Tbilisi, 5th of May 2011

1. Mag. Martin Riedler Flat ratetaxation schemes in Austria Tbilisi, 5th of May 2011

2. Flat rate taxation schemes in Austria • Flat rate taxation for Income Tax purposes (partial and full flat rate taxation): • Flat rate taxation for VAT purposes(refers only to the determination of deductible Input VAT) Flat rate taxation schemes in Austria/Mag. Martin Riedler/Tbilisi/5th of May 2011

3. Flat rate taxation for Income Tax purposes • Flat rate deduction of business expenses (partial flat rate taxation):-General flat rate deduction of expenses- Industry-specific flat rate taxation • Flat rate taxation of profits (full flat rate taxation):- Industry-specific flat rate taxation (smaller farmers, hotels and catering businesses, food retailers or grocers) Flat rate taxation schemes in Austria/Mag. Martin Riedler/Tbilisi/5th of May 2011

4. General flat rate deduction of business expenses • For self employed taxpayers such asmedicals, lawyers etc., and for traders • Considered a special cash accounting method • Income Tax Act specifies the general provisions Flat rate taxation schemes in Austria/Mag. Martin Riedler/Tbilisi/5th of May 2011

5. Requirements for General flat rate deduction of business expenses • Supplies made in the preceding accounting year must not exceed € 220,000 • No double-entry book keeping allowed • The taxpayer has to opt for the flat rate deduction scheme in the tax form Flat rate taxation schemes in Austria/Mag. Martin Riedler/Tbilisi/5th of May 2011

6. General flat rate deduction of business expenses • Business expenses are equalled to 12% of net revenues, limited to the maximum of € 26,400 • For some professions a rate of 6% of net revenues is fixed, limited to the maximum of € 13,200 (e.g. for commercial or technical consultancy, Lecturers, Scientists, Teaching and educational activities etc.) Flat rate taxation schemes in Austria/Mag. Martin Riedler/Tbilisi/5th of May 2011

7. Additional Business expenses In addition to flat rate business expenses, the following (already paid) expenses may be claimed with their actual amounts: • Expenses for goods, semi-finished goods, raw materials and consumable materials, • Expenses for wages and incidental employment costs, • Remuneration for third-party services, • Social security contributions Flat rate taxation schemes in Austria/Mag. Martin Riedler/Tbilisi/5th of May 2011

8. Calculation of taxable profit Net revenues - Net expenses for goods, semi-finished goods raw materials and consumable materials - Wage costs - Net expenses for third-party services - Social security contributions - 6% or 12% of net revenues = TAXABLE PROFIT Flat rate taxation schemes in Austria/Mag. Martin Riedler/Tbilisi/5th of May 2011

9. Full flat rate taxation Flat rate taxation of profits for taxpayers working in certain industries No double-entry book keeping allowed Profits are computed as a base amount plus a percentage of the revenues Several ordinances issued by the Federal Ministry of Finance specify the provisions for each industry Flat rate taxation schemes in Austria/Mag. Martin Riedler/Tbilisi/5th of May 2011 9

10. Flat rate taxation for VAT purposes • Refers only to the determination of deductible Input VAT • Not bound to the option for flat rate taxation for Income Tax purposes • General flat rate deduction of Input VAT or Industry-specific flat rate deduction of Input VAT Flat rate taxation schemes in Austria/Mag. Martin Riedler/Tbilisi/5th of May 2011

11. General flat rate deduction of Input VAT • Supplies made in the preceding accounting year must not exceed € 220,000 • Option for flat rate scheme is allowed for book-keeping taxpayers, too • The flat rate deduction of Input VAT is generally calculatedat a rate of 1.8% of total supplies made (max. € 3,960) Flat rate taxation schemes in Austria/Mag. Martin Riedler/Tbilisi/5th of May 2011