(a) No, there is no specific statutory legislation.
(b) Tax: No; social security: Partly.
(c) Partly.
(a) No.
(b) Tax: No; social security: Partly.
(c) Partly.
The EU directive on platform workers, which was adopted by the European Parliament in early 2024, seeks to improve the working conditions of individuals performing work for a digital labor platform. Broadly, the directive provides that an individual working for a digital labor platform will be presumed to be its employee where facts indicating control and direction are present. For more information, please see our client alert here.
Further, EU member states have developed a new framework agreement in the field of social security to address the reality of regular cross-border remote working. The framework agreement on the application of Article 16 (1) of Regulation (EC) No. 883/2004 in cases of habitual cross-border remote working aims to promote the free movement of people within the EU while preserving their right to social security. The framework agreement came into effect on 1 July 2023.
The main employment law risk is misclassification, leading to the following:
- There will be a full employment relationship with all employee protection rights including termination protection, working time regulations, full representation by works council, etc., vis-à-vis the main contracting entity or the platform operator.
- There will be a retroactive and prospective obligation to pay salary (minimum requirements), provide holidays and sick pay, include employee in company pension scheme, etc., as applicable for regular employees.
- Penalties may be triggered under wage and social security dumping law.
- Work via a platform may also be qualified as employee leasing, and thus may be subject to Austria's employment laws and additional protections under the Temporary Employment Act (Arbeitskräfteüberlassungsgesetz).
The company also faces reputational risks.
The penalty amount depends on which law was violated (which may differ case-by-case, e.g., violations of working time, wage and social security dumping) and the extent of violations. However, if de facto employers pay below minimum requirements, then the maximum fine for this type of violation is EUR 400,000.
The de facto employer can be held liable for underpaid payroll tax from payments made to the misclassified contingent worker. However, the de facto employer can take recourse against the contingent worker (this is not possible in the case of social security contributions). If the de facto employer does not take recourse against the misclassified contingent worker, but assumes the payroll tax liability, this will be treated as additional taxable benefit in kind that is subject to wage tax and social security contributions.
The de facto employer is also obliged to repay erroneously deducted input VAT (Vorsteuerabzug).
If a foreign employer employs domestic employees who carry out their work in a home office in Austria, the home office could constitute a permanent establishment for corporate income tax purposes in Austria. The criteria to establish such permanent establishments are (i) power of disposal, (ii) permanence, and (iii) activities related to business. This would result in a limited tax liability for the domestic employer in Austria. However, a merely occasional (less than 25% of the total work time) use of the home office will not yet constitute a permanent establishment due to the lack of the employer’s power of disposal and permanence. A home office being used for more than 50% of the normal working time is deemed to constitute a permanent establishment, while a use between 25% and 50% has to assessed on a case-by-case basis.
If no deduction and remittance is made, the employer liable for these taxes faces fiscal criminal liability. The penalties include fines and incarceration, depending on the sums involved and the individual accountability.
The main social security risk is misclassification leading to the following:
- In case of misclassification, the company will be retroactively subject to the automatic social security enrollment regime for the misclassified individuals. Thus, social security authorities may claim social security payments (employee's and employer's contributions) plus interest vis-à-vis the company for previous years.
- Penalties may be triggered under wage and social security dumping law if minimum salary requirements are violated.
- Criminal liability may arise, which translates into financial exposure.
If workers are misclassified and social security becomes due, companies would need to consider the EU's new social security rules for cross-border employees (effective from 1 July 2023), if the individuals are EU-based and work in more than one EU jurisdiction.
The penalty amount depends on which law was violated (which may differ case-by-case, e.g., violations of working time, wage and social security dumping) and the extent of violations. However, if de facto employers pay below minimum requirements, then the maximum fine for this type of violation is EUR 400,000.
From a pension's perspective, the main risk is misclassification leading to the same consequences from a social security perspective. In addition, if the company has a company pension scheme in place (which is not obligatory from a statutory perspective), the company is obliged to retroactively include the individual in such scheme. This applies even if the contingent worker would be qualified as "leased employee," e.g., via a platform, but only from the fifth year onward.
From a regulatory perspective, the platform provider may be fined, and platform work may be prohibited, if the required trade permits are missing.
In addition, if the company has a company pension plan, the contingent worker may raise claims under such plan.
The penalty amount depends on which law was violated (which may differ case-by-case, e.g., violations of working time, wage and social security dumping) and the extent of violations. However, if de facto employers pay below minimum requirements, then the maximum fine for this type of violation is EUR 400,000.
While the entity itself may face fines under the Austrian Association Responsibility Act, the directors are the ones who bear the fiscal criminal responsibility. Other senior personnel may be charged with facilitating tax evasion.
The penalties include fines and incarceration, depending on the amounts involved and the individual accountability.