The draft of the Tax Amendment Act 2024 (AbgÄG 2024) was published in mid-June 2024. Significant changes regarding VAT are expected for micro companies starting from January 1, 2025, which are summarized below.
Cross-border small entrepreneurs – EU-wide
The draft of the Tax Amendment Act 2024 introduces significant changes for Austrian micro companies who operate their business in other EU member states. Until now, sales generated by micro companies in other EU member states are not covered by the micro company owner rule (VAT exemption) of the other EU member state. This creates disadvantages for micro companies generating sales in other EU member states compared to locally recognized micro company owners who enjoy local VAT exemption.
The concept of the “EU micro company” VAT exemption has now been created EU-wide. With the EU-wide exemption provision for the “EU small company owner,” Austrian entrepreneurs can also claim “micro company owner rule” VAT exemption in other member states. Likewise, foreign EU micro business owners will be able to take advantage of the VAT exemption in Austria.
The following key conditions must be met to claim the EU small company VAT exemption:
- EU Threshold: An annual turnover across the union of a maximum of EUR 100,000 both in the previous year and the current calendar year.
- Local Small Business Threshold: The local small enterprise threshold of the respective EU member state must not be exceeded.
- Application for EU micro company VAT exemption: The exemption must be applied for through the procedure provided in the respective member state.
Upon approval of the EU micro company VAT exemption in the respective EU member state, the micro company will be issued an identification number with the suffix “-EX” (micro company identification number).
The provisions of the “EU micro company” VAT exemption are expected to come into force on January 1, 2025, and will first apply to sales executed after December 31, 2024, within the framework of the Tax Amendment Act 2024.
Small Business Exemption in Austria – New Regulations
According to the draft of the Tax Amendment Act 2024, the Austrian micro company threshold will change from €35,000 net to €42,000 gross. Since the threshold, which is then to be calculated in gross, is equivalent to the previous net value, there is no change in the threshold for sales with the standard tax rate.
It should be noted that if the micro company threshold is exceeded, the exemption will no longer retroactively cease to apply, but will cease from the point at which the threshold is exceeded.
In this context, the 10% tolerance rule should be noted. The draft of the Tax Amendment Act 2024 clarifies that if the micro company threshold is exceeded by no more than 10%, the micro company exemption – unlike before – will apply until the end of the year and will only cease to apply from the following calendar year. However, if the 10% tolerance threshold is exceeded, the exemption will cease to apply from the sale that exceeded the threshold, as well as for all subsequent sales.
The changes are expected to come into force on January 1, 2025, and will first apply to sales executed after December 31, 2024.
