EARLY BIRD

Registration of the (freelance) business

A business that is subject to the trade regulations must be registered with the trade authority that is locally responsible for the trade location. Activities for which no certificate of competence is required are called free trades.

In the case of free trades, the activity may already be commenced upon registration of the trade. In the case of regulated trades, proof of qualification must be provided when registering the trade and the trade may not be commenced until a legally binding notice of grant has been issued. Registration in the trade register is carried out by the trade authority and is certified by an extract from the trade register.

Our tip

Activities that are not subject to trade law, and thus without a “trade licence”, do not qualify you as a member of the Chamber of Commerce. This also has different legal consequences in terms of social insurance (apart from the fact that you save on WK contributions).

Chamber of Commerce and start-up support

The Chamber of Commerce (Wirtschaftskammer/ WKO) collects an annual contribution (the basic levy), which ranges from 35 to several hundred euros, depending on the sector and legal form or size of your company.

Freelancers (such as doctors, notaries, lawyers, civil engineers, artists, etc.) do not belong to the Economic Chamber, but usually have their own interest groups (e.g. Medical Chamber).

Certain levies, contributions and fees in connection with a start-up are not charged for a period of up to 3 years. The prerequisite for this is a declaration of new establishment, which is usually confirmed by the Chamber of Commerce by means of the form NeuFö 2.

This is what disclosure is all about

For corporations, the annual financial statements must be submitted electronically to the Commercial Register Court within 9 months after the balance sheet date. For micro and small limited liability companies, there are simplifications in that only a balance sheet with a form or limited notes with disclosure of the list of assets must be disclosed. The filing fee of € 20 is waived if the annual turnover does not exceed € 700,000 and the annual financial statements are filed electronically within 6 months after the balance sheet date.

Income tax

Income tax is levied on the income you have received within a calendar year. The term “income” is understood to mean the total amount from the seven types of income, taking into account any losses, minus special expenses and extraordinary burdens. The child allowance can be claimed up to and including the employee tax assessment for the calendar year 2018. Since 2019, the Family Bonus Plus replaces the tax deductibility of childcare costs and the child allowance.

Tax rate

In Austria, different tax scales are applied for the calculation of income tax depending on the amount of the respective annual income. The exact tax rates can be found here.

A higher tax rate of 55 per cent will be applied for a limited period of time for the years 2016 to 2025 for portions of income above 1 million euros per year.

Marginal tax rate

The marginal tax rate indicates the tax burden associated with any further increase in income. The average tax rate is the amount of the average income tax in relation to the total income.

Conditions

Value added tax (VAT) is payable on all

•  supplies and services which
•  an entrepreneur
• within the country
• for consideration and
• within the scope of his business

carried out.

These conditions must all be met together (cumulatively), otherwise the transaction is not subject to turnover tax. Only the final consumer is charged VAT, but the entrepreneur is liable for the tax. The entrepreneur has the right to deduct input tax. The input tax is the turnover tax that is charged to the entrepreneur by another entrepreneur. The VAT itself is a so-called transitory item. The difference between the VAT due (from own supplies and services) and the deductible input tax (from supplies and services received) is the so-called VAT payable. As a rule, this amount must be calculated for the calendar month and paid to the tax office. Any resulting input tax surplus must be reported and is credited to the tax account.

Invoices must be issued if a trader makes sales to other traders in Germany for their businesses or to legal entities that are not traders or makes a taxable supply of work or services in connection with a property to a non-trader.

Advance return for turnover tax

The calculation of the VAT payment burden must be carried out monthly. The VAT is compared with the input tax amounts, the difference results in an advance payment or a credit.

The submission of the calculation or announcement (notification) of the VAT payment burden to the tax office is called the advance VAT return (UVA). The period for which the advance payment is calculated is called the advance VAT return period. This is generally the calendar month. Entrepreneurs whose turnover in the previous calendar year did not exceed € 100,00 have the option of choosing the calendar quarter as the advance return period (quarterly calculation of turnover tax).

The 15th is tax day

The VAT return must be submitted electronically via FinanzOnline by the 15th of the second following month (= 1 month and 15 days after the end of the advance return period). You need access to FinanzOnline for this. If no Internet connection is available, the official form (Form U30) is used. Entrepreneurs whose turnover in the previous year did not exceed € 30,000 do not have to submit an advance return. The punctual payment of a VAT debt is sufficient.

If a payment burden arises for an advance return period, the payment must also be made by the 15th of the second following month at the latest. In the event of late payment, a late payment surcharge may be imposed.

Income tax return

An income tax return must always be submitted for a past calendar year if the income, which does not include income subject to wage tax, amounted to more than € 11,000 or if you are requested to do so by the tax office (e.g. by sending tax returns to us).

In the case of income-expenditure accountants, you must enclose a “copy of the statement of business income and business expenses” with the tax return – the so-called EAR. The operating expenses must be broken down into groups in this statement.

If you are a balance sheet accountant, you must enclose the balance sheet and profit and loss account.

Deadlines

The income tax return together with the enclosures must generally be submitted by the end of April or June of the following year. However, if you are represented by a tax advisor, you have up to one year longer to submit the returns.

Income and expenditure account

If you are a balance sheet accountant, this topic is so central that you employ an accountant anyway or have directly commissioned us – the question is thus answered.

However, if you are an income and expenditure accountant, it is important to find the best system taking into account the particular circumstances of your business. Optimal income-expenditure accounting is when you, as an entrepreneur, do not need any accounting knowledge to prepare the basic records and do not need much time to prepare clear records.

For the preparation of the basic records you need

• a revenue book,
• an expenditure book and
• the bank statements, furthermore
• a goods receipt book (if you resell goods)

Cash register obligation

The cash register obligation is the obligation to individually record all cash receipts for the purpose of determining the lot with an electronic cash register, cash register system or other electronic recording system. It applies to entrepreneurs who generate business income from an annual turnover of € 15,000 per business, provided that the cash turnover exceeds € 7,500 per business per year.