The Federal Ministry of Finance has clarified open questions surrounding the applicability of the new 5 % VAT rate in Austria:
1. Which revenues are subject to the reduced rate?
The applicability of the new reduced 5 % VAT rate depends on whether a trade license for the hotel and catering industry is normally required for the specific activity. However, entrepreneurs who are entitled to serve food and drink under another trade licence or other trade regulation provisions may also apply the reduced VAT rate here.
What is important here is that food or drinks can be consumed on the premises. It was clearly highlighted that food and drinks are not subject to the reduced rate when the primary focus here is on commercial activity. This means that the reduced rate is not applicable to merely selling items such as packaged goods. It was also clarified, however, that the collection and delivery of food as part of the delivery service is subject to the temporary reduced VAT rate of 5 %.
2. Which drinks are subject to the reduced rate?
Generally speaking, only open drinks are subject to the reduced rate. The tax authorities define “open drinks” as being ones that are typically opened directly by the restaurateur or the customer when being purchased and consumed (e.g. at a sausage stand or in a canteen). This means that drinks offered in supermarkets, as part of a collection and delivery service and in vending machines are generally excluded here.
3. In the context of which activities are food and drinks subject to the reduced VAT rate?
- Catering services
- Snack stands such as sausage stands
- Mountain huts
- Collection or delivery normally just for food
- Wine taverns, provided they are not on a flat rate
- Company canteens
- Restaurants in supermarkets
- Filling station restaurants, but not filling station shops
4. What is covered by delivery and collection?
The 5 % VAT rate also applies to the delivery and collection of food. If, on the other hand, drinks are delivered, only “open drinks” are subject to the reduced rate. Open drinks are ones that are typically opened immediately when being purchased.
PLEASE NOTE: This means that if sealed drinks such as lemonade bottles or beer cans are delivered together with food that is being delivered or collected, they are subject to the 20 % VAT rate.
5. Are shops, supermarkets and vending machines always not subject to the reduced rate?
The sale of food and drinks in stores or supermarkets is not subject to the reduced rate. This also applies to the sale of cold snacks or “commercially packed” goods such as filled snack rolls. This also generally applies to vending machine sales, except if these machines offer hot food or open drinks such as coffee or tea.
6. What has to be considered for “mixed” businesses?
Bakeries, patisseries and butcheries in particular must clearly differentiate between the applicable VAT rates and record them separately:
|Toast and a Coca-Cola served in the restaurant area||5 % VAT|
|Sale of bread over the counter||10 % VAT|
|Sale of mineral water over the counter||20 % VAT|
|Schnitzel roll at the butcher’s (= collecting food)||5 % VAT|
In view of the generally positive nature of the stimulus packages being offered by the Federal Government, which however clearly state which industries should benefit from them, applying the correct VAT rate will become something of a science in itself in some areas. It should therefore always be clearly defined which services are offered and which VAT rate is to be applied, especially if the reduction is passed on to the customer.
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