In this case, the transactions are taxable in the country of dispatch and the small business owner can issue invoices tax-free. These transactions are included in the limit of EUR 55,000.

If the limit of EUR 10,000 is exceeded, the transactions are taxable in the destination country and it must be checked whether or not the small business exemption regulation of the destination country applies. If it does apply, the invoice must be issued to the customer without sales tax. However, if the small business exemption regulation of the destination country does not apply or no registration takes place, the delivery is subject to tax and the entrepreneur must pay the sales tax to the fiscal authorities of the destination country. The EU-OSS system simplifies tax declarations and payments to the tax authorities. To register with EU-OSS via Finanzonline, small business owners need a VAT ID number which can be applied by means of an informal application at the competent fiscal authorities.

C) Trade in services

If an Austrian small business owner provides any other service to an entrepreneur located in another EU country, the place of performance must first of all be identified. If this is abroad, the tax liability is transferred to the foreign recipient of the service (reverse charge). As a result, a registration in the respective country is not necessary, however this service must nevertheless be entered in the recapitulative statement. The prerequisite is that the small business owner must apply for a VAT ID number for this purpose.

The reverse is true if a small business owner receives another service, that is taxable and liable to tax in Austria, from an entrepreneur from another EU country who has neither their registered office nor an operating site in Austria. In this case the tax liability is transferred to the Austrian small business owner. 

Important:
You can find further information on the export and import of services in the information leaflets Services to foreign entrepreneurs – B2B services - WKO.at and Services to foreign private customers – B2C services - WKO.at.
The threshold for services supplied "by electronic means" to EU end consumers is an exception from the place of supply regulations for B2C services. If these sales, together with sales from intra-Community mail-order trade, do not exceed the value of EUR 10,000, the place of delivery/service is in Austria.

Small business exemption regulation and VAT ID number

The fiscal authorities allocate a VAT ID number to small business owners who are exempt from sales tax only upon application.  

You can find the U 15 application form on the home page of the BMF.  

You must credibly show on this application why you need a VAT ID number. Reasons for this could be:

• you have exceeded the acquisition/service threshold or you have waived these
• you have provided or received other cross-border services which necessarily result in the transfer of tax liability

Note:
If you opt for sales tax liability, you will receive the VAT ID number automatically from the fiscal authorities.

Regulations for invoicing

Important: 
If you opt for sales tax exemption, you may not include sales tax in your outgoing invoices. If you include it anyway, without having submitted an option declaration, you will owe the sales tax (tax liability by virtue of the invoice) and will not be entitled to deduct input tax.

Unlike other entrepreneurs, you do not have to show your VAT ID number on your invoices. However, you must make reference to the exemption from sales tax, e.g. by adding “Exempt from sales tax on account of the small business exemption regulation.” 

Since 1 January 2025, small business owners must issue invoices in accordance with the provisions for invoices for small amounts (up to EUR 400) (see Requirements for an invoice - Economic Chamber Organisation (WKO)). If the small business owner exemption is no longer applicable due to the turnover limits being exceeded, simplified invoicing only remains permitted for invoices of up to EUR 400.

Sales tax liability for small business owners who are exempt from sales tax

Since deliveries and services are exempt from sales tax, there is usually no obligation to pay sales tax. However, there are exceptions:

• unintentional offsetting of sales tax (tax liability by virtue of the invoice)
• for taxable intra-community acquisitions, if the acquisition threshold has been exceeded or its application renounced
• services supplied by foreign companies, if the place of supply is in Austria (reverse charge - RC)
• for supplies within Austria by foreign entrepreneurs (deduction procedure)
• certain foreign transactions (e.g. for services in electronic form to consumers in the EU, which exceed the threshold for services of EUR 10,000).

Sales tax advance return and annual statement

Small business owners who are exempt from sales tax do not have to send a sales tax advance return to the fiscal authorities unless they have been requested to do so.

For advance return periods for which sales tax has to be paid (e.g. on account of taxable ICAs), an internal sales tax advance return must be prepared. The official form (form U30) is available on the BMF website and can be used to do this. This internal sales tax advance return remains in your accounting.

Small business owners do not generally have to submit an annual sales tax return either. An annual sales tax return must only be submitted if sales tax had to be paid during the assessment period (calendar year).

If you have opted for sales tax liability, the general regulations of the Sales Tax Act apply. You can find more information in the information leaflets on Sales tax advance return (UVA) - WKO.at and Sales tax annual return - WKO.at.

Advantage of the new rule for small business owners

Previously, one of the greatest challenges was that, at the onset of your activity, you were incapable of knowing with any certainty whether you were going to exceed the turnover limit in the current year. With the new rule, you are only obliged to issue invoices with sales tax once the turnover limit has been exceeded. If the limit is only exceeded by up to 10%, sales tax liability does not apply until the following year.

Input tax deduction in the case of sales tax inclusion without option declaration 

Time and again, the question comes up as to whether the customers of small business owners are entitled to deduct as input tax the sales tax included in an invoice if the small business owner has not submitted an option declaration and does not pay the sales tax. 

According to administrative practice, this is only possible if the invoice shows all the legally required information (including the VAT ID no.) and it is not obvious to the customer that the small business owner has deliberately omitted to pay the sales tax to the fiscal authorities. In order to avoid possible discussions in the event of an audit, it might be useful if the customer requests that the small business owner submit his tax number and option declaration.

Settlement with credit note

If the customer issues a credit note for the service rendered by the small business owner, he is not entitled to input tax deduction if the small business owner has not submitted an option declaration. 

Stand: 29.04.2025