- Austria seeks permission from the Council of the European Union to continue excluding input Value Added Tax (VAT) deductions for business goods and services used primarily for private purposes. This measure, in place since 1995, simplifies VAT collection, reduces administrative burdens, and aims to prevent tax evasion. It has a minimal impact on total VAT collected and EU VAT resources.
- The Austrian Federal Finance Court allowed input tax deductions for rental business activities. In a specific case (Decision No. GZ. RV/5100382/2023), the court ruled in favor of a taxpayer who had been denied input tax deductions by the Tax Office. The taxpayer, who had purchased and modified a single-family house for rental purposes, successfully argued that the rental activity constituted a legitimate business, thereby qualifying for input tax deductions.
- The European Court of Justice (ECJ) recently issued a judgment (Case C-622/23 (RHTB)) on VAT implications in work contract cancellations, which could have implications for Austrian VAT law. The ECJ ruled that amounts contractually due to a contractor following unjustified contract termination by a client are subject to VAT if the contractor had already begun providing the service and was prepared to complete it. This ruling emphasizes that a direct link exists between the service provided and the remuneration due, even if the work is not completed. It remains to be seen how the Austrian government will reconcile the ECJ ruling with its request to exclude input VAT deductions for private use goods and services. It’s possible that further clarification or adjustments to Austrian VAT regulations may be necessary to ensure compliance with EU law.
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