On April 4, 2019, Austria’s Parliament received proposals from the Ministry of Finance (Bundesministerium für Finanzen or BMF) to implement a digital tax (Digital Tax Act 2020 or DiStG 2020), which, if approved, would be introduced with effect from January 1, 2020, and apply to online advertising services provided after December 31, 2019.
Editor’s Note: Article 2 of the legislation would also amend Austria’s VAT Act 1994 to address certain e-commerce transactions.
The digital tax (Article 1 of the DiStG 2020) would apply to online advertising services, which would be deemed to be provided in Austria if it appears on the device of a user with a domestic IP address and if its content and design are directed at domestic users. Online advertising services would include advertising on a digital interface in the form of banner advertising, search engine advertising, and comparable advertising services.
Companies subject to the proposed digital tax provide online advertising services for a fee, and within one marketing year, have global turnover of at least €750 million and generate at least €25 million in domestic sales from online advertising. The basis of assessment of the Austrian digital tax would be the fee that the online advertiser receives from a client. The tax would be 5% of the assessment basis.
The taxable person would be assessed for the Austrian digital tax at the end of the marketing year. Three months after the end of the marketing year, the taxable person would have to submit an annual tax return for the previous year.
In view of developments in taxation of the digital economy at the EU or OECD level, the new Austrian rules would be evaluated and, where appropriate, improved, according to Article 1(8) of the DiStG 2020. As soon as adequate solutions have been found at the international level, digital taxation in Austria should be adjusted accordingly.
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