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Glossary

Einnahmen-Ausgaben-Rechnung (cash-basis accounting)

In short

Under the Einnahmen-Ausgaben-Rechnung your profit is the excess of business receipts over business expenses (§ 4 Abs. 3 EStG). What counts is when the money moves.

· General information, not tax advice.

You may use it if you have no statutory duty to keep books and do not keep them voluntarily. Liberal professions such as doctors or lawyers fall outside the accounting duty of the Austrian Commercial Code (UGB) and can use it at any turnover. Corporations such as the GmbH always have to keep double-entry books.

Trades become subject to bookkeeping when their business has revenue above EUR 700,000 in each of two consecutive financial years. The duty then starts with the second year after that. With revenue of EUR 1,000,000 or more in one year, it starts in the following year (§ 189 UGB). Farming and forestry businesses have their own EUR 700,000 limit under § 125 BAO.

Receipts count in the year in which the money is at your disposal, expenses in the year you pay them (§ 19 EStG). Regularly recurring payments such as rent that move shortly before or after the turn of the year belong to the year they relate to; the tax administration treats up to 15 days as short. Prepayments, for example for rent or consulting, that reach beyond the following year are spread evenly over their period.

Fixed assets are the exception to the payment rule. You depreciate wearing assets such as machines, vehicles or office equipment over their useful life and keep an asset register for them. Low-value assets up to EUR 1,000 are deducted in full in the year you pay for them. Land held as current assets, and gold, silver, platinum and palladium not processed directly, are deducted only when they leave the business.

You may treat VAT as a pass-through item (net method) or include it in receipts and expenses (gross method); § 4 Abs. 3 EStG leaves the choice to you. As a VAT-exempt small business you tick the gross method on the form.

Besides your receipts and invoices, trades keep a goods-received book for goods bought for resale or processing; no stocktake is needed. You enter the result on form E 1a, an annex to the income tax return E 1. Small businesses can use the simplified annex E 1a-K under certain conditions, for example business receipts of up to EUR 55,000 net. You do not send a separate statement.

Questions about this term

Who may use cash-basis accounting?

Anyone with no bookkeeping duty under the UGB or BAO who does not keep books voluntarily. In practice that means liberal professions and traders whose revenue did not exceed EUR 700,000 in two consecutive years. A GmbH cannot use it.

Does a December invoice paid in January count in the old year?

No, in the new one, because the money arrives in January. Only regularly recurring payments such as rent that move up to 15 days before or after the turn of the year are treated differently. VAT may follow different dates.

When do I have to switch to double-entry bookkeeping?

As a trader, when your revenue exceeds EUR 700,000 in each of two consecutive years: from the second year after that. With EUR 1,000,000 or more in one year, from the following year.

Does Germany have cash-basis accounting too?

Yes, as the Einnahmenüberschussrechnung (EÜR), also under § 4 Abs. 3 EStG. The German tax office can require traders to keep books from, among other things, turnover above EUR 800,000 or profit above EUR 80,000 a year (§ 141 AO).

Sources