Reduced VAT rate adopted for certain industries affected by COVID-19

To fight the impacts of COVID-19, the Austrian government has approved a new law announcing additional support measures for industries particularly affected by the pandemic, including a temporary VAT rate reduction to 5% for the gastronomy, cultural, publication, and tourism sectors. The new law has not yet entered into force; however, when published, the reduced VAT rate will apply retroactively from 1 July 2020 until 31 December 2020.

Gastronomy sector

The 5% reduced VAT rate applies to sales of food and beverages (including alcoholic and non-alcoholic drinks) in all cases in which a business license is needed. The reduced rate also applies to sales of food and beverages in ancillary business such as bakeries, pastry shops, and butcher’s shops. An ancillary business qualifies for the reduced rate if food and beverages are served at up to eight seats in addition to the over the counter sale of branch-specific goods.

Cultural sector

The 5% reduced VAT rate applies to the following transactions, among others:

  • Photographs taken by the artist and sales related to works of art (under certain conditions);
  • Artistic activities;
  • Services that are regularly tied to the operation of a theatre, music and singing performances, or the operation of museums;
  • Movie screenings; and
  • Circus performances and showmen activities.

Publication sector

The 5% reduced VAT rate applies to printed materials such as books and similar items, newspapers and periodic prints, picture books, drawing or coloring books, sheet music, and cartographic prints. The reduced rate also applies to electronic publications (e.g., e-books).

Tourism

As a result of a change to the draft law, the VAT rate reduction measure now also includes the tourism sector. The 5% reduced VAT rate applies to accommodation services in living and bedrooms as well as to the leasing of premises for camping purposes (including regularly provided ancillary services).

Practical implementation

The Federal Ministry of Finance has published additional information regarding the new legislation on their website. To avoid invoice corrections and VAT reclaim, the new reduced VAT rate should be implemented in taxpayer cash register systems as from 1 July 2020.

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Sabine Mandahus

Sabine Mandahus

Senior Assistant | Deloitte Tax | Telefon: +43 1 537 00 4954 | E-mail senden

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