Digital Tax Act 2020
The international tax system still prevailing at the moment does not take sufficient account of current developments, especially in the field of digital economy. It is based on physical presence, whereas companies with novel digital business models often achieve high added value on a market on which they have no business premises or headquarters. Distortions of competition are widespread. The OECD and the EU are working hard on solutions, but none are available yet. Since 2000, Austria has been levying an advertising tax, but only on “classic” advertising services (e.g. on TV, radio, print media, or posters). As it is being done in various other EU Member States, Austria likewise taxes online advertising, thus contributing to increasing tax justice.
Austria has therefore decided on an interim solution and will levy a digital tax on online advertising services as of 01 January 2020. The digital tax is regulated in the Austrian Digital Tax Act 2020, Federal Law Gazette I № 91/2019 (DiStG 2020), and in an ordinance of the Federal Minister of Finance, the DiStG 2020-UmsetzungsV, Federal Law Gazette II № 378/2019.
Online advertising services are subject to the digital tax if and insofar as they are provided by online advertisers in Austria for remuneration as of 01 January 2020. An online advertising service is deemed to have been provided domestically if it is received on a user’s device having a domestic IP address and is addressed (also) to domestic users in terms of its content and design. The location of the provision of an online advertising service may be determined on the basis of the IP address or by using other technologies for geolocation.
The following are considered online advertising services:
Advertisements placed on a digital interface, in particular in the form of banner advertising, search engine advertising and comparable advertising services.
The following are not considered as online advertising services:
Who is the tax debtor?
The tax debtor is the online advertiser entitled to a remuneration for performing an online advertising service. This also applies if the online advertiser is not the owner of the digital interface.
“Online advertisers” are companies
- that provide online advertising services, or contribute to the provision of online advertising services, for remuneration and that,
- within one business year, generate
- (a) a worldwide turnover of at least € 750 million; and
- (b) a turnover in Austria of at least € 25 million from the provision of online advertising services
Expenditure on intermediate inputs by other online advertisers that are not part of the multinational group of companies of the tax debtor is not to be included into the amount of € 25 million for domestic turnover. If companies are part of a multinational group of companies within the meaning of § 2 of the Austrian Transfer Pricing Documentation Act, Federal Law Gazette I № 77/2016, the calculation is to be based on the turnover of the group. The latest published annual or consolidated financial statements, respectively, are relevant. Turnover due to legal obligations is not to be included into this turnover.
How is the digital tax calculated?
The assessment base for the digital tax is the remuneration that the online advertiser receives from a customer. This is reduced by expenditures on intermediate inputs by other online advertisers that are not part of the tax debtor’s multinational group of companies. The tax rate amounts to 5 percent of the assessment base.
When is the tax to be calculated and the tax return filed?
The tax claim arises at the end of the month in which the taxable service is furnished. The tax is to be calculated monthly by the tax debtor itself and paid by the 15th of the second month (due date) after the arising of the tax claim.
Three months after the end of the business year, the tax debtor must file an annual tax return for the previous year. The same must include the types of online advertising services provided (e.g. search engine advertising, banner advertising, other) and the remunerations attributable to them; the turnover achieved worldwide during the business year according to § 2 para 1 subpara 2 lit. a of the DiStG 2020 must also be reported.
Please note: For business years ending already before 01 July 2020, the annual tax return shall be filed by 30 September 2020 at the latest.
The collection of the digital tax is incumbent on that tax office that is also responsible for collecting the turnover tax of the tax debtor and, from 01 July 2020, the tax office for large companies.
How is the tax return to be filed?
In the digital tax procedure, annual tax returns and other declarations must be submitted electronically, by way of data stream transmission or by means of a web-based service.
- If the online advertiser is a FinanzOnline participant, the annual tax return and other declarations must be filed via the procedure FinanzOnline according to the FinanzOnline Ordinance 2006 – FOnV 2006, Federal Law Gazette II № 97/2006.
- This also applies to legal representatives if in this function they are FinanzOnline participants.
- If a foreign online advertiser has appointed a fiscal representative pursuant to § 6 of the DiStG 2020-UmsetzungsV, this representative must have a permission to participate in the FinanzOnline procedure. Therefore, if a fiscal representative is appointed, the transmission is made exclusively via FinanzOnline.
- However, if neither the Online Advertiser nor the representative of the same (as a legal representative as defined in § 2 II of the FOnV 2006) is a FinanzOnline participant, the electronic transmission of annual tax returns and other declarations in connection with the collection of the digital tax must take place via the “Onlineverfahren-Digitalsteuer” (Online Procedure Digital Tax) provided for this purpose.
Do I need a fiscal representative?
If you have neither a registered office nor a place of management or permanent establishment in the European Union or the wider European Economic Area, you are required to appoint a fiscal representative. This will (indirectly) give you access to the FinanzOnline procedure. The prerequisite for acting as a representative is therefore in particular that this fiscal representative has a permission to participate in FinanzOnline.
Please note: Other tax debtors, in particular online advertisers with their registered office, place of management or permanent establishment in another EU member state or further EEA contracting state, are also free to appoint a fiscal representative in order to be able to fulfil their obligations in connection with the collection of the digital tax as efficiently as possible.
What applies in the “Onlineverfahren-Digitalsteuer” (Online Procedure Digital Tax)?
The Online Procedure Digital Tax is set up for electronic data transmission in the digital tax procedure and ensures electronic communication between the online advertiser and the tax authority even in those cases where the FinanzOnline procedure according to the FOnV 2006 is not applicable. The provisions of the FOnV 2006 that are relevant for the Online Procedure Digital Tax – in particular those relating to electronic review of files and electronic delivery – shall be applied mutatis mutandis.
How to register for the Online Procedure Digital Tax?
Registration for the Online Procedure Digital Tax is done via a web form.
The following information is to be provided
- Name or company name, respectively
- Date of establishment
- Email address
Furthermore, the following documents must be annexed electronically to the form sheet:
- An extract from the Register of Companies or comparable evidence of registration in the country of domicile
- Proof of the identity of the person performing the registration
- Proof of the power of representation of the person performing the registration.
After successful examination of your registration, the tax office will send your access data for the Online Procedure Digital Tax and the internet address at which the Online Procedure Digital Tax is available to you to the email address provided by you. If any information or documents should be missing, you will be notified and asked to submit them later.
How is the tax number assigned in the “Onlineverfahren-Digitalsteuer” (Online Procedure Digital Tax)?
Since the digital tax is payable for the first time already on 15 March 2020 and it is not ensured at this point in time that registration has taken place, participants in the Online Procedure Digital Tax must consider the following points:
Tax payment requires a tax number for each tax debtor (i.e. also for individual companies within a multinational group of companies).
If you do not have a tax number yet, you must apply for it by sending an email to the mailbox Post.FA68-GL@bmf.gv.at, providing the following information:
- Application for issuance of a tax number for the purposes of the Online Procedure Digital Tax
- Precise, official company name
- Date of establishment of the company
- Headquarters including exact address (postcode, city, street, any house numbers)
- Email address to which the tax number is to be sent
The tax number will be sent to the email address indicated. We would like to point out that the assignment of a tax number may take a few days. Moreover, timely assignment can be guaranteed only if the necessary information has been provided completely and correctly.
What applies to companies of a multinational group of companies that use the Online Procedure Digital Tax?
According to § 2 of the DiStG 2020, the group is to be taken into account. The general regulations apply as a rule to companies belonging to such a multinational group of companies (MGCs), especially with regard to the appointment of a fiscal representative.
For reasons of administrative simplification, however, the Federal Ministry of Finance will not raise any objections if an MGC (or a company of an MGC) entrusts any of its companies having its registered office, place of management or permanent establishment in the European Union or the wider European Economic Area to assume a contact function towards the Austrian tax administration and, for example, to forward annual tax returns of other companies in its group to the tax administration (commissioned MGC company).
In this case, too, each of the companies of the MGC that is a tax debtor for the digital tax will require a tax number and registration. They can apply for this through the commissioned company. Proof of the commissioning must be presented to the Austrian tax administration upon request. There are no objections to a request for several tax numbers for different companies of the MGC in one mail application. In such cases, the tax administration can issue a collective response, including all the tax numbers.
Payment of digital tax
For payment, please use the electronic payment (“eps-Überweisung”) integrated into FinanzOnline or the “Payments to the tax office” (“Finanzamtszahlungen”) service offered in electronic banking, indicating the tax account number (tax office number and tax number).
Deviating from this, the following applies to participants in the Online Procedure Digital Tax:
Payments until 30 June, 2020, to the account:
- IBAN: AT12 0100 0000 0553 4681
- BIC: BUNDATWW
- in the name of Finanzamt Graz Stadt
Payments from 01 July, 2020, to the acount:
- IBAN: AT88 0100 0000 0550 4116
- BIC: BUNDATWW
- in the name of Finanzamt für Großbetriebe
following note to payee is required for correct posting of the payment:
- Tax number
- Digitalsteuer (DIS)
- Period (MM/YYYY)
From the point of view of the tax authority, there are no objections to the payment being made not by the tax debtor, provided that the information provided allows the payments to be clearly attributed to the tax debtor.