At the last weekend, Parliament adopted further COVID-19 legislative packages. In addition to extensions and clarifications on the COVID-19 legislative packages adopted so far, numerous other new provisions have been introduced in response to the COVID-19-crisis. The following is an overview of the most important tax and legal innovations for companies, due to the large extent classified according to topics.
1. Tax Law
Tax exemption for grants and subsidies. Grants and subsidies which are granted to taxpayers by the crisis management fund, the financial hardship fund or the Corona-crisis fund as well as similar subsidies granted by federal states, municipalities or interest groups for coping with the COVID-19-crisis, are tax exempt. This applies to all grants and subsidies that have been granted since March 1, 2020.
Tax exemption for allowances and bonuses. Allowances and bonuses that are granted in 2020 due to COVID-19, are tax exempt up to EUR 3,000,-. The tax exemption requires that the payments have been made in addition and solely for the mentioned purpose and that no similar payments have been made in the past. The allowances and bonuses are not taken into account in connection with the so called „Jahressechstel“. In case the mentioned requirements are not met, the payments will be taxed at the progressive income tax rate.
Continuation of the commuting allowance. The commuting allowance will still be granted in cases of temporary short-term work, telework (“home office”) or absence of work due to COVID-19.
Half average tax rate for termination of medical practices. In case the requirements for the preferential taxation of profits from the termination of businesses with the half tax rate have been met, the tax relief will remain unaffected by income that is obtained by retired doctors due to the COVID-19-pandemic in 2020. Therefore, the half tax rate remains applicable for retired doctors who are (again) practicing during corona-crisis.
Tax reliefs for the production of disinfectant. With the modification of the alcohol tax act special regulations for the production of disinfectants have been introduced. These provide for reimbursements of levied alcohol tax under certain conditions, in case the alcoholic product has been used to produce disinfectant.
Suspension of deadlines for reporting of beneficial owners. The suspension of specific deadlines has been extended to the Beneficial Owners Register Act by the 3rd COVID-19-Act. The deadlines for reporting of information by the legal entities as well as the deadlines for the threat and imposition of coercive fees, that were still open on March 16, 2020, or which started/start running between March 16 and April 30, 2020 will be suspended and will start anew beginning May 1, 2020. This includes in particular the four-week deadline for initial reports, reports of amendments and the confirmation reports (mandatory for the first time in 2020). It should be noted that the new regulations do not include the deadline for conduct of the annual due diligence obligations in relation to the beneficial owners.
Suspension of deadlines in fiscal penal law procedures. With the 3rd COVID-19-Act the deadlines in fiscal penal law procedures have been revised. The suspension of specific deadlines until April 30, 2020 for deadlines that were still open on March 16, 2020, or which started/start running between March 16 and April 30, 2020 is now also applicable for the following deadlines:
- the deadline for filing an application for reopening of the proceedings (“Wiederaufnahme des Verfahrens”)
- the deadline for filing an application for restitutio in integrum (“Wiedereinsetzung in den vorigen Zustand”)
- the deadline for the raise of objections to the minutes (“Einwendungen zur Niederschrift”)
Furthermore, the panel has been given the possibility to pass resolutions or hold consultations using technical communication devices (ie video conference) or in circular resolutions until September 30, 2020.
Postponement of the organizational reform of the tax administration. The organizational reform of the tax administration, which has been intended for July 1, 2020 has been postponed half a year due to the COVID-19-pandemic. The reform shall enter into force on January 1, 2021.
2. Corporate Law
Measures regarding company law. The second COVID-19 legislative package already introduced the COVID-19 Corporate Law Act (COVID-19-GesG), which came into force on 22 March 2020 and will expire on 31 December 2020. With the fourth COVID-19 legislative package, the COVID-19-GesG was partially amended. The following regulations now apply: In order to prevent the spread of COVID-19, meetings of shareholders and members of corporate bodies of a corporation, a partnership, a cooperative, a private foundation, an association, a mutual insurance association, a small insurance association or a savings bank may be held and resolutions may be passed without the physical presence of the participants in accordance with a regulation to be issued. Contrary to the generally applicable rule, meetings or resolutions of stock corporations, limited liability companies and cooperatives may be held or passed within the first twelve months of the financial year of the company concerned. Insofar as periods or dates for certain meetings are stipulated in the articles of association, such meetings may also take place at a later date in 2020. Quarterly supervisory board meetings of stock corporations, limited liability companies and cooperatives may also take place after 30 April 2020. If, as a result of the COVID‑19-pandemic, it is not possible for the legal representatives of a corporation, the management board of a cooperative or the management body of an association to prepare the accounting documents in the first five months of the financial year and to present them to the members of the supervisory board, this period may be exceeded by a maximum of four months. In addition, the annual financial statements must be submitted to the commercial register no later than twelve months after the balance sheet date, instead of the usual nine months. This rule applies to all companies whose last or next balance sheet date is between 30 September 2019 and 31 July 2020.
Amendment of the Notaries Order. If a legal transaction, a declaration or a legally relevant fact requires the form of a notarial deed or other public or publicly certified deed, the official notarial acts required for the drawing up of the deed may pursuant to Sec. 90a of the Notaries Order (NO) be carried out using an electronic means of communication (e.g. video conference) in order to prevent the spread of COVID-19. This provision will expire on 31 December 2020. This means that notarial deeds and certifications may be effected without the physical presence of the parties.
Support for operational financing – Extended guarantees. In order to maintain the business and to bridge a temporary liquidity shortage due to the COVID-19-crisis, the possibility of the Austrian Wirtschaftsservice Gesellschaft mbH (AWS) to grant guarantees to companies with its corporate seat or business premises in Austria was extended. Accordingly, AWS is authorized to provide guarantees, default guarantees or other hedging transactions, which are intended to finance a material requirement caused by the negative economic effects due to the COVID-19-crisis. The Federal Minister of Finance is authorized to hold AWS harmless for these guarantees. This will support operational financing (e.g. purchases of goods, personnel costs) as well as financing for the deferral of existing credit lines to healthy companies that do not have sufficient liquidity to finance the current operations or whose sales and earnings development is affected by loss of orders or market changes due to the current COVID-19-crisis. The application is to be submitted together with the financing bank online via the “AWS Promotion Manager” system.
Moratorium on consumer and microenterprise loans. As regards credit agreements with consumers and microenterprises concluded before 15 March 2020, creditor claims falling due between 1 April and 30 June 2020 will be subject to a 3-months moratorium from the due date onwards. The requirement is that the consumer has suffered a loss of income due to the COVID-19-crisis and can therefore not be expected to continue the debt service without threatening its reasonable maintenance, or the microenterprise is unable to continue its debt service or cannot be expected to continue its debt service without compromising the economic basis of its business. During the moratorium, the borrower is not in default, which means that no default interest incurs. Where the borrower has provided security in connection with a loan for a limited period, the period will automatically be extended so that the lender will have the same time for enforcement after the secured obligation has fallen due, which it would have had without the moratorium. The borrower is free to make payments according to the loan agreement during the moratorium and may agree with the lender on different terms. The lender may not terminate the loan on the grounds of non-payment or a material adverse change during the moratorium.
No default interest in excess of 4%. If the debtor is in default with payments due between 1 April 2020 and 30 June 2020 under a contractual relationship (also B2B) entered into before 1 April 2020, the creditor may not claim default interest in excess of 4%, irrespective of any contractual agreements. Besides, the debtor is not obliged to reimburse out of court enforcement costs. The requirement is that the debtor’s economic capacity has been impaired because of the COVID-19-crisis.
No agreed penalties. If the debtor is in default in a contractual relationship (including B2B) entered into before 1 April 2020 because his economic capacity has been impaired due to the COVID-19 crisis or he has been unable to perform due to the currently applicable restrictions on trading, he is not obliged to pay a contractually agreed penalty. This also applies if it has been agreed that the contractual penalty is to be paid regardless of the debtor’s fault.
No repayment restriction for certain capital-substituting shareholder loans. Unsecured shareholder loans granted to the company in crisis are – contrary to the Austrian Capital Substitution Act (EKEG) – not treated as equity if they are granted and disbursed until 30 June 2020 for no more than 120 days.
Improvements to the hardship fund. After quite fierce criticism of the provisions concerning the hardship fund introduced with the second COVID-19 legislative package on 22 March 2020, the legislator has now made improvements. The size of the hardship fund has been increased from EUR 1 billion to EUR 2 billion. In addition, the group of those entitled to claim grants has been adjusted. The entitled group under the hardship fund now includes one-person enterprises including new self-employed persons and freelancers, non-profit organizations and micro-entrepreneurs, as natural persons or working shareholders who are compulsorily insured under the BSVG/GSVG/FSVG or in insurance policies of corresponding institutions of the liberal professions. In addition, the group of those entitled has been extended to include private room landlords of private guest rooms in their own households with a maximum of ten beds that are not subject to the Trade Act. Furthermore, it was clarified that benefits from the hardship fund are not to be used to determine the contribution bases for social insurance payments.
Exemption from charges for certain legal transactions. Previously, merely regulatory legal documents, which are “necessary to carry out the measures in connection with the management of the COVID-19-crisis” were exempt from any stamp duties according to the Austrian Fee Act (Gebührengesetz – GebG). Now, all legal documents (i.e. contract deeds) that fulfill this requirement are exempt. This exemption shall apply retroactively as of 1 March 2020. It will in particular cover sureties entered into to ensure liquidity during the COVID-19-crisis. In addition, according to the legislative material, this exemption shall also apply to tenancy agreements concluded by local authorities or public aid organizations in order to provide proper medical care.
Exemption from fees for crises-related mortgage registrations. Mortgages to secure loans granted exclusively to maintain solvency and/or bridge liquidity difficulties of companies in connection with the COVID-19-pandemic are exempt from the registration fee under the Court Fees Act (Gerichtsgebührengesetz – GGG); however, this is only the case if the application for registration is received by the land registry before 1 July 2020. The connection with the COVID-19-pandemic must be certified by presenting a confirmation by Austria Wirtschaftsservice GmbH (AWS), the Austrian Hotel- and Tourism Bank (ÖHT) or in any other suitable way. This exemption shall also apply retroactively, provided that the conditions described above are met.
4. Real Estate Law
Default in payment of rent for residential rental agreements. As a general rule, qualified default of payment by the tenant entitles the landlord to terminate or cancel the rental agreement. The 4th COVID-19 Act now stipulates deviations from this principle: If a tenant does not settle a rent payment due and payable in the period from 1 April 2020 to 30 June 2020 (in full), his contract cannot be terminated or cancelled due to this circumstance; however, this is only the case if the tenant’s financial situation is considerably impaired due to the COVID-19-pandemic. The landlord is not entitled to demand payment arrears before 1 January 2021 in court or to cover them from a deposit handed over by the tenant. The before mentioned judicial demand of the arrears is not yet equivalent to the termination of the rental agreement. Termination or cancellation due to default of payment for these months is only permissible from 1 July 2022 on. It should be noted that this provision applies to all residential leases, regardless of whether they lie within the full scope of application of the Austrian Tenancy Act (Mietrechtsgesetz – MRG), within the partial scope of application or completely outside the MRG (e.g. single-family homes or holiday homes).
Contract extensions for residential rental agreements. Fixed-term residential rental contracts which are subject to the Austrian Tenancy Act and expire after 30 March 2020 and before 1 July 2020 may be extended in writing until the end of 31 December 2020 or for a shorter period. In this way, the legislator is deviating from the general provisions of the Austrian Tenancy Act, according to which the minimum term for residential rental agreements must always be three years.
Postponement of eviction execution for apartments. The legislator has enacted the following regulation in order to specify and supplement the general rules on the postponement of a judicial eviction (these are already rather favorable for residential tenants within the scope of application of the Austrian Tenancy Act): A judicial eviction must be postponed at the request of the tenant without the imposition of a security deposit if the apartment is indispensable to satisfy the urgent housing needs of the tenant and the persons living with him, unless the eviction is indispensable to avert serious personal or economic disadvantages of the landlord. Before the decision on the postponement is taken, the landlord shall be given the opportunity to make a written statement. At the request of the landlord, the proceedings shall be continued no later than six months after the granting of the deferment. Proceedings may continue earlier if the official measures taken on the basis of COVID-19 which restrict freedom of movement or interpersonal contact have been lifted. This regulation applies to any eviction proceedings and thus (in deviation from Sec. 35 MRG) also to rental of business premises rent or commercial leases. Reimbursement of costs between the parties in proceedings concerning the deferment of eviction is excluded.
Extension of the time limit for taking advantage of a Priority Notice. The legislator has now clarified that the previously enacted regulations on the suspension of court deadlines also apply to Priority Notices in the land registry (for the intended sale or pledging of a property). In principle, Priority Notices are only effective for one year from the date of the court decision regarding the registry of the Notice. This period is suspended from 16 March 2020 until 30 April 2020 and may be extended further by regulation of the Minister of Justice.
Closure of hotels. The regulation of the Minister of Health of 15 March 2020 prohibits the entry into the customer area of certain retail premises and certain service providers (except for specific retail premises and service providers that are necessary for the fulfillment of basic needs) as well as leisure and sports facilities. With the Ordinance of the Minister of Health of 2 April 2020, this prohibition of entry has now been extended nationwide for all tourist accommodation facilities: Entering of tourist accommodation facilities for the purpose of recreation and leisure activities is prohibited until 24 April 2020. However, this prohibition does not apply to persons who are already in accommodation at the time of the resolution entering into force and for the duration of their stay (as agreed in advance with the accommodation provider). There has already been a ban on entering tourist accommodation facilities in individual federal provinces, such as Salzburg and Tyrol. These continue to apply.
5. Employment Law
Working-time reduction model (Corona-Kurzarbeit) – new provisions. The 3rd COVID-Act increases the funding for the working-time reduction scheme. It also provides that the Minister of Labour, in accordance with the Minister of Finance, may pass a regulation to adjust the upper spending limit of EUR 1 billion for COVID-19-related measures such as, inter alia, the working-time reduction scheme. The COVID-19 fund is increased from EUR 4 billion to EUR 28 billion.
Work-related accident and home-office. The definition of what qualifies as a work-related accident is expanded to include home-office-related accidents. According to the new terminology, a work-related accident is an accident that has a temporal and causal connection to the insured person’s occupation, and happens at their place of work (i.e., at home in case of home-office work). In this sense, an accident that happens outside of the person’s workroom, for instance while preparing or buying lunch, also counts as a work-related accident for insurance purposes. Thus, previous restrictions and ambiguities have been removed.
Alien Employment Act (Ausländerbeschäftigungsgesetz – AuslBG). Work permits for seasonal workers in the agricultural and forestry sector may now be issued for over nine months within a 12-month-period. This provision is temporarily necessary to secure the domestic food supply and will expire on 30 June 2020, unless the Minister of Labour issues a regulation expanding the time limit, for a maximum of two months at a time, but not beyond 31 December 2020. The 4th COVID-19-Act accordingly adapts work visa requirements; these provisions will expire after 31 December 2020.
Citizenship and residence. The 4th COVID-19-Act regards one prerequisite for obtaining citizenship, namely the “pledge” (Gelöbnis). Instead of delivering the pledge in person, the competent authority may require the transmission of the pledge in writing. Likewise, applications on extensions and other relevant changes concerning legal residence are no longer to be submitted in person, but in writing (by mail or electronically). At the same time, the procedural requirements for issuing work visa have been loosened for certain occupations (e.g., for seasonal work in the agricultural sector). These provisions will expire after 31 December 2020.
Further employment law amendments. The provisions regarding special care leave (Sonderbetreuungszeit) have been amended to include (among other things) care for relatives in need, as well as for disabled persons who have used personal assistance before, if such assistance cannot be ensured anymore due to COVID-19. Moreover, the mandates of employee representatives are prolonged once again. Another innovation concerns the “Voluntary Social Year” („außerordentliches freiwilliges Sozialjahr“), which now can be extended for a maximum of six additional months, if special circumstances exist (e.g., exceptional emergencies or force majeur). The 3rd COVID-19-Act also provides that pensioners who take up an occupation in the health sector in order to support efforts surrounding the COVID-19-crisis shall not face negative repercussions regarding their pension benefit claims. Additionally, the 4th COVID-19-Act contains a provision on the remuneration for perpetual overtime work on the Tuesday after Whitsunday.
6. Time limits in court and administrative proceedings
Interruption of time limits in court proceedings. In court proceedings (civil proceedings, non-contentious proceedings, land register and commercial register proceedings as well as execution proceedings), statutory and judicial time limits pending after 22 March 2020 are interrupted until the end of 30 April 2020. The time limits shall restart on 1 May 2020. When calculating a period determined by days, 1 May 2020 is not included. Periods determined by weeks, months and years end with the expiry of the day of the last week or month, which corresponds with 1 May 2020 by its designation or number. In addition, the period from 23 March 2020 until the end of 30 April 2020 shall not be included in the period in which an action or application is to be brought before a court or a declaration is to be made. This concerns in particular limitation periods.
Changes in insolvency law. In the event of over-indebtedness under insolvency law (insolvenzrechtliche Überschuldung) occurring between 1 March 2020 and 30 June 2020, the debtor is not obliged to file for insolvency. If the debtor is over-indebted at the end of 30 June 2020, he must apply for the opening of insolvency proceedings without culpable delay, but at the latest within 60 days after the end of 30 June 2020 or 120 days after the occurrence of over-indebtedness, whichever period ends later. The debtor’s obligation to apply for the opening of insolvency proceedings in the case of illiquidity (Zahlungsunfähigkeit) remains unchanged (in case of illiquidity caused by the COVID-19-pandemic, the statutory period to file such an application is extended from 60 to 120 days pursuant to Sec. 69 of the Insolvency Code). At the debtor’s request, the court may defer payment schedule instalments (Zahlungsplanraten) for a maximum of nine months, taking into account the current situation. Furthermore, the insolvency court may extend procedural deadlines whose triggering event falls in the period after 4 April 2020 by a reasonable period of time, not exceeding 90 days.
Interruption of time limits in administrative procedures. The third COVID-19 legislative package specified and supplemented the special rules on the interruption of time limits in administrative procedures already introduced in the second COVID-19 legislative package. Accordingly, the following applies: In pending official proceedings of the administrative authorities to which the administrative procedure acts (AVG, VStG and VVG) are applicable, all time limits whose event triggering the time limit falls after 22 March 2020, as well as time limits that have not yet expired by 22 March 2020, will be interrupted until 30 April 2020. The time limits shall restart on 1 May 2020. This does not apply to time limits in proceedings under the Epidemics Act. In certain cases (averting a danger to life, safety and freedom or to prevent a substantial and irreparable damage to a party, etc.) the authority may declare in the respective proceedings that a deadline will not be interrupted. At the same time, the authority must set a new reasonable deadline. The period from 22 March 2020 to the end of 30 April 2020 shall not be included in (i) the period in which an application initiating proceedings (Sec. 13 para. 8 AVG) is to be filed, (ii) decision periods with the exception of maximum periods laid down in the constitution and (iii) periods of limitation. Decision periods shall be extended by six weeks, but if they are less than six weeks, only to the extent of the respective decision period itself. The deadline for payment of a penalty shall be extended and shall be six weeks (i) in the case of anonymous orders (Anonymverfügungen) issued in the period from 22 March 2020 to 30 April 2020 and (ii) four weeks in the case of on-the-spot fines (Organstrafverfügungen) if the document is left or handed over in the period from 22 March 2020 to 30 April 2020. This provision will expire on 31 December 2020.
Extension of deadlines – Financial Market Authority (FMA). The FMA is entitled to extend the deadlines for notifications, submissions and reporting obligations, as well as for publication and information obligations. The FMA acts on a reasoned (electronic) request from the respective applicant, but may also extend the deadlines by means of a regulation without request of its own motion.
Merger Control (Austria). Merger filings may only be submitted, during the office hours of the authority, by electronic means (via the “ERV” system). For filings which are made outside the office hours, the review period runs from the first working day after the day on which the filing was made. For all filings which are made in the period from 22 March 2020 to 29 April 2020, the four-week review period runs from 1 May 2020 and ends on 29 May 2020. Notifying parties may apply for expedited clearance. In addition to the standard legal requirements, such clearance also requires that the current circumstances permit a comprehensive review and that there is no doubt that the transaction does not raise any competitive concerns.
7. Further laws
Mayors liable for data breaches. Within the framework of the 3rd COVID-Act, a new Sec. 3a was inserted into the Epidemic Act. According to it, district administrative authorities are authorized to inform the mayor of the name and the necessary contact details of a person affected by a segregation measure due to COVID-19 and residing in his municipal territory, if and to the extent that it is absolutely necessary to provide this person with necessary health services or with goods or services of daily use. Mayors may not process the data of these persons thus obtained for any other purpose and must take appropriate data security measures to protect these data. As soon as the supply of these persons is no longer necessary, the data must be irretrievably deleted. Particularly explosive about this new regulation, however, is the last paragraph of the newly inserted Sec. 3a Epidemic Act, according to which Sec. 30 para. 5 DSG is not applicable in this context. Under Sec. 30 para. 5 DSG, no fines can be imposed on authorities, public bodies and corporations under public law for breaches of data protection. This exception does not apply to mayors when processing data of persons who are separated because of COVID-19.
Admissibility of food collection. According to the regulation of the Minister of Health of 15 March 2020, entry into business premises of all types of catering establishments was also prohibited. This prohibit has now been eased: the regulation as amended per 2 April 2020 clarified that the use of catering establishments for the collection of pre-ordered meals is permitted. It must be ensured, however, that a distance of at least one meter is kept from other persons.
Conclusion. With further Acts on COVID-19, the legislator has made numerous legislative changes and enacted new laws. Your Deloitte or Jank Weiler Operenyi/Deloitte Legal contact person will be happy to answer any questions you may have and can provide comprehensive legal and tax advice from the relevant experts.
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