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Austria’s tax and legal landscape saw a series of impactful developments in May 2025, ranging from court rulings on corporate governance to evolving packaging laws and EU-driven cybersecurity obligations. Below is a roundup of the key highlights affecting businesses and professionals.
Supervisory Board Members: Liability for Inaction Clarified
The Austrian Supreme Court issued a significant ruling on the duties of supervisory board members, distinguishing their responsibilities from those of management boards. The court emphasized that supervisory board members must monitor management and assist in major decisions. Notably, they can be personally liable for any damages resulting from failure to act when action was warranted.
The ruling reinforces that supervisory board members must uphold the standards of a “reasonable and prudent” director, with legal consequences if their inaction harms the company.
Distinguishing Between Maintenance and Repair Expenses
In decision Ro 2023/15/0001 dated 26 September 2024, the Administrative High Court addressed how to differentiate repair from maintenance expenses in the context of condominium units within large residential complexes.
The court clarified that the individual unit, not the entire building, is the reference point for evaluating whether value or lifespan has significantly increased. The source of income associated with the unit is crucial in determining whether the expense qualifies as capital improvement or regular upkeep.
Transfer Pricing Update: Focus on Contract Research
The Austrian Transfer Pricing Guidelines 2021 have been updated more on contract research. The update clarifies the substance requirements for such arrangements and emphasizes how the Austrian research allowance, a unique local incentive, should be treated under the arm’s length principle.
This update helps multinational companies align their intra-group research pricing models with the Austrian tax authority’s expectations.
Minimum Wage Obligations in Cross-Border Employment
In a decision from 22 January 2025, the Austrian Supreme Court (OGH) ruled that foreign employers with staff working in Austria must comply with Austrian collective bargaining agreements.
A German IT company was required to pay Austrian minimum wages under the relevant collective agreement, given the employee’s workplace was in Austria. The case reaffirms Austria’s commitment to prevent wage dumping and protect employee rights in cross-border scenarios.
ECJ Clarifies VAT Treatment of Compensation Payments
In the case C-615/23 (Dyrektor Krajowej Informacji Skarbowej), the European Court of Justice (ECJ) ruled that flat-rate compensation payments made by local authorities to public transport companies are not subject to VAT. The payments were designed to offset operating losses and did not constitute payment for a specific service.
The ruling helps clarify the scope of VAT in public service contracts and could influence similar arrangements across the EU.
Reuse on the Rise: Deposit System for Takeaway Packaging?
Austria already introduced a deposit system for beverage containers in early 2025. Government discussions are underway to extend the system to takeaway food packaging.
A motion by the Green Party in March 2025 pushes for mandatory reusable packaging systems in the catering industry. Though no concrete law has been passed yet, proposals could soon align Austria with EU Packaging and Packaging Waste Regulation (PPWR) deadlines:
- By Feb 2027: Consumers can bring their own takeaway containers without discrimination.
- By Feb 2028: Takeaway food must be available in reusable packaging.
- By Jan 2030: Ban on single-use plastic for eat-in takeaway food; 10% reuse sales target introduced.
These developments mark a paradigm shift in how Austria handles food packaging waste.
NIS-2: Internal Data Centers Now in Scope
The updated EU NIS-2 Directive has implications for intra-group data center services. While centers used exclusively by the owning company are exempt, those serving other group entities are not.
This means corporate groups operating internal shared IT infrastructure must comply with stricter cybersecurity standards, including incident reporting and resilience testing. Although legislators did not intend to target such setups, the strict interpretation brings them under the scope of NIS-2.
From corporate accountability to digital security and environmental regulations, May 2025 brought crucial changes for companies operating in Austria. Businesses, especially those with cross-border operations or group structures, should take note of these rulings and legislative shifts to remain compliant and competitive.
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