Rechtsanwälte GmbH Current challenges for companies due to coronavirus COVID-19 under Austrian law - DLA Piper
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Current challenges for companies due to coronavirus COVID-19 under Austrian law This paper is intended to serve as a first aid kit for issues that may arise. For more detailed information or for help and support in relation to COVID-19, please reach out to your regular contact at DLA Piper or visit our DLA Piper Coronavirus Resource Center. DLA Piper Weiss-Tessbach Rechtsanwälte GmbH Schottenring 14 1010 Wien T: +43 1 531 78 0 F: +43 1 533 52 52 www.dlapiper.com
Content:
I. Update Labour Law - New developments due to the latest legal changes
II. Is Force Majeure beneficial to the supplier in supply relationships under Austrian law?
III. Insurance coverage for companies for damage caused by the spread of coronavirus COVID-19?
IV. Corporate law: possibility of meetings without physical presence; extension of the deadline for
Annual General Meetings
V. Checking and adjusting financial and corporate planning
VI. Tax compliance implications
VII. What options do Austrian authorities have?
VIII. Implementing measures and processes in compliance with data protection law
IX. Procedural implications of COVID-19
X. Impact of coronavirus pandemic on Austrian lease agreements
2I. Update Labour Law - New developments due
to the latest legal changes
Short time work Company employee representatives
Short-time work can now also be applied for apprentices and The period of activity of works councils or other company-based
managers who are socially insured according to the ASVG. Short- employee representatives as well as of persons representing the
time work is thus possible for all employees, including executives, interests of disabled persons whose period of activity ends
apprentices and ASVG-insured managing directors. - The only between 16 March and 30 April 2020 shall be extended until the
exceptions (as things stand at present) are GSVG-insured corresponding body is constituted, which shall be elected after
managing directors and board members, marginally employed 30 April 2020 in compliance with the relevant deadlines.
and freelancers.
Special care period:
The application form has now also been completed - it can be
downloaded from the AMS homepage If schools and childcare facilities are closed and employees are
not entitled to time off work to care for the child, a special care
https://www.ams.at/unternehmen/personalsicherung- period of up to 3 weeks can be agreed. In this respect, employers
undfruehwarnsystem/KA/downloads-KA
are entitled to reimbursement of one third of the remuneration
paid to the respective employee (capped with the maximum
Together with the social partner agreement and a brief
contribution basis - thus EUR 5,370.- gross). This now also
explanation of why this measure is necessary, this must be
applies in cases in which there is a duty to care for disabled
submitted to the responsible AMS regional office by e-mail. The
persons who are cared for and taught in an institution for the
application can be submitted retroactively for a period starting
disabled or an educational institution for disabled persons and
on 1.3.2020.
this institution has now been closed.
In order to calculate the amount of the short-time work
allowance, the AMS has provided an online calculator - you can The employer's application for reimbursement must be submitted
find it on the following website: to the Federal Accounting Agency within 6 weeks after the official
measures have been lifted.
https://www.ams.at/unternehmen/personalsicherung-und-
fruehwarnsystem/kurzarbeit/rechner-fuer-kurzarbeit#wien
Forfeiture periods and period for contesting
Employment prohibition dismissals
There is still no general employment prohibition in Austria. Only The expiry of limitation and forfeiture periods relating to labour
employees who can also do their work from home via telework law claims which have already started to run before 16 March or
are to be allowed to work from home. If the work can only be which have started to run after 16 March shall be suspended until
done at the workplace, this is still possible. However, the 30 April 2020.
employer must take appropriate precautions to minimize the risk
of infection and to ensure that a certain minimum distance (at The same applies to the periods for contesting dismissals in court
least 1 meter) is maintained between employees. - their expiry is also suspended until 30 April 2020.
Holiday consumption
If employees are unable to perform their work due to measures
based on the COVID-19-Maßnahmengesetz (prohibition or
restriction of the access to businesses), at the request of the
employer, vacation and working-time credits must be consumed
up to a maximum of 8 weeks - however, vacation claims from
the current vacation year must only be consumed up to an
amount of 2 weeks. The employer therefore now has the
possibility to unilaterally order the consumption of vacation and
working time credits in the above-mentioned cases.
3II. Is Force Majeure beneficial to the supplier in
supply relationships under Austrian law?
Under Austrian law, force majeure is only regulated in isolated It should be noted, however, that the violation of ancillary
cases – a general definition does not exist. According to the contractual obligations may very well trigger a claim for damages,
definition prevailing in doctrine and jurisprudence, force for example if the contractual partner is not (timely) informed
majeure constitutes "an elementary event which is externally about the temporary impossibility of performance of contract.
caused and which could not have been prevented even by
exercising the utmost reasonable care and which is so On the other hand, especially in the light of the recently passed
extraordinary that it cannot be considered a typical business COVID-19 Act as well as regulations issued based thereon, the
hazard". Depending on the nature of the contractual legal institution of frustration of contract (“Wegfall der
relationship, force majeure can have different consequences. Geschäftsgrundlage”) could apply. This assumes that the parties
have taken for granted certain circumstances in the contractual
Unless excluded by contract, within the ambit of the UN environment when concluding the contract and are disappointed
Convention on Contracts for the International Sale of Goods in this assumption without having taken any precautions in this
(CISG) - the contractual partner can directly refer to Art 79, respect. In this case, it should be possible to create an appropriate
according to which the affected contractual partner is not liable spread of risk between the contractually agreed equivalence of
for damages if he can prove a hinderance outside his sphere of mutual performance and the principle of contract performance. In
influence and is relieved of his duty to perform in case of analogy to the legal consequences of a contestation for reasons of
permanent impossibility . a mistake according to Sections 871 et seq ABGB, this could lead
to the cancellation or amendment of the contract.
Outside the CISG, which in practice is of only minor importance, a
contractual provision for cases of force majeure can be The decision which legal remedy is adequate to evaluate a
contractually agreed upon between the parties. This is common pandemic such as COVID-19 has to be made for each case
practice in international supply contracts. The prerequisites and individually. Once again, it is now obvious that complex supply
legal consequences, such as temporary suspension of mutual relationships should always include explicit provisions addressing
obligations or rights of withdrawal, depend on the specific such exceptional situations and their effects on contractual
arrangement. Typically, the provisions contain individual abstract obligations.
definitions of force majeure with specific examples and
information duties.
If, in the absence of contractual provisions on force majeure,
deliveries are delayed the general rules on disruptions of
performance shall apply. Primarily, regarding COVID-19,
temporary impossibility of fulfillment of contract arises. If the
reason for this impossibility does not lie within the debtor's sphere
of influence, objective default arises. In this case the other
contracting party has according to Section 918 ABGB (Austrian
Civil Code) the right to choose between performance of contract
and withdrawal from contract after a reasonable grace period. In
case of objective default the creditor is not entitled to claim
damages.
4III. Insurance coverage for companies for
damage caused by the spread of coronavirus
COVID-19?
Companies that are financially affected by the virus may ask majeure, absence of key persons, unavailability of the venue,
themselves whether and to what extent insurance coverage for official measures or other agreed causes. Usually the costs
losses resulting from the virus exists or can be obtained. In incurred and to be reimbursed on the basis of contracts as well
addition to business interruptions and shutdowns, companies as the additional costs in the event of a postponement of the
may also suffer losses due to cancelled events, projects, etc. event are covered by the insurance. Loss of profit may also be
insured. In Austria, policies usually specify individually against
Compensation for business shutdowns and interruptions may be which events the organizer is insured. Cancellations due to
obtained if the company has concluded a business interruption epidemics and pandemics are very often not covered by the
insurance. However, in the basic packages that are usually event cancellation insurance. If such events are insured,
offered by business interruption insurers only business insurance coverage usually requires an official order to cancel
interruptions due to illness or accident are insured. In some the event. Cancellation insurance may also cover train or plane
extended packages, insurance cover is also provided for business tickets that have become useless, depending on the structure.
interruption due to quarantine in the event of a disease or Here likewise, coverage may depend on whether there is official
epidemic. However, coverage is usually subject to the condition confirmation from an authority that the destination is a
that an officially ordered shutdown of operations or destruction quarantine or high-risk area.
of goods occurs.
The current pandemic may also bring insurance law implications
If companies are held liable for losses of contractual partners, for beyond specific cover. For example, managing directors could be
example due to non-delivery, there is often also insufficient held liable for losses incurred by companies due to inadequate
insurance coverage. In this case, however, the liability of the crisis management. For such claims, insurance protection under
company is questionable anyways, since it may be possible to the companies’ D&O insurance policies may be obtained.
invoke force majeure based on corresponding contractual However, it should be noted that coverage for losses resulting
clauses. As far as the company is liable, insurance coverage from personal injury is not an option, as this is a pecuniary loss
under the liability insurance policy will often be unavailable due liability insurance. For personal injury, coverage claims under
to the lack of a loss covered by the insurance policy. employer’s liability insurance may be considered.
Losses resulting from the cancellation of events may be covered Companies should review their insurance cover in the light of the
by specific event cancellation insurances, provided that such current situation and be careful to fulfil any obligations to
insurance exists. In principle, event cancellation insurance covers notify and provide information to their insurers in a timely
the financial loss if an event has to be cancelled, broken off, manner.
postponed or relocated for certain reasons, e.g. due to force
5IV. Corporate law: possibility of meetings
without physical presence; extension of the
deadline for Annual General Meetings
Avoidance of physical contact as a measure to slow down the than within the first eight months. This is intended to enable in
virus spread, leads to restrictions and changes in the field of particular large companies to postpone the annual general
corporate law. Physical meetings are de facto no longer meeting by means of the usual presence meeting.
possible. Based on the recent developments in Austria de facto
holding of the face to face meetings is no longer possible. Other:
In view of the explicit request of the Austrian Federal
Regarding the COVID-19 Act:
Government, even small face-to-face meetings with up to 5
The legislator has already taken remedial action with the persons will no longer be held at present. With the COVID-19
corporate law COVID-19 Act (COVID-19-GesG) and now Act coming into force, this is also no longer necessary.
enables meetings without the physical presence of the
participants. Resolutions passed in these meetings are not We expect that the complementary regulation to the COVID-19
circular resolutions and therefore do not require the consent of Act will be issued very soon in order to create legal certainty.
the participants to pass resolutions without physical presence.
In detail: It is to be assumed that general meetings of listed stock
corporations, which are scheduled to be held shortly, will be
General meetings of joint stock companies and cancelled and subsequently postponed.
shareholder meetings of limited liability companies can
currently be held without the physical presence of the Moreover, we expect broad acceptance of the possibilities
participants (this applies for the duration of measures taken to offered by the COVID-19 Act.
prevent the spread of COVID-19 under the COVID-19 Act).
Irrespective of the above, it is always still possible to issue a
The same applies to all meetings of the corporate bodies, power of attorney, in many listed companies this can even be
i.e. meetings of the board of directors (Vorstand), the done electronically or online. This could regain importance once
managing directors (Geschäftsführung) and the the current strict measures are lightened. By granting power of
attorney, individual participants who are at risk, concerned or
supervisory board (Aufsichtsrat). The law also takes
otherwise prevented from attending can exercise their rights
precedence over any regulations in the articles of association
even without physical participation (however, if power of
and in rules of procedure (which is not explicitly stated in the
attorney is granted to the proxies appointed by the company
law, but results from the ratio). as is customary for listed companies, only the voting right can
in general be exercised).
All this applies to all corporations (i.e. in addition to AGs and
GmbHs for SEs), partnerships, cooperatives, private For GmbHs, the adoption of a circular (written) resolution
trusts and foundations (Privatstiftungen), associations remains possible with the consent of all shareholders. It is of
(Vereine), mutual insurance companies and small central importance that all (!) shareholders agree with this
insurance companies (Versicherungsvereine auf procedure. In practice, written resolutions already occur more
Gegenseitigkeit und kleine Versicherungsvereine). frequently; especially in the case of group structures, physical
meetings are the exception.
The Federal Ministry of Justice is authorised to issue a
regulation laying down more detailed rules on the holding of It is important to note that so called star decisions
(Sternbeschlüsse) are permitted in Austria. This means that it
such meetings (whereby a comparable quality of decision-
is not necessary that all shareholders and one after another
making must be guaranteed). We assume that a flexibly
sign the same document, but each shareholder can use and
formulated regulation will give companies a wide scope of
execute his or her own document (including the same content).
action and at the same time create legal certainty.
The same typically applies to a KG or a GmbH & Co. KG.
For AGs, another regulation has also been adopted by law: Resolutions can be passed outside of (presence) meetings,
Contrary to Section 104 (1) of the Austrian Stock Corporation provided that all shareholders agree to this procedure as well.
Act (Aktiengesetz – AktG), the Annual General Meeting of a It is obvious that for the purpose of legal certainty of the
stock corporation must now be held within the first twelve procedure the declarations of consent should be made in
months of the financial year of the company concerned, rather writing or recorded.
6V. Checking and adjusting financial and
corporate planning
Special attention should also be paid to financial and corporate minimizing personal liability risks – pay more attention to
planning. This is because the complex effects of the possible financial, revenue and corporate planning.
coronavirus COVID-19 pandemic (including sales losses,
unreliability of suppliers and interruption of supply chains, This also applies to corporate groups. If an unplanned slippage into
procurement restrictions and production delays, restrictions in crisis or even insolvency of an affiliated company is to be
logistics/distribution channels, complications in distribution prevented, early and transparent communication of the current and
channels and communication, illness, additional costs) have a expected economic situation is the best way to take targeted
direct impact on the financial situation of the company and, at measures at group level in good time. It is also important to
least indirectly, on its strategic and corporate planning. prevent a crisis that has occurred from affecting the group and
endangering the group’s overall ability to survive. In this context,
If these effects remain unnoticed and adequate countermeasures the extensive package of measures adopted by the National
are not initiated, in the worst case scenario, material insolvency Council on 15 March 2020 to combat the spread of coronavirus
in the form of illiquidity or over-indebtedness can occur. Such should also be mentioned. The government measures were
reasons for insolvency result in an obligation to file for unanimously approved. The crisis package consists of three pillars
insolvency, which in the event of culpable violation create serious in order to protect against negative economic effects, namely
civil and criminal liability risks for the company management. It safeguarding jobs, maintaining the liquidity of companies and
must therefore be ensured that the company remains solvent assistance for cases of particular hardship, especially SMEs and
even in the face of current challenges, i.e. that it can meet its one-man companies.
due payment obligations at all times.
The "COVID-19 Crisis Management Fund", which was adopted in
In addition, corporate planning, by means of which the ability of Parliament on 16 March 2020 and is set at four billion Euros, is
a company to continue its business is documented in order to intended to provide initial immediate aid in the form of funds to
rule out over-indebtedness under insolvency law, must be stabilise health care, cushion the loss of revenue and measures to
adjusted to the actual circumstances, and the assumptions and stimulate the economy. The focus hereby lies on maintaining the
forecasts made must be re-validated and revised. Especially for solvency of companies and bridging liquidity problems. The funding
companies operating in tense industries (including travel, guidelines are currently being drawn up by the Federal Minister of
aviation, just-in-time production, automotive, pharmaceuticals Finance and will be laid out in form of a regulation.
with production in China, fashion), this is likely to be of central
importance and will require management to be prepared to In addition, the new regulation on short-time working is to apply
react dynamically and creatively to changes in the market. from 16 March 2020. For further details, please refer to Chapter I.
Whether the assumptions and forecasts made to date continue
to apply without restriction and are still suitable for avoiding or Most recently, on 18 March 2020, the Federal Government
minimizing any liability without the need for updating them, they announced an aid package totaling 38 billion Euros for the domestic
must be checked and documented, including the results. If in economy. The financial aid is to be made available equally to one-
doubt, an acute need for adjustment should be assumed. Having man companies and industrial groups. Under the motto "whatever
to operate, if necessary, with significantly reduced revenues and it takes", 15 billion Euros in emergency aid, nine billion Euros in
continuing to be able to act poses a major challenge. Company loan guarantees and a further ten billion Euros in tax deferrals are
managers should therefore – including for the purpose of to be added to the above-mentioned four billion euros in immediate
aid.
7VI. Tax compliance implications
(Obligation to declare, balance sheet preparation, leniency, deferral)
On Saturday, March 21st, the 2nd Covid Measures Act came into The measures provided in the info are:
force in addition to the already adopted 1st COVID-19 Act. These
laws regulate, among other things, that the COVID-19 crisis Taxpayers affected by a loss of income due to the SARS-
management fund, endowed with up to 38 billion euros, should CoV-2 virus may apply for a reduction in advance
support the health sector as well as companies. In this context, payments of income or corporation tax for the
measures to revitalize the labor market, cushion revenue losses calendar year 2020 until 31 October 2020. In this
due to the crisis and stimulate the economy are planned. The 1st application, the taxpayer must provide credible evidence of
COVID-19 law has no direct impact on the Austrian tax law the probable reduction in the tax base based on the specific
situation. The 2nd Covid Measures Act essentially includes the nature of the problem. The application can be filed in
following tax measures: FinanzOnline. A sample form is provided for taxpayers who
do not use FinanzOnline. The tax office must reduce the
Writings and official acts that take place directly or indirectly advance payments for 2020 accordingly. If it is unlikely that
in connection with coping with the COVID-19 crisis situation there will be a tax regulation for the calendar year 2020, the
are exempt from legal transaction fees. tax office must set the advance payments for the calendar
year 2020 at zero euros. Such applications must be
The increase in tobacco tax planned for April 1, 2020 is to be processed immediately.
postponed to October 1, 2020 and the other increases
planned for 2020 to 2022 are to be postponed by 1 year. Unless income or corporation tax advance payments for the
calendar year 2020 are set at zero euros anyway, the
All deadlines for appeal in tax matters (also applies to criminal advance payment shall be reduced to the amount that is
tax proceedings and proceedings before the Administrative
expected to be paid for the calendar year 2020. If the
and Constitutional Court), which are due after 16 March 2020,
taxpayer is affected by the consequences of the emergency
and deadlines that have not yet expired on 16 March 2020,
caused by the SARS-CoV-2 virus in terms of liquidity in such
will expire on 30 April 2020 interrupted and start to run again
a way that he cannot pay the advance payment in the
on 1 May 2020. The authority can only deviate from the
amount to be determined in accordance with Section 45 (4)
interruption in certain circumstances. The Federal Minister
of the Income Tax Act, he may suggest to his tax office that
can extend this interruption by ordinance until December 31,
the advance payments of income tax or corporation tax for
2020 at the latest.
the calendar year 2020 should not be determined in full
As far as possible, procedures in tax matters are to be carried or that the determination should be limited to an
out audiovisual. amount lower than the anticipated annual tax for
2020. The tax authority shall set the amount of income tax
It is also planned that tax audits are not carried out if the or corporate income tax advance payments at a lower
enterprises cannot guarantee an adequate support of the tax amount or at zero euros. This is subject to the condition that
authorities. the taxpayer provides credible evidence that he is actually
affected by the consequences of the liquidity emergency
For tax law purposes it is significantly more important that on
caused by the SARS-CoV-2 virus. Such suggestions must be
13 March 2020 the Austrian Ministry of Finance (BMF) issued an
dealt with immediately.
information (decree) 2020-0.178.784 on „special
regulations regarding coronavirus“. In all cases, the The tax office must refrain from setting ex officio the
precondition for the application of the measures listed in the interest to be paid in arrears if the reduction or
information provided by the BMF is that the taxpayer can discontinuation of advance payments results in interest to be
demonstrate that he or she is affected by a liquidity shortage paid in arrears when income or corporation tax for 2020 is
that is specifically due to a SARS-CoV-2 virus infection. These assessed (after the end of 2020).
include, for example, exceptionally high cancellations of hotel
reservations, loss of sporting and cultural events due to official The taxpayer can apply to his tax office to postpone the date
prohibitions, failure or impairment of supply chains or loss of of payment of a tax (deferral) or to grant the payment in
earnings due to changes in consumer behavior. A text specified installments. In the application, the specific concern of the
by the BMF can be used to substantiate the claim, whereby all taxpayer must be demonstrated. When processing the
applications must be processed immediately. application, the tax office must take due account of the
special situation that has arisen in individual cases as a result
8of the occurrence of the SARS-CoV-2 virus. The application result, can also apply to the relevant social insurance
must be processed immediately. institution for the following measures:
The taxpayer can suggest to his tax office (eg in the
Deferral of social security contributions;
application for deferral or payment in installments) to refrain
from setting deferral interest. The specific concern of the Deferred payment of social insurance contributions;
taxpayer must be made credible. If this is the case, the tax
office must comply with the suggestion and reduce the Reduction of the provisional contribution base;
deferral interest to an amount of up to zero euros. The
Total or partial leniency of interest on arrears.
suggestion must be processed at the same time as the
application for the deferral or payment in installments.
To date, however, the COVID-19 pandemic has not yet had
The taxpayer can apply to his tax office to reduce or not any direct impact on substantive tax laws, and no tax
set a late payment penalty. In the application, the specific declaration deadlines have been postponed to give
concern of the taxpayer must be demonstrated. When taxpayers, be they private individuals or companies, the
processing the taxpayer's application for a reduction or non- opportunity to respond to the changed situation in the event of
determination of a late payment surcharge in accordance with a lack of work resources . Accordingly, all tax procedural
Section 217 (7) BAO, the tax office must assume that there regulations must continue to be observed, including in particular
is no gross negligence on the part of the default if the tax declaration and payment periods (for the interruptions and
taxpayer has demonstrated that it is actually affected. reliefs provided see above). However, the tax authorities are
now extending declaration and payment periods for reasons of
If there is a loss of income due to the SARS-CoV-2 virus goodwill.
infection, which affects the amount of the income or
corporate tax advance payments for 2020 and / or if there is In addition to the exemptions listed in the information provided
a liquidation bottleneck caused by this, the following text by the BMF, many taxpayers will sooner or later face the question
modules can be used to substantiate the claim: of whether it is not possible to fully forgive the taxes.
According to Section 236 (1) of the Federal Tax Code, due tax
"I am affected by the effects of the SARS-CoV-2 virus
debts can be checked in whole or in part at the request of the
infection in my operational activities (indication of the
taxpayer if the collection would be unreasonable according to
industry ...). As a result, the previous payment of advance
the situation. The inequity required in § 236 of the Federal Tax
payments for the 2020 calendar year is too high. I have
Code can be either personal or factual. According to the settled
carefully assessed the impact of SARS-CoV-2 virus infection
case law of the Administrative Court, the levy of levying in
on the tax base for 2020 and am applying…..“
general presupposes that the levying is in no economically
or justifiable proportion to the disadvantages that arise for the
taxpayer or the tax object from the confiscation. If there is a
"I am affected by the effects of the SARS-CoV-2 virus
personal unfairness, there must be an economic mismatch
infection in my operational activities (indication of the
between the collection of the levy and the disadvantages arising
industry ...). This creates a liquidity bottleneck, which is an
in the subjective area of the applicant. This can be the case in
emergency for me. I am therefore applying……“
particular if the collection would endanger the existence of the
company. Only if the loss of assets or other events deteriorate
In addition, the 2nd Covid Measures Act provides in any event:
the economic situation of a person liable to pay the tax in such
a way that it can no longer be expected to pay the tax, are there
For companies subject to a ban on entering the premises or
reasons that may make the collection of the tax unreasonable
affected by operating restrictions and closures, the
for personal reasons (cf. VwGH May 10, 1995, 92/13/0125).
contributions for February to April 2020 shall be deferred
However, an undisputed reduction in liquidity is not sufficient to
without interest on arrears.
assume an existential risk (VwGH 4 10.1985, 82/17/0021).
In the months of March, April and May 2020, contributions Adverse consequences that affect all businesspeople in a similar
already due are not to be collected, no default surcharges are situation, economic fluctuations or business transactions that fall
to be imposed and no insolvency applications are to be filed under the general entrepreneurial risk category do not justify
for non-payment of amounts due. forbearance (VwGH 21.5.1992, 91/17/0118). In principle, it is
difficult to prove such a threat to existence and is therefore rarely
These periods may be extended by decree by up to 3 further issued by the authority. This had to be checked separately in
months. individual cases.
Anyone who is directly or indirectly affected by the coronavirus For annual financial statements in preparation (those as
as a result of illness and quarantine, or who is expecting massive of December 31, 2019, but also those for another reporting
business losses and is experiencing payment difficulties as a date), the question arises whether the outbreak of the COVID 19
9pandemic can lead to the recognition of a profit-reducing terms of company law (but not tax), it can be considered
liability or impending loss provision in the annual whether expense provisions should not be created - i.e.
financial statements and in the tax balance sheet (Section expenses that are attributable to the current or previous
198 (8) 1 UGB and Section 9 (1) 3 and 4 EStG). Provisions for marketing years, but are undetermined in terms of amount and
liabilities would have to be created for uncertain liabilities or time of entry. As far as the timing of the approach is concerned,
private law, public law or even economic obligations that are the development of the COVID-19 pandemic in China began in
probable on the balance sheet date, but are still uncertain with December, but only gradually and more widespread in Europe in
regard to the amount and timing. Examples of this are, for January 2020. In particular for annual financial statements as of
example, event cancellations, use as a guarantor / surety for December 31. one would therefore have to analyze the extent
subsidiaries, disposal, waiver of claims, goodwill payments, to which the circumstances leading to potential provisions
recultivation or reconstruction costs, moving costs, etc.). existed.
Provisions for impending losses would have to be formed in
particular if a pending (not yet mutually fulfilled) transaction As far as the research of COVID-19 is concerned, it should also
could lead to a loss - e.g. due to circumstances caused by the be pointed out that research expenditure on the research
outbreak of the COVID 19 pandemic (e.g. with regard to existing premium according to § 108c Income Tax Act. It is also -
orders, purchased tickets, exchange rate or currency losses, depending on how much COVID-19 affects the economy - that
etc.); however, only those circumstances that exist or have further tax measures will follow from the legislator.
arisen on the balance sheet date must be taken into account. In
10VII. What options do Austrian authorities have?
Official measures to combat notifiable transmissible diseases, customers - in particular manufacturing companies - are also not
including COVID-19 ("Coronavirus") , are mainly found in the affected by the prohibition of entry.
Epidemic Act (Epidemiegesetz). Further, in a special session of
the National Assembly (parliament) on Sunday, 15 March 2020, A fine of up to EUR 3,600 may be imposed if such premises are
the COVID-19 Measures Act (COVID-19- Maßnahmengesetz) entered illegally. Moreover, owners of such business premises
and the COVID-19 Fund Act (COVID-19-FondsG) were passed, will also be fined up to EUR 30,000 if they fail to ensure
according to which further measures to prevent the spreading compliance with the ban on entering. The police will monitor
of COVID-19 and the establishment of a COVID-19 Crisis the compliance with these provisions of the regulation.
Management Fund (Krisenbewältigungsfonds) were
introduced. This new legal basis partially derogates the As a result the provisions regarding the shutdown of
Epidemics Act. companies, stipulated in the Regulation, will – within the scope
of this Regulation – overrule the provisions of the Epidemic Act
The COVID-19 Measures Act provides the Federal Ministry of (Epidemiegesetz) and thus the reimbursement of the loss of
Social Affairs, Health, Care and Consumer Protection earnings within the meaning of the Epidemic Act will not be
(Bundesminister für Soziales, Gesundheit, Pflege und applicable. For this purpose, the Crisis Management Fund is to
Konsumentenschutz) to pass a regulation, which may prohibit be set up, which is to be used, among other things, to
the entry of the customer area of business premises of retailers compensate for the loss of income of such closed companies.
and service providers as well as leisure and sports facilities for Other provisions of the Epidemics Act remain unaffected by the
the purpose of acquiring goods and services (prohibition of Regulation.
entry), insofar as this is necessary to prevent the spread of
COVID-19. This was supplemented by the 2nd COVID-19 Act in A further regulation of the Federal Minister provides that in
so far as it now also covers places of work within the meaning order to prevent the spread of COVID-19, the entry of public
of Section 2 para 3 of the Occupational Health and Safety Act places is prohibited unless this is necessary to avert an
(ArbeitnehmerInnenschutzgesetz) - workplaces in buildings immediate danger to life, limb and property, to cover the
and outdoor workplaces, construction sites, external necessary basic needs of daily life as well as for professional
workplaces. If such an ordinance comes into force, the purposes or it serves to provide care and assistance to persons
Epidemic Act will - within the scope of this Regulation - no in need of support. Means of mass transportation (public
longer apply with regard to the closing of business premises. transport) may only be used for the four exceptions mentioned
The regulation may also prohibit the access of certain places. above. Outdoor public places may be entered alone, with
As the competent authority, the Federal Minister is thus persons living in the same household or with pets, provided
provided with a far-reaching and intensive catalogue of that a distance of at least one meter is maintained. Apart from
measures. this, provisions of the Epidemics Act provide, inter alia, for
special obligations to report and notify sick persons, the
Such a regulation (Verordnung des Bundesministers für Soziales, isolation of sick persons (quarantine), disinfection measures,
Gesundheit, Pflege und Konsumentenschutz betreffend vorläufige the closure of schools or exclusion of individuals from
Maßnahmen zur Verhinderung der Verbreitung von COVID-19) - educational establishments, kindergartens and similar
based on the Measures Act – was passed by the Federal Minister institutions, restrictions on the use of water and food supply,
shortly after the Measures Act was passed, which stipulates monitoring of certain persons, evacuation of flats and
nationwide that – from Tuesday, 17 March 2020 on – it is restrictions on traffic for residents of certain localities and in
prohibited to enter the customer area of business premises of cross-border traffic with foreign countries. For example, on the
retail and service companies as well as leisure and sports facilities. basis of the Epidemic Law, decrees of the Federal Ministry were
Excluded from this are, among others, hospitals, banks, law firms, passed which, among other things, prohibited larger gatherings
pharmacies and grocery stores. From Tuesday, 17.03.2020, of people where more than 500 people meet outside closed
restaurants and hotels must close their premises and are not rooms or in the open or more than 100 people in a closed room.
allowed to open until further notice - with the exception of delivery Legal interference in the fundamental right of freedom of
services or restaurants within a hospital. assembly may be justified if it is in the interests of national or
public safety, for the prevention of disorder or crime, for the
Section 2 of the Regulation provides for an extensive list of protection of health or morals or for the protection of the rights
exceptions to the prohibition of entry, according to which, among and freedoms of others.
others, pharmacies, grocery stores, hospitals, petrol stations,
banks, but also automotive workshops and law firms may The Medical Devices Act shall be amended to the effect that the
continue to be open (Section 2 of the Regulation provides for a Federal Minister of Social Affairs, Health, Care and Consumer
total of 21 exceptions). Companies which have no contact with Protection shall be authorised, in the event of a catastrophe,
11epidemic, pandemic, terrorist threat, armed conflict or other crisis Furthermore, the Federal Minister may - if the necessary supply
situation, to make exceptions to the Medical Devices Act and the of the population would be seriously and substantially endangered
corresponding regulations issued on the basis of this Medical - issue provisions by regulation on supply and provision
Devices Act by regulation, insofar and for as long as this is obligations for manufacturers, authorised representatives and
necessary due to the special situation and the protection of life delivery points for medical devices if and as long as this is
and health of humans and animals is ensured. necessary due to the special situation. Regulations on this basis
shall be valid for a maximum of six months
12VIII. Implementing measures and processes in
compliance with data protection law
When taking measures regarding to COVID-19 within a company The Data Protection Act (Datenschutzgesetz, DSG) does not
special attention must be paid to data protection aspects since provide for any regulations on the collection of health data for
there is an increased potential to process data relating to the such case that go beyond the provisions of the GDPR, but other
health of individuals. Such data represent special categories of national laws may. For example, the Epidemics Act
data in the sense of the General Data Protection Regulation (Epidemiegesetz) may require certain persons to notify the
(GDPR), namely “health data”. The processing of health data is authorities of certain illnesses and even suspected cases thereof
regulated even more strictly than the already strict regime for whereby sensitive personal data are processed. A positive duty
processing “common” personal data. of a company to actively or without cause check the health of
employees or third parties cannot be derived from the
According to the GDPR the processing of health data is generally mentioned provisions, however. A direct obligation to make
prohibited and is only permissible in exceptional cases health check does also not arise from the recently adopted
mentioned in a conclusive catalogue of justifications (Article 9 measures (COVID-19-Act and regulations issued on the basis of
Para 2 GDPR). It has to be noted that the frequently used the Act). To the extent health-related data, especially
ground of justification "legitimate interests" does not exist with information regarding specific cases of infection, have been
regard to the processing of special categories of personal data collected lawfully on the abovementioned bases, the Epidemics
(and thus also health data) and therefore cannot be invoked by Act and the Data Protection Act provide legal bases for transfers
a company. of such data to public authorities.
Although consent to data processing is in principle also possible Due to the large number of potential measures it is always vital
for “sensitive” data the rigorous requirements such consent to carefully examine the admissibility of each individual case on
must meet should be noted. Meeting the requirements could be the basis of the aforementioned justification catalogue of the
problematic especially with a view to employment relationships. GDPR and possibly applicable special laws; and in any case prior
Other justifications, such as the protection of the vital interests to the implementation of the planned measures. Additionally,
of a data subject or third parties, may at first sight appear to be the fulfilment of conditions other than general admissibility - in
applicable. As concerns the processing of employee data, particular information requirements - should also be taken into
additionally, data processing for the purpose of carrying out account.
obligations in the field of employment law (in particular the
employers duty of care) or data processing for the purpose of
preventative or occupational medicine may come into
consideration. The Austrian Data Protection Authority has in the
meantime also addressed these specific points
(www.dsb.gv.at/informationen-zum-coronavirus-covid-19-).
However, even in these cases, the principles of data
minimization and proportionality of data processing must be
observed.
13IX. Procedural implications of COVID-19
The 2nd COVID-19 legislative package passed on 20 March 2020 suitable technical means of communication (in particular video
provides for the amendment of a total of 39 Acts and the conference).
introduction of five new Acts. Procedurally relevant changes will
be made to the Delivery and Service Act (Zustellgesetz), the Section 5 of the Federal Act on Accompanying Measures to
Insolvency Act (Insolvenzordnung), the Enforcement Act COVID-19 in the judicial system also provides with regard to the
(Exekutionsordnung), Austrian Code of Criminal Procedure Insolvency Act that a written reminder of a liability which has
(Strafprozessordnung) as well as for administrative proceedings. become due after the entry into force of this provision and which
Newly added relevant Acts are the Federal Act on Accompanying is sent from the entry into force of this Federal Act until the end
Measures for COVID-19 in the Judicial System as well as the of 30 April 2020 shall not lead to default pursuant to Section
Federal Act on Accompanying Measures for COVID-19 in 156a para 1 Insolvency Act (default in connection with the
Administrative Proceedings. reorganisation plan).
The Federal Act on accompanying measures for COVID-19 in the Furthermore, Section 69 para 2a Insolvency Act and Section
judicial system provides for the interruption of procedural time 200b para 1 Enforcement Act specify that epidemics and
limits and the suspension of time limits for bringing proceedings pandemics will now fall within the definition of natural disaster.
before a court (concerns limitation periods) until 30 April 2020. Accordingly, the current pandemic will be accepted as a reason
Procedural time limits shall be interrupted if the event triggering for, on the one hand, an extension of the deadline for a debtor
the time limit falls within the period after the entry into force of to file for insolvency (Section 69 para 2a Insolvency Act) and,
this Federal Act and those that have not yet expired by the time on the other hand, for the postponement of an execution
this Federal Act enters into force - with the exception of service (Section 200b para 1 Enforcement Act). These amendments are
deadlines for example. The explanatory notes clarify that in civil not limited to 31. December 2020.
cases (civil litigation, non-contradictory procedure, land register
and commercial register proceedings, enforcement proceedings, Similarly, in pending administrative proceedings, all time limits
insolvency proceedings) procedural time limits (both statutory whose event triggering the time limit falls within the period after
and judge's time limits) are thus interrupted. The procedural the entry into force of these amendments, as well as time limits
time limits begin to run anew from 1 May 2020. The Federal that have not yet expired by the time the Federal Act enters into
Minister of Justice is authorised to extend the interruption of force, shall be suspended until the end of 30 April 2020. This
time limits via regulation to the extent necessary to prevent and shall also apply to limitation periods under Section 31 of the
combat the spread of COVID-19. Administrative Criminal Act, but not to maximum time limits laid
down by constitutional law and to time limits under the Epidemic
In each individual case, however, a court may, in the relevant Law.
proceedings, declare that a time limit is not interrupted and, if
so, shall at the same time set a new reasonable time limit. The amendment to the Delivery and Service Act provides that
However, such a decision shall only be taken if, after careful as long as the time limits are interrupted, certain easements
consideration of all circumstances, this is urgently required to apply to the service with proof of delivery of documents to be
avoid a danger to life and health, safety and freedom or to transmitted by courts or administrative authorities and to the
prevent substantial irreparable damage to a party to the service of documents by foreign authorities to be carried out by
proceedings and if the public interest in preventing and courts or administrative authorities (Section 26a of the Delivery
combating the dissemination of COVID-19 and in maintaining Act). For example, the document can be delivered by placing it
the orderly operation of the courts does not overrule the in the delivery device intended for the delivery point (letterbox,
individual interests. mailbox or mail slot) or by leaving it at the delivery point
(delivery is deemed to have been effected at that time). As far
For the duration of the measures taken any kinds of hearings as this is possible without endangering the health of the
shall only be held if this is urgently required to avoid danger to deliverer, the recipient shall be notified of the delivery by
life and health, safety and freedom or to prevent substantial written, oral or telephone communication to himself or herself
irreparable damage to a party to the proceedings and if the or to persons who can be assumed to be able to contact the
public interest in preventing and combating the dissemination recipient.
of COVID-19 and in maintaining the orderly operation of the
courts does not overrule the individual interests. Urgently
required oral hearings can also be held or conducted using
14X. Impact of coronavirus pandemic on Austrian
lease agreements
Executive Summary Introduction: The current situation and
measures taken by the Austrian Government
The statutory provisions on leases explicitly govern the
legal consequences of extraordinary coincidences. The corona The coronavirus pandemic has brought about unprecedented
pandemic as such and the measurements put in place by the challenges for everyone. Many governments try to tackle them
Austrian government both constitute extraordinary by imposing measures and restrictions. In Austria, such were
coincidences. introduced by a new statutory law and regulations based on this
new law. By these regulations, first, a curfew was established,
These provisions are, however, nonmandatory, and our and second, the entering of restaurants and bars as well as
experience shows that in some lease agreements they have customer areas of shops not being expressly exempted was
indeed been altered. Therefore, when contacting us, please forbidden. Hence, these premises were forced to close. However,
provide a scan of your lease agreement(s). both regulations provide for numerous exceptions, which are
equally relevant for commercial tenants. Yesterday and today,
If the leased object cannot be used at all, no rent has to the Austrian government announced that new measures will be
be paid. If a limited use is retained, the rent may be partially imposed and the existing ones will be extended until Easter
reduced but, generally speaking, only if the lease is to be Monday.
qualified as "regular" lease (Miete, as opposed to a
usufructary lease, Pacht; the latter could be relevant in This leads to the question which rights the lessee has in this
shopping malls). situation, and what the lessor could argue. Prima facie, there could
be two rights: First, the suspension of (at least parts of) the rent,
The amount by which the rent can be reduced has to be and second, the (immediate) termination of the lease agreement.
evaluated on a case-by-case basis, and broadly speaking
depends on the leased object, the agreed purpose of the Suspension of payments
lease, and the extraordinary coincidence in question (in
particular the specific measurement that was imposed). We Austrian statutory law provides for rules for cases of extraordinary
help you determine to relevant parameters. coincidences whereby it expressly mentions pestilence as an
example. The current pandemic is such pestilence. Moreover, the
For a lessee, it is in general not recommendable to current orders by the Austrian Government to close the customer
unilaterally suspend rent payments. For a lessor it is area of most stores is unanimously held to constitute an
advisable to find a mutual solution to avoid litigation too, extraordinary coincidence too. In such a case, statutory law grants
also to avoid that the lessee becomes insolvent. We are happy the lessee rights to reduce the rent.
to support you either way.
Relevance of lease agreement
A further right that may result from the current situation is a
right to immediate termination. This could be particularly However, since these rules are nonmandatory, they could have
relevant with the recent announcement of the Austrian been mutually amended in the agreement, and our recent
government to extend the measurements until Easter experience shows that this has been done in some, although, in
Monday. the absence of a recent and similar precedent, it is not too
common (this will likely change in the future). Nonetheless, any
legal assessment of the lessee’s rights needs to start with the lease
agreement.
15Statutory provisions again. We are evaluating the situation every day, have weighed
arguments in favour of both sides, and are happy to assist you.
If there is no agreement, statutory law provides that if the leased
property cannot be used “at all” due to extraordinary coincidences, UPDATE 21 March 2020 regarding home office: The new
no rent shall be paid, and if a “restricted use” remains, a regulation (No. 107) was published in the Federal Law Gazette on
proportionate share of the rent must be remitted. However, the 19 March, and thus came into force on 20 March; media reports
provisions distinguish between both forms of lease agreement un- were correct, it should have been lifted the same day but the
der Austrian law, the Mietvertrag (lease/tenancy agreement; this respective regulation (No. 108) was published on 20 March only,
only entitles to the use of the leased object) and the Pachtvertrag thus coming into force not before 21 March. Also, technically, the
(usufructuary lease agreement; also entitles to enjoyment of the measure regarding home office was not lifted but amended from
leased object’s fruits). The qualification of a lease as Pacht is of an order that the work-place may only be entered if work cannot
particular relevance in connection with shopping malls. Despite be done elsewhere, to an order that work should "preferably" be
increasing and somewhat clear case law in the last two decades carried out elsewhere if feasible and agreed upon between
ruling that they are regular leases, some scholars still hold that employer and employee. The latter requirement renders the whole
these are usufructuary leases. So the last word might not have or-der, more or less, pointless.
been spoken, and yet another change in case law cannot be
excluded. Lessee’s obligation to notify the lessor?
If the lease agreement in question is to be qualified as a It should be noted that in case of an usufructuary lease, the law
usufructuary lease, a partial loss of the use can only be claimed stipulates that the lessee has to give notice of the extraordinary
when the term of the lease is no longer than one year (which in circumstances without undue delay and cause the facts to be
practice is rather seldom) and the profits are less than half of the ascertained. It is disputed whether this should apply to agricultural
usual yields. Hence, an all-or-nothing principles applies for leases leases only or also to other leases (such as a business lease). This
with longer terms. The rationale when the Austrian General Civil provision seems to dispense a lessee from such obligation if the
Code (ABGB) was introduced in beginning of the 19th century was extraordinary coincidence is notorious, however, the wording of
that during a longer lease of an agricultural property the loses of the respective statutory provision is not unambiguous. Although in
one year would be compensated in the sub-sequent year(s). It is such case it may appear as an unnecessary formalism to inform
questionable whether this applies to business leases too, and thus the lessor, it is recommendable for lessees to nevertheless do so
whether this provision is applicable. However, a rather old decision in order to avoid putting their rights at risk. At the same time, the
held that the wording of the provision does not distinguish so it lessor could be invited to enter negotiation to reach a mutual
shall be applied to all leases. So both sides have their arguments, agreement on the rent reductions. This leads us to the next point.
and we are happy to support you.
Asserting lessee’s rights
Assessing the remaining use
Austrian law assumes that the rent reduces automatically in the
Furthermore, the lease agreement is also relevant to determine moment the extraordinary circumstances occurs. However, it is for
the purpose of the lease. This is necessary to assess to what the parties, and eventually for the courts, to determine the extent.
extent the property may still be used, if at all. For this, the purpose
of the lease agreed in the lease agreement has to be determined The lessee, however, is in a dilemma: If she/he pays the full
in the first place. This is because the current governmental amount, it could be qualified as a tacit waiver of her/his reduction
regulations do not provide for the entire closure of shops and rights; if she/he does not pay the full amount, the lessor may sue
restaurants. In regard to the former, only the customer areas need for the remaining rent and be entitled to terminate the lease
to stay closed, however, the rest may, and could, still be used agreement. Thus, to avoid burdensome litigation and if no mutual
(back offices, storage, preparation of deliveries, other creative agreement can be reached for the moment, it is recommendable
ideas that store owners have come up with to make at least a bit to effect payment under express reservation. It should be noted
of revenue). Regarding restaurants, the Government made an that the lessee might have means of defence if a termination and
express exception for delivery services, so they can still enter eviction procedure is brought before court, but this always poses
restaurants, which in turn means that restaurants, in principle, a risk and they might be not available for all leases (e.g. for
could continue their operation (at least with reduced capacity). usufructuary leases). We thus recommend to not take actions
The situation, however, can change every second for every sort of unilateral-ly but discuss your options first. Also lessors should be
lease object. Just yesterday (19 March), the Government open to negotiations because otherwise it does not help much if
published a new regulation (No. 107) which orders home office for the lessee becomes insolvent due to the high rent payments.
all companies, however, according to media, this will be lifted
16You can also read
