Austria: New Digital Services Tax

2020 | roadmap

In September 2019, the Austrian parliament passed the new Digital Services Tax Act, which will enter into force on 1 January 2020. The main goal is to achieve "fair taxation" by taxing online advertising services provided in Austria. But in fact it is aimed at multinational tech companies.

Why is a Digital Services Tax necessary in Austria?
In March 2018, the European Commission proposed to introduce a directive on a digital services tax on certain digital services. However, since the EU Member States have not been able to reach consensus yet, more and more of them, like the UK, Spain or Italy, intend to introduce legislation on a national level. In Austria, currently only conventional advertising (e.g. in print media, radio or television) is subject to an advertising tax. As of 2020, also certain online advertising services will become subject to the new Digital Services Tax ("DST").

What is subject to DST?
Online advertising services rendered against consideration by companies exceeding certain annual revenue thresholds (see below) will be subject to a flat tax of 5 % of the consideration received by the person providing such services. Examples of such services include advertisements that are displayed in search engine results or banners on a website.

Who is subject to DST?
DST covers both the companies providing and contributing to such services. To become subject to DST, such companies must cumulatively meet the following two revenue thresholds within one financial year: (i) worldwide revenues of at least EUR 750m and (ii) revenues in Austria of at least EUR 25m.

What constitutes an online advertising service rendered in Austria?
Only domestic services will be subject to DST. An online advertising service is deemed to be provided in Austria if (i) it is displayed on a user's device with an Austrian IP address and (ii) the content of the advertisement is (also) addressed to Austrian users.

How is DST levied?
In case DST liability is triggered, the person rendering online advertising services in Austria against consideration is liable to pay DST (tax debtor). If another person contributes to such services, this person is liable for the DST to the extent of the contribution. The tax debtor is obliged to always keep records of all services that are subject to DST and to calculate and pay DST to the competent tax office.