Refund or deduction of input VAT is possible only where such input VAT is deductible according to the Austrian VAT Act 1994. The VAT Act provides that the entrepreneur is allowed to deduct as input VAT the amount of VAT separately shown on an invoice, issued to him by other entrepreneurs for supplies of goods and services which have been effected in Austria for the purpose of his business.
Deduction of input VAT is not allowed as far as living expenses (e.g. entertainment expenses) are concerned.
As regards expenses for business meals, deduction of input VAT is only allowed where it is possible to provide evidence that such expenses have served advertising purposes and have predominantly been used for business or professional purposes. As for the evidence of the advertising purpose and the predominant business or professional purpose, see paragraph 4823 of the Income Tax Guidelines 2000.
Expenses associated with cars, mixed vehicles or motorcycles
Expenses in connection with the purchase (manufacturing), leasing or the operation of cars, mixed vehicles or motorcycles (including mopeds and motorcycles with side-cars) do not entitle to deduct input VAT. The only exceptions are motor vehicles of driving schools, motor vehicles for demonstration purposes, motor vehicles which are intended exclusively for commercial resale, and motor vehicles which are used to the extent of at least 80% for commercial passenger transport or for commercial lease.
Furthermore, it is not possible to claim deduction of input VAT on the basis of the official kilometre allowance.
Input VAT incurred in connection with motor vehicles other than cars, mixed vehicles or motorcycles as mentioned above (e.g. lorries, minibuses) is deductible provided that the requirements for deduction of input VAT are in principle met.
The Ordinance by the Minister of Finance, Official Gazette II No. 193/2002, lays down the respective requirements for the classification of vehicles in categories that qualify to deduct input VAT.
Therefore, in cases where input VAT is claimed for vehicles which entitle to the deduction of input VAT, we recommend that for the sake of a swift procedure, the taxpayer file supplementary documents which clearly show that the vehicle is not excluded from deduction of input VAT (e.g. copy of vehicle registration certificate) together with the original invoices at the time of application (i.e. in the course of the input VAT refund procedure). For further information on deduction of input VAT, see VAT Guidelines 2000, paragraph 1801 et sequ.
Input VAT on the basis of travel inputs
Travel inputs are supplies of goods and services by third parties which are effected by an entrepreneur in the frame of travel services and from which travellers benefit directly (e.g. hotel stay). Input VAT for travel inputs is not deductible.
For further information on input VAT on the basis of travel inputs, see VAT Guidelines 2000, paragraph 2941 et sequ.