AUSTRIAN DIGITAL TAX

The currently prevailing international tax system does not adequately take current developments, especially in the digital economy, into account. It is based on physical presence, while companies with new digital business models often generate high added value in a market in which they have no permanent establishment or registered office. The OECD and the EU are working to implement solutions for taxing the digital economy. Austria has been levying an Advertising Tax since 2000, but only on "classic" advertising services (e.g., on TV, radio, in print media or on posters). As in various other EU member states, online advertising is also to be taxed in Austria, thus contributing to increasing tax fairness worldwide.

Austria has therefore been levying a Digital Tax on online advertising services since January 1, 2020. The Digital Tax is regulated in the Digital Tax Act (DiStG) and in an ordinance of the Federal Minister of Finance, the DiStG 2020-Implementation Ordinance.

Online advertising services are subject to Digital Tax if they are provided by online advertising providers in the country for a fee. An online advertising service is deemed to be provided in the country, if it is received on the device of a user with a domestic IP address and its content and design are (also) aimed at domestic users. The place where an online advertising service is provided may be determined based on the IP address or with the help of other technologies for geolocating devices.

Who is liable for the tax? The tax debtor is the online advertising service provider e.g., the company which is entitled to a fee for carrying out an online advertising service and moreover, generates a worldwide turnover of at least EUR 750 million as well as a domestic turnover of at least EUR 25 million from the provision of online advertising services.

How is the Digital Tax calculated?

The basis for calculating the Digital Tax is the provision fee that the online advertising service provider receives from a client. The tax amount is set at 5% of the fee’s tax basis.

Three months after the end of the financial year, the taxpayer must submit an annual tax return for the previous year. This must include the types of online advertising services provided (e.g., search engine advertising, banner advertising, others) and the fees incurred; the sales generated worldwide within the financial year must also be stated.

The Austrian Tax Office department for large companies is responsible for collecting the Digital Tax on electronic basis.

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