Insights
VAT
AMS‑funded educational services and input tax
Educational services are exempt from tax. Providers of such services may, however, waive this exemption and claim input tax deduction.
In order for this option to be exercised, the supplying company must demonstrate that the tax exemption would lead to distortions of competition. The prerequisite is, in any case, that the educational services are provided predominantly to entrepreneurs. Where a VAT identification number is present, it may be assumed that the recipient is an entrepreneur.
AMS‑funded educational services not subject to VAT
Since AMS subsidies are not considered consideration within the meaning of the Value Added Tax Act, the Ministry of Finance states that activities financed with these subsidy payments are to be regarded as non‑VAT‑liable transactions. As the activity is not taxable, neither the tax exemption nor the option thereto has any legal effect for these transactions. Activities for which AMS payments are made are therefore also not to be taken into account when assessing whether educational services are predominantly provided to entrepreneurs.
The Ministry of Finance informed that the previous administrative practice, according to which non‑taxable supplies under the Labour Market Service Act (Arbeitsmarktservicegesetz) did not reduce input tax deduction, will be abandoned with effect from the assessment year 2027. It now holds the view that activities financed by non‑taxable grants do not constitute an economic activity aimed at the sustainable generation of revenue and therefore no input tax deduction is due.
AMS‑funded educational services not subject to VAT
Since AMS subsidies are not considered consideration within the meaning of the Value Added Tax Act, the Ministry of Finance states that activities financed with these subsidy payments are to be regarded as non‑VAT‑liable transactions. As the activity is not taxable, neither the tax exemption nor the option thereto has any legal effect for these transactions. Activities for which AMS payments are made are therefore also not to be taken into account when assessing whether educational services are predominantly provided to entrepreneurs.
The Ministry of Finance informed that the previous administrative practice, according to which non‑taxable supplies under the Labour Market Service Act (Arbeitsmarktservicegesetz) did not reduce input tax deduction, will be abandoned with effect from the assessment year 2027. It now holds the view that activities financed by non‑taxable grants do not constitute an economic activity aimed at the sustainable generation of revenue and therefore no input tax deduction is due.