Repeal of Ordinance on flat-rate deduction of input VAT for foreign entrepreneurs providing cross-border passenger transport services

Information released by the Federal Ministry of Finance on 14 December 2006

The ordinance of the Federal Minister of Finance dated 13 November 2006, Federal Gazette (BGBL.) II No. 423/2006 repeals the Ordinance of 26 April 2002 on the establishment of flat rates for the calculation of deductible input VAT by foreign entrepreneurs providing cross-border passenger transport services, Federal Gazette (BGBL.) II No. 166/2002 as of 31 December 2006. The repeal was the consequence of an ECJ judgement dated 28 September 2006, C-128/05, Commission/Austria.

Such services rendered after 31 December 2006 have to be taxed in accordance with the general rules of the VAT Act 1994. The consideration paid for that part of the transport services provided on Austrian territory is subject to Austrian VAT (Sec. 3a (7) VAT Act 1994). The tax rate is 10% (Sec. 10 (2) (12) VAT Tax Act 1994). The exemption for small enterprises pursuant to Sec. 6 (1) (27) VAT Tax Act 1994 is not applicable.

If the recipient of the service is an entrepreneur or a public law entity, the tax liability is shifted to the recipient (including foreign recipients) of the service (Sec. 19 (1) VAT Tax Act 1994. If the foreign entrepreneur has made only services of this kind and if no other entrepreneur’s tax liability has been shifted to him, input VAT may be claimed in the VAT refund procedure in accordance with the Ordinance of the Federal Minister of Finance dated 21 April 1995, Federal Gazette (BGBL.) No. 297/1995 as amended by Federal Gazette (BGBL.) II No. 384/2003.

By contrast, if transport services are provided to private persons, the assessment procedure is applied: The entrepreneur providing the service has to register with the tax office of Graz-Stadt and submit a VAT return where he must declare his supplies and where he can claim input VAT.

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