Reporting obligations after registering a foreigner’s business.

After commencing business operations, whether as an individual or a legal entity, an entrepreneur is subject to registration or reporting obligations to the authorities.

It’s essential to register at the local tax office (determined by the business’s headquarters), with the Health Insurance Company, and Social Insurance (if the entrepreneur has employees or is concurrently a statutory employee of the business entity being represented).

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The Department of Trade Business of the respective district office, acting as a Single Contact Point (SCP), simultaneously registers a physical person with the Health Insurance Company and the tax office when announcing a trade license.

This possibility also applies to legal entities when registering with the tax office and entering the Commercial Register (CR), although it’s voluntary for them.

Tax Office: Every business entity must request registration with the tax administrator, who subsequently assigns a tax identification number (TIN) and issues a document confirming the TIN assignment. The deadline for submitting the registration request is within 30 days from obtaining the permit or authorization to operate the business.

Upon reaching the legally stipulated 12-month turnover threshold (€49,790 or more), it’s necessary to register as a VAT payer. In such a case, in addition to the TIN, the entrepreneur also receives a Value Added Tax identification number (VATIN).

The entrepreneur can voluntarily apply for VAT payer registration if they haven’t reached the legally stipulated turnover threshold of €49,790. Being a VAT payer at the start of the business might be advantageous, especially if their business targets VAT-paying customers, allowing their business partners to claim VAT on goods or services.

A “voluntary VAT payer” can be both a physical person – entrepreneur (sole trader) and a legal entity. The decision whether to allow registration as a VAT payer is at the discretion of the local tax administrator, considering the documents provided, demonstrating future taxable transactions. Approval might be conditional upon submitting collateral ranging from €1,000 to €500,000.

Regarding reporting obligations to the tax office, the entrepreneur is obligated to disclose their business account number(s) held at the bank for business purposes if not provided during the trade license announcement. Changes to the business account(s) can also be reported electronically via the Financial Administration portal following registration. IMPORTANT: As of January 1, 2020, reporting the bank account number or its changes is no longer necessary; the bank handles this obligation on behalf of the entrepreneur.

If the entrepreneur uses a motor vehicle for business purposes, the tax obligation arises on the first day of the month when the vehicle is used for business. The taxpayer specifies this tax liability when filing the tax return at the end of the tax period.

Furthermore, the entrepreneur must report any substantial changes related to their business, such as changes to the data recorded in the trade or commercial register (name, address, ID number, statutory body, or other acting individuals or organizational units). Changes should be reported within a 30-day timeframe.

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Changes to the information provided in the trade license announcement must be reported to the respective Trade Licensing Office within 15 days. In the case of an address change, the responsibility for confirming the change shifts to the Trade Licensing Office according to the new business address.

Announcing a new business activity is not considered a change of information but a new announcement.

Health Insurance Company: A physical person-entrepreneur can enroll in the Health Insurance Company using the trade license announcement form. If the entrepreneur also employs individuals, they must inform the Health Insurance Company within 8 working days of the insurance payment payer’s change for each employee in their insurance company. The same obligation applies to a legal entity if they are an employer.

Social Insurance: A physical person-entrepreneur enrolls in the Social Insurance only when their income reaches the required threshold, beginning in the year following the start of the business. The obligation to register as a social insurance payer arises on July 1st of the respective year, and the registration deadline is 8 days. If the individual or legal entity becomes an employer, the obligation arises from the date of employment contract conclusion, and the entrepreneur registers as an employer within 8 days of this obligation.

After commencing business activities, an entrepreneur has additional obligations resulting from specific regulations depending on the type of business, such as notifying the municipality when opening a terrace or applying for permission to sell alcohol, and more.