4.9, 10, 13 or 20 Percent? Setting Up VAT Rates Correctly in Your POS System

Few topics raise as many questions at the checkout as the correct assignment of VAT rates. An incorrectly configured tax rate affects not only the receipt but also daily closes, reports and your bookkeeping.

If you set up tax classes and products cleanly from the start, you reduce manual correction work and ensure that VAT is calculated and shown correctly and automatically in day-to-day operations.

In this article, we give an overview of the most important VAT rates in Austria and show what to look out for when setting up your POS system. The binding tax classification of individual goods and services should always be clarified with your tax advisor.

The most important VAT rates in Austria

In Austria, a standard rate of 20 percent generally applies. Reduced rates apply to certain goods and services that are explicitly defined by law.

20 percent – the standard rate

The standard rate of 20 percent applies to most taxable goods and services unless a statutory exception is provided.

This includes, for example, many general services, technical products, household goods and numerous beverages.

10 percent – the reduced rate

The reduced rate of 10 percent applies, among other things, to certain goods and services such as books, newspapers, accommodation services and other transactions defined by law.

Which products actually fall under this rate depends on their specific tax classification.

13 percent – the second reduced rate

The 13 percent rate likewise applies only to explicitly defined transactions. These can include, for example, certain cultural services, admission tickets, plants, animals or certain agricultural products.

A blanket assignment based on a general product name is therefore not always sufficient.

4.9 percent – selected foods

Since 1 July 2026, a reduced VAT rate of 4.9 percent has applied to selected foods in Austria. Only the products defined by law are affected. Other foods may still be subject to a rate of 10 or 20 percent.

The reduced rate applies to the sale of foods in retail. Hospitality services – such as on-site dining – remain unaffected and continue to be subject to the previous rate.

In food retail in particular, this means that similar products do not automatically share the same tax rate. What matters is the precise legal classification of each individual item.

In addition, a special rate of 19 percent applies in the former customs exclusion zones of Jungholz and Mittelberg. For most Austrian businesses, however, this special case is not relevant.

Why correct assignment at the checkout matters so much

With a cash register compliant with the Austrian Cash Register Security Ordinance (Registrierkassensicherheitsverordnung, RKSV), the cash payment amount is recorded separately by tax rate and shown accordingly on the receipt and in the signed register data.

For this breakdown to be correct, every item or service sold must be assigned to the correct tax class.

An incorrectly configured tax rate can lead to the following problems, among others:

• incorrect tax amounts on receipts
• faulty daily and monthly reports
• discrepancies between the POS system and bookkeeping
• extra work on the advance VAT return (Umsatzsteuervoranmeldung)
• time-consuming corrections of sales that have already been completed

It becomes especially problematic when an error is only discovered after several weeks or months. Careful setup before the first sale therefore saves considerably more time than a later correction.

Keep product groups and tax classes cleanly separated

Many POS systems allow you to assign a tax rate to an entire product group. This can simplify setup, but it is not always sufficient.

Products with different tax rates can occur within the same product group. A modern POS system should therefore manage tax classes independently of the actual assortment structure.

A sensible setup looks like this, for example:

1. Central tax classes are created for the tax rates you need.
2. Product groups are given a default tax class where needed.
3. New items inherit this tax class as a preset.
4. Items that differ can be individually assigned to another tax class.
5. Changes are documented and applied from a defined point in time.

The product group thus makes administration easier, but it does not replace checking each individual product.

Consider the type of sale and service

It is not only the product itself that can be relevant for tax classification. In certain cases, the type of service also plays a role.

This applies, for example, to:

• in-store sales
• pickup
• delivery
• on-site dining
• combined goods and services
• promotional bundles and set menus
• vouchers
• deposits and partial payments

Especially in hospitality, hotels and retail, outwardly similar transactions can be treated differently for tax purposes.

A tax rate should therefore not be chosen based solely on a general label such as “food”, “drink” or “service”. What always matters is the specific transaction.

How to set up VAT rates in your POS system

1. Determine the tax classes you need

Work with your tax advisor to determine which tax rates your business actually needs. Not every business has to create all available tax rates in its POS system.

2. Assign items unambiguously

Assign a suitable tax class to every item and every service. For unclear products, do not rely solely on similar items or general experience.

3. Use defaults as presets

Default tax classes can be used for product groups with largely uniform taxation. Still check whether individual items deviate from them.

4. Document unclear cases

Flag items whose tax treatment has not yet been conclusively clarified. Record your tax advisor's decision in a traceable way.

That way, the same question does not have to be re-examined with every later change.

5. Run test sales

Before going live, create test receipts with items from different tax classes.

Check the following:

• the gross and net amounts
• the calculated tax amount
• the breakdown by tax rate
• rounding differences
• discounts
• cancellations
• mixed baskets
• different payment methods

6. Check your reports

Check whether daily, monthly and export reports break down revenue by tax rate in a traceable way.

The figures should match the receipts and the data provided for bookkeeping.

7. Do not overwrite changes retroactively

When a tax rate changes, the existing configuration should not simply be replaced retroactively.

A good POS system takes into account the date from which a new tax rate applies. Receipts that have already been completed and historical reports must remain unchanged and traceable.

8. Consider open transactions

When a tax rate changes, open orders, reservations, deposits, vouchers and invoices that have not yet been finalized should also be reviewed.

What can be decisive is when the service was provided, the goods were delivered or the transaction was executed for tax purposes. Such transitional cases should be coordinated with your tax advisor.

Typical setup mistakes

One tax rate for the entire product group

A product group such as “food” or “drinks” is often not enough for a correct tax assignment. Different tax rates can occur within such a group.

Choosing the tax class based on the item name alone

A product's name does not always clearly indicate how it is treated for tax purposes. Composition, packaging, type of sale or service combination can also be relevant.

Applying changes without testing

A new tax class should be tested with test items, discounts, cancellations and mixed sales before it is activated.

Changing historical sales

Changes to items must not cause earlier receipts or reports to be displayed retroactively with a new tax rate.

Treating reports and receipts separately

It is not enough for the receipt alone to look right. The daily close, accounting export and VAT report must also be based on the same calculations.

Special cases belong with your tax advisor

For many standard items, the assignment is done quickly. It becomes more difficult with combined services, product bundles, vouchers, deposits or different types of sale.

In such cases, do not rely on rules of thumb or the configuration of a similar business. A brief consultation with your tax advisor creates clarity and prevents an incorrectly chosen tax rate from being used for an extended period.

The decisive references are the Austrian VAT Act (Umsatzsteuergesetz) and the current information from the competent authorities and professional bodies. The reduced rates apply only to the transactions provided for by law.

Conclusion

At first glance, Austria's VAT rates are quickly explained. In detail, however, the correct assignment of individual goods and services can be demanding.

A well-configured POS system supports you with central tax classes, sensible presets, individual exceptions and traceable reports. What matters is that product groups, tax classes and historical sales data remain cleanly separated from one another.

With Lonio, you can manage tax classes centrally, assign them unambiguously to items and evaluate them transparently in receipts and reports. We would be happy to show you the right setup for your business in a free initial consultation.

Note: This article is for general information only and does not replace legal or tax advice. For binding guidance, please consult your tax advisor or the competent authority.