Freelance service contract – VAT liability

To determine whether an employment relationship or a freelance service contract exists, § 47 para. 2 of the Austrian Income Tax Act 1988 defines two key criteria that indicate an employment relationship: being subject to instructions from the employer and being integrated into the employer’s business organization.

In cases where these two criteria do not clearly distinguish between self-employment and non-self-employment, the Austrian Supreme Administrative Court (VwGH) consistently refers to additional indicators, such as the absence of entrepreneurial risk or the ability to appoint a substitute.

If a freelance service relationship exists, it is considered a self-employed activity under VAT law. As a result, freelance service providers qualify as entrepreneurs and are therefore subject to VAT.

VwGH 23.11.2023, Ra 2022/13/0102