The ECJ has revised the previously held view of the Austrian tax authorities, that a rented property always represents a domestic fixed establishment of the foreign owner with the consequence that the foreign owner must register for VAT in Austria and invoice with Austrian VAT. According to a ruling dated 3.6. 2021, C-931/19, Titanium Ltd, the court clarified that a property located in Austria without fulfilling the criteria of Art. 11 (EU) No. 282/2011 in terms of a suitable human structure does not constitute a fixed establishment.
The judgment in question has far-reaching effects on foreign investors who rent out property in Austria. As a consequence of this decision, non-resident taxpayers who rent out Austrian property to entrepreneurs (e.g. to an operating company with a hotel licence) without having their own staff in Austria have to apply the Reverse Charge Mechanism according to § 19 (1) Austrian VAT Act starting from 1 January 2022. The tax shall be payable
by the entrepreneur to whom the services are supplied. In this case, rental invoices will have to be issued net with reference to the Reverse Charge Mechanism.
Source WTS
