(Nov. 6, 2019) On October 22, 2019, the Digital Tax Act 2020, which levies a 5% digital tax on domestic online advertising services provided by large multinational companies, was published in the Austrian Federal Law Gazette. The Act applies to all online advertising services provided after December 31, 2019. (Digital Tax Act § 7, para. 1.)
The Digital Tax Act is restricted to domestic online advertising services. Domestic online advertising services are defined as services that are “received by a user with a domestic IP address and whose content and design are (also) targeted at domestic users.” Online advertising services consist of advertisements on a digital interface, in particular banner advertising, search engine advertising, and similar advertising services. (§ 1, paras. 1, 2.)
The digital tax applies to companies that provide or contribute to online advertising services for remuneration, generate a yearly worldwide revenue of €750 million or more (about US$834 million), and generate a yearly domestic revenue of €25 million (about US$27.8 million) from providing online advertising services. (§ 2, para. 1.) Such companies include, among others, Facebook, Google, and Amazon.
In May 2019, the European Commission presented a proposal for an EU-wide digital services tax, which would have applied to revenues created from online targeted advertising, the transmission of data collected about users on digital interfaces, and multisided digital interfaces providing intermediation services. However, member states were not able to reach a unanimous decision in the Council of the EU on the proposal. Individual EU member states therefore decided to introduce a national tax instead. France, in July 2019, enacted a law that levies a 3% tax on digital services. Other EU member states have also announced plans for a digital services tax.