Back in February, 2020 rumours spread that U.S. tech giant Google was going to increase its ad charges against Austrian companies due to a new tax introduced in the country. As of by September 1st, the rumour became official, and tax charges will, in fact, increase.

Read on for knowledge.

1. What Is Happening?

Now fixed: 5% increase from November 1st.

The digital tax that has been in force in Austria since the beginning of the year is passed on to advertising customers. Google has now announced that it will increase advertising prices by five percent from November 1st and justifies the measure with the new tax that was initiated by the former ÖVP-FPÖ government. A corresponding message was sent to customers by the US tech giant.

It is the law. Any history?

Back in February, 2020 the United States threatened to take action against countries where digital advertising tax laws were to be introduced. Austria promised to stay loyal to “tax equality” between digital and traditional media. The law applies to firms with annual sales of 750 million euros and above, if a minimum of 25 million euros worth was generated in Austria.

We’ll be doing that in the second half of the year.

– Google (not reviewed)

Well, it did happen, November 1st is undoubtedly the second part of the year…

#austria #5 #percent #tax #digital #ads

2. Not Only Austria

Great Britain is also affected.

In addition to Austrian companies, British customers also received the information because the kingdom has also introduced a digital tax, albeit only at a rate of two percent. In view of the price increase, Google emphasizes that the international community should work out a fundamental tax reform instead of unilaterally levying new taxes. The reason for the special tax was surveys according to which multinational tech corporations tend to pay little taxes because they usually do not have any operating facilities locally and can thus transfer their profits to countries with low taxes in a tax-friendly manner.

European Union project failed.

The digital tax is actually a European initiative, but a corresponding proposal by the EU Commission failed due to the unanimous principle prevailing in the Union. Austria then implemented the levy single-handedly, albeit in a slimmed-down variant. In fact, it is now a tax on online advertising. Data trading and platforms such as Amazon or Airbnb have been removed from the tax liability included in the EU concept. Digital companies with sales of more than 750 million euros are affected. This ensured that only multinationals such as Facebook or Google are taxed, but not Austrian companies. The five percent surcharge is due for every advertisement that is displayed to users in Austria. The move was announced in January, 2020.

#digital #tax #on #ads #austria

3. Final Words

With Google’s new charge introduced advertising agencies are facing a 5% increase in taxes in the country. Fair or not is for another argument, however, it is undoubtedly hurtful to the domestic revenue chain, but is still being compensated with the 750 million sales floor.

DISCLAIMER

We hereby expressly do not declare that we are the author of the post or the content it contains. It is our intention to summarize the essential information from several sources and to provide our site visitors with knowledge about our services.

REFERENCES

DernStandard. 2020. “Google wälzt Digitalsteuer auf österreichische Werbekunden ab”. Accessed 18th September.

TheLocal. 2020. “Google to raise ad fees to cover Austrian tax”. Accessed 18th September.