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The small-business VAT exemption in Austria 2026: is opting out worth it?
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Up to €55,000 revenue a year, you don't have to charge VAT – sounds like less admin. The catch: you also don't get any input tax back. Whether that's worth it for you depends on who your clients are and how much you spend.
As of: · Reviewed by Pascal Schraml, Austrian certified tax advisor (Steuerberater), founder of PSTax
At a glance
- Small-business threshold: €55,000 gross/year, unchanged for 2025 and 2026
- Tolerance up to €60,500: the exemption continues until year-end, then ends immediately
- Only revenue taxable in Austria counts towards the threshold – B2B services to foreign businesses usually don't
- As a small business: no input tax, but also no VAT on your invoices
- Voluntarily opting into VAT (Regelbesteuerung) locks you in for at least 5 years
Still unclear on the VAT basics? → VAT basics in Austria
What the small-business exemption actually means
Stay under €55,000 annual revenue and you don't charge VAT – your invoices carry a fixed note instead of a VAT amount. Less admin, but fewer rights too – see the next point.
The catch: no input tax deduction
Without VAT on your invoices, you also don't get input tax back on your own purchases. With low expenses that barely matters. With bigger purchases – new equipment, software subscriptions, office setup – it costs you real money.
What actually counts towards the small-business threshold
Only revenue taxable in Austria counts towards the threshold. B2B services to businesses abroad – EU or otherwise – usually have their place of supply abroad and so don't count.
Sounds simple, but
That means you can earn a lot from clients abroad and still stay a small business in Austria – though you'll often still need a VAT ID (UID) and have to file a recapitulative statement (ZM).
What happens if you exceed the threshold
Up to €60,500 (10% tolerance), the exemption still runs until year-end. Above that it ends immediately – from the exact invoice that crosses the line. From that point you have to charge VAT.
Sounds simple, but
If you notice too late, you owe VAT you never actually charged – adding it retroactively with the client is often not realistic in practice.
What has to be on a small-business invoice
No VAT shown, but a note such as "VAT exempt under the small-business exemption (Kleinunternehmerregelung)". If VAT is shown anyway, you owe it to the tax office – regardless of whether you were actually exempt.
Can you opt out of the small-business exemption?
Yes, with an application to opt into standard VAT treatment (Regelbesteuerungsantrag, form U12). That can be worth it if most of your clients are businesses that reclaim VAT anyway, or if you're planning bigger investments. Sounds simple, but: opting in locks you in for at least 5 calendar years – not a decision to make on a whim.
| Small business (no VAT) fits when … | Standard VAT treatment fits when … |
|---|---|
| your clients are mostly private individuals (they can't reclaim VAT) | your clients are mostly businesses (VAT costs them nothing) |
| you invest or buy little | you're planning bigger purchases (equipment, a car, software) |
| you want the least possible admin | you work a lot with foreign B2B clients and want input tax back |
Does the exemption apply in other EU countries too?
Since 2025, you can use the Austrian small-business exemption for revenue in other EU countries too, under certain conditions, as long as your EU-wide annual revenue doesn't exceed €100,000 – this needs a separate registration in Austria.
The small-business VAT exemption is not the same as the small-business flat-rate scheme
A common mix-up: the small-business exemption (Kleinunternehmerregelung) is about VAT – whether you charge it. The small-business flat-rate scheme (Kleinunternehmerpauschalierung) is a completely separate income-tax rule about how your profit is calculated – more in the profit calculation guideSoon. One doesn't tell you anything about the other.
Mistakes we see most often
- Wrongly counting EU B2B revenue towards the €55,000 threshold – and switching to VAT unnecessarily as a result
- Accidentally issuing an invoice with VAT while still a small business
- Exceeding the threshold but continuing to invoice without VAT for months
- Confusing the small-business VAT exemption with the small-business flat-rate income tax scheme
- Opting out of the exemption without pricing in the 5-year lock-in
What does this mean for me? Whether the small-business exemption or opting into VAT fits you depends on your clients and expenses – we work it out for you in a free 30-minute first call. Book a free first call.
Frequently asked questions
Is the small-business threshold gross or net?
Do sales to clients abroad count towards the threshold?
What do I write on my invoice as a small business?
Do I need a VAT ID (UID) as a small business?
How long am I locked in if I opt out?
Do I have to file a VAT return as a small business?
What happens if I exceed the threshold by a small amount?
Keep reading 2-minute quick guide on this topic · VAT basics in Austria · VAT ID numberSoon · Flat-rate vs. actual expensesSoon
Official sources
- usp.gv.at / wko.at: Small-business exemption (Kleinunternehmerregelung), opens in a new tab
- wko.at: Small-business exemption FAQ, opens in a new tab
- wko.at: VAT ID numbers FAQ, opens in a new tab
- RIS: § 6 UStG, opens in a new tab
Not sure whether opting out is worth it?
Whether the small-business exemption or standard VAT treatment fits you depends on your clients and expenses – and on a 5-year lock-in if you change your mind. In a free 30-minute first call, we work it out for you.
PSTax advises 600+ clients in Austria, fixed prices from €800/year, in German and English.
Pascal Schraml
Austrian certified tax advisor (Steuerberater), founder of PSTax
Advising self-employed people and freelancers in Austria since 2023, bilingual service in German and English, 600+ clients.
General information, not individual tax advice. All figures apply to 2026 and change annually. PSTax (Pascal Schraml Steuerberatung FlexCo) is a member of the Austrian Chamber of Tax Advisors and Auditors (KSW).
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