The 2012 worldwide VAT, GST and sales tax guide

38 A USTRIA
Books
Small business gifts, if allowed for direct tax purposes (but gifts
are subject to output VAT if they exceed a value of €40)
Purchase, lease, hire, maintenance and fuel for vans and trucks
Entertainment of business partners (restaurant expenses), if predominantly
for marketing purposes
Taxis
Business travel
Partial exemption. Input tax directly related to the making of
exempt supplies without credit is not recoverable. If an Austrian
taxable person makes both exempt supplies without credit and
taxable supplies it may not recover input tax in full. This situation
is referred to as “partial exemption.”
The general partial exemption calculation is performed in the
following two stages:
• The first stage identifies the input VAT that may be directly
allocated to exempt and to taxable supplies. Supplies that are
exempt with credit are treated as taxable supplies for these
purposes. Input tax directly allocated to exempt supplies without
credit is not deductible, while input tax directly allocated to
taxable supplies is deductible.
• The second stage prorates the remaining input tax that relates
to both taxable and exempt supplies without credit and cannot
be directly allocated, in order to allocate a portion to taxable
supplies. For example, this treatment applies to the input tax
related to general business overhead. In Austria, the pro rata
calculation is based on the value of taxable supplies compared
to the total value of supplies made. The pro rata recovery percentage
is normally taken to two decimal places.
An alternative method is a simple pro rata calculation. A partially
exempt taxable person may choose to use the pro rata
method alone, provided it does not result in the recovery of an
amount of input tax more than 5% higher than would be recoverable
under the direct allocation method.
Capital goods. Capital goods are items of capital expenditure that
are used in a business over several years. Input tax is deducted in
the VAT year in which the goods are acquired. The amount of
input tax recovered depends on the taxable person’s partial
exemption recovery position in the VAT year of acquisition.
However, the amount of input tax recovered for capital goods
must be adjusted over time if the taxable person’s partial exemption
recovery percentage changes during the adjustment period.
In Austria, the capital goods adjustment applies to the following
assets for the number of years indicated, if the input VAT exceeds
€220:
• Land, buildings and additions to buildings, basic alterations and
major repairs to buildings (adjustment period of 10 years)
• Other fixed assets (adjustment period of five years)
The adjustment is applied each year following the acquisition, to
a fraction of the total input tax (1/10 for land and buildings and
1/5 for other movable capital assets). The adjustment may result