Businesses Reclaiming VAT in Austria

If you have a business with employees traveling to Europe, you’re part of a very large group. Companies with employees traveling to Europe on business nowadays are pretty much the norm. Unfortunately for them, many companies who don’t get their VAT business related expenses reimbursed is also the norm.

Honestly, there are quite a few very avoidable reasons for this. Put quite simply, it is quite a tedious process. A process that is just screaming for a technological solution.

After all, corporate accounting departments are typically understaffed, disorganized, and remarkably still rely on paper trails to get things done; long, unorganized, wrinkled trails of paper, and lost VAT receipts. But wait, that’s only the beginning. There are different VAT rules for different countries and different regulations for EU countries and non-EU countries.

The paragraph above may have ended but not the situations. There are the various administrations in different municipalities, language barriers, signatures needed, attached documents that don’t stay attached, lack of knowledge on tax technicalities, and what gets reimbursed. Things such as gas taxes: what percentage of your gas expenditures get taxed if you’re driving between countries for business. If you work from a home office in London but you’re employed by a Polish company and your office occupies 15% of your home, how much can you get reimbursed for utility expenses? You get the picture.

Most of the countries in Europe place a sales tax on all goods and services purchased within their countries. This is a huge source of revenue. This is known as VAT (Value added Tax).

Regardless of whether you’re a resident of that country or a visitor, everyone is required to pay this tax. With that being said, if you’re on a business trip, your company pays the VAT on all the expenses that you incur on your trip. This includes your taxi rides, meals, hotel bookings, mobile phone expenses and a whole lot more.

As a business traveler, your company has a right to receive a VAT refund on this tax paid by you. However, factually most companies leave this VAT money on the table, so to speak. An average of 20 Billion Euros is left on the VAT table every year. Think about it. 20 BILLION EUROS. Part of that, albeit, a very small part of that money can be yours if you just follow the process.

Now, this varies from country to country. Just some of the business related VAT you can be reimbursed for are:

  • Fuel
  • Rental Car
  • Meals
  • Lodging
  • Telecommunication
  • Seminars
  • Education/Training
  • Conferences
  • Transportation
  • Export Taxes
  • Supplier Invoices

Now, all these aforementioned can be

  • Refundable – Where the entire amount of VAT paid can be claimed.
  • Partial – Certain stipulated percentage of the VAT paid can be claimed.
  • Restrictions Apply – The deductible amount is subject to certain restrictions.

Again, all this differs depending where you purchased the goods, exported to, from etc…

What can be considered refundable in one country, is not refunded in the other and so on.

Gone are the days when you paid an accounting firm to recover VAT, and you waited, waited and waited. Never to receive anything, but the bill from the accounting firm.

To give you just an example, in this post we’ll focus on Austria and what businesses are eligible to reclaim when sending their employees to conduct business there.

In Austria, while the standard VAT rate is 20%, there are also reduced rates of 13% and 10%. A special rate applies to the states of Jungholz and Mittelberg.

In Austria, the language spoken is German, It is a federal landlocked republic with over 8.5 million people. It is the birthplace of Sigmund Freud, Mozart and Niki Lauder. It is made up of states, of which there are nine. Vienna is the capital and the largest Austrian city, with a population just under 2 million people. Per capita it is ranked as one of the richest countries in the world. The below chart can give you a feel just based on Austria’s exports:

Austria: Export of goods from 2007 to 2017 (in billion U.S. dollars)

 

Austrian VAT is known as Umsatzsteuer (UST), and the rates are as follows:

  • Standard Rate 20%
  • Reduced Rates of 13% and 10%, and a Special Rate of 19%

As a business from an EU member or non member state, the VAT paid on the following items are recoverable:

  • Groceries
  • Most types of transportation
  • Accommodations such as hotels and motels
  • Restaurants
  • Laundry
  • Phone
  • Internet
  • Parking
  • DDP
  • Conferences

Here are some basic phrases your traveling employees should keep in mind; first in English and then in German when purchasing items covered by Austria’s VAT rules. If a business traveler is unsure of whether an item is covered by a particular country’s VAT rules, it is best to be safe and get a receipt anyway.

Please give me:

  • An original VAT invoice
  • With my company name and address
  • VAT rate and value shown

Bitte gib mir:

  • Eine Original-Mehrwertsteuerrechnung
  • Mit meinem Firmennamen und meiner Adresse
  • MwSt.-Satz und mehrwertsteuerbetrages

To read more about VAT in the EU click here
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