VAT SME exemption for EU enterprises (regulations from 1 January 2025)
From 1 January 2025, enterprises with their place of establishment in another EU Member State can, under certain conditions, make use of the Value Added Tax exemption for small businesses (small entrepreneur regulation) in Austria.
Requirements
Enterprises from other EU Member States can only claim the SME exemption if the following conditions are met:
- The enterprise must submit a prior notification in the Member State of establishment.
- The national SME threshold of 55,000 Euro was not exceeded either in the previous calendar year or in the current calendar year.
- The enterprise's Union threshold must not exceed 100,000 Euro in the previous and current calendar year.
The exemption is only applicable once the SME exempt identification number has been issued. This is issued to the enterprise by the place of establishment and contains the suffix -EX. However, if the enterprise already has a SME exempt identification number for other reasons and then applies for exemption, the exemption is applicable from the date on which the number is confirmed by the place of establishment with regard to the Austrian exemption.
Please note
If the SME exemption no longer applies (e.g. exceeding the turnover limit or option for tax liability), VAT registration in Austria is generally required.
Exceeding the limits for SME exemption
If the national SME threshold is exceeded, a 10 per cent tolerance rule applies. However, there is no comparable regulation if the Union threshold of 100,000 Euro is exceeded. If the Union threshold is exceeded, the turnover with which the limit was exceeded is therefore already taxable. If the company carries out sales to Austria (Form Verf19), it must register for VAT in Austria unless it declares and pays the Austrian VAT in full via the OSS.
Option for tax liability
If a company from another EU Member State is exempt as a small business in Austria and wishes to waive the tax exemption again at a later date, it can terminate the exemption for Austria via the portal of the place of establishment and thus opt for tax liability. The company is bound to the option for tax liability for five calendar years.
The option for tax liability is only possible with effect from the beginning of a calendar year. If the company opts for tax liability, the tax administration assumes that the option will not take effect until the following calendar year and that VAT will therefore only be payable on sales from the following calendar year. If the company wishes to exercise the option for the current calendar year, it must register for VAT in Austria and declare and pay VAT for the entire calendar year (preliminary return and annual return).
Example 1
A German entrepreneur is exempt as a small entrepreneur in Austria in calendar year 2026. In October 2026, he terminates his exemption for Austria via the German portal. He will not exceed the turnover threshold in either 2026 or 2027.
As the entrepreneur has not stated anything to the contrary, it can be assumed that he does not want to be a small entrepreneur any more from calendar year 2027 onwards. That means: In calendar year 2026, he can treat his entire turnover as tax-exempt and he is not entitled to any input VAT deduction for input turnover in connection with the tax-exempt turnover. For the calendar year 2027, as a rule, he must register for VAT in Austria and declare and pay VAT for the transactions that are taxable in Austria.
The entrepreneur is bound to exercise the option for five calendar years.
Example 2
A German entrepreneur is exempt as a small entrepreneur in Austria in calendar year 2026. In October 2026, he terminates his exemption for Austria via the German portal. He will not exceed the turnover threshold in either 2026 or 2027. The entrepreneur informs the Tax Authority Austria that he no longer wishes to apply the SME exemption for the calendar year 2026.
The entrepreneur must declare and pay VAT for the entire calendar year 2026. If the entrepreneur cannot use the EU-OSS for these transactions, he must register for VAT in Austria and include the transactions in the preliminary return and in the annual return.
The entrepreneur is bound to exercise the option for five calendar years.
Form
Responsible for the content: Federal Ministry of Finance
