At the beginning of 2008, the EU countries had reached an agreement on several fundamental changes to the VAT directive, which will enter into force in Austria on January 1, 2010. A draft law has already been prepared. It should be approved before summer and contains some important changes for entrepreneurs.
Services rendered in favour of a foreign recipient are currently subject to VAT in Austria unless some exceptions apply. There are, however, certain services to which the principle of the place of the recipient applies. This means that taxation has to be provided for by the recipient according to the “reverse charge” system.
As of 1 January 2010, the principle of the place of the recipient will become the general rule for services rendered in favour of entrepreneurs. There will, however, be a series of exceptions, such as in the real estate sector, the field of hired cars, restaurants etc. The new rule implies also that services rendered from abroad are subject to VAT in Austria. Consequently the economic advantages deriving from leasing of cars abroad will be lost.
VAT requires a series of documented evidence. In case of the supply of services to persons who are not entrepreneurs, the current rules will be applied also in future.  It will therefore be of utmost importance to establish if a client is an entrepreneur or not.
Currently it is necessary to communicate to the Tax Office the supply of goods to entrepreneurs within the territory of the UE in form of a monthly summarized information. As of 2010, also services rendered to entrepreneurs in the UE, which pursuant to the principle of the place of the recipient of the rendered service will have to be contained in this communication,  and therefore also in the provisional return.
For this purpose, it will be necessary to keep record of the VAT numbers of foreign clients. Austrian entrepreneur, on their part, will have to be careful to subject services obtained from abroad  regularly to VAT in order to avoid misunderstandings with the Tax Administration in case of tax audits.