This content is from: Local Insights

Minimum fines for late filing are constitutional

Christian Temmel

Austrian companies with limited liability and Austrian stock corporations are required to file their annual financial statements with the Austrian companies register within nine months after the end of the previous fiscal year.

This requirement exists in addition to the obligation to file annual financial statements with the tax authorities. The Austrian companies register is open to public inspection, so everyone can review the annual financial statements of an Austrian company.

The requirement to file the annual financial statements within nine months after the end of the previous fiscal year is not new – it has existed for many years – however, there have been only a few fines for late filing.

In 2010, an amendment to the Business Enterprise Code (Unternehmensgesetzbuch, or UGB) was introduced which provided for a minimum fine of e700 ($940) for late filings for each managing director and company. The fine is to be imposed on all managing directors and on the company, since it is their obligation to procure for a timely filing of the annual financial statements.

So, if a company has two managing directors, the cumulated minimum fine is e2,100 (e1,400 for the two managing directors and e700 for the company), if a company has three managing directors the cumulated minimum fine is e2,800 (e2,100 for the managing directors and e700 for the company), and so on.

In July 2011, after the first fines under the new regime were imposed on companies and managing directors, the Austrian Supreme Court held that the determination of a minimum fine of at least e700 is in compliance with the Austrian Constitution.

The amount of e700 is an amount that has typically been imposed by the courts for late filings also before the determination of a minimum fine, so the Austrian legislator has simply codified the previously existing practice.

In addition, the Austrian Supreme Court has held that statistics show that in 2008, for example, only 58% of Austrian companies with more than 250 employees filed their annual financial statements within the nine-month period. The Austrian Supreme Court is of the opinion, therefore, that such existing practice of non-compliance with Austrian and European provisions justifies the imposition of fines. For the same reason, penalising both the company and its managing directors is also justified.

Christian Temmel

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