Austrian UBO register: Fiscal penal proceedings in case of non-reporting

Overview

Since 2018, Austrian legal entities, such as ordinary partnerships (OG), limited partnerships (KG), stock companies (AG), limited liability companies (GmbH), European companies (SE) as well as trusts, have to report their beneficial owners to the Register of Beneficial Owners according to the Austrian Beneficial Owners Register Act (Wirtschaftliche Eigentümer Registergesetz). The legal entities are obliged to fulfill the due diligence and reporting obligations. To serve the purpose of this register and thus to ensure compliance with the obligations according to the Beneficial Owners Register Act , Sec 15 provides for tremendous fines according to Fiscal Penal Law in case of non-compliance.

Breaches of obligations in case of non-reporting

If a newly created legal entity did not submit a UBO-report within four weeks after its entry in the respective register (e.g. trade register) or if a legal entity did not comply with the obligation of a yearly UBO-filing check, the tax authorities will threaten to impose a first coercive penalty of currently EUR 1,000. If the entity still does not file the respective reporting, the coercive penalty is imposed after a period of six weeks. Together with the assessment of the first coercive penalty, a second coercive penalty in the amount of currently EUR 4,000 will be threatened together with a grace period of another six weeks. In the case that the reporting obligation is still not fulfilled within that time period, the tax authorities will impose the second coercive penalty.

Immediate start of fiscal penal investigations or start of fiscal penal proceedings

If despite the imposition of two coercive penalties, the reporting obligation is still not fulfilled, a fiscal penal offense is committed. The sanction is a fine of up to EUR 200,000 when acting intentionally and up to EUR 100,000 for gross negligent behavior. Such fine may be imposed on each fiscal penal offender (e.g. the entity itself as well as managing directors).

Thus, if the legal entity fails to comply with its reporting obligation despite two coercive penalties, the offense is considered to have been committed. Since the initiation of coercive measures must precede criminal liability, the offense may only be fulfilled in the case of a required initial report (within four weeks of the initial entry in the respective identification register) or confirmation report (within four weeks of the due date of the annual review). These penalties are imposed automatically if the respective deadlines are not met and are subsequently imposed if the report is not submitted within the set grace period. If two coercive penalties have already been imposed, the registry authority of the UBO register must forward the suspicion of a fiscal penal offense to the competent financial penal authority (Amt für Betrugsbekämpfung).

In practice, without further delay the competent authority quickly start fiscal penal investigations or even fiscal penal proceedings. Thus, there is an immediate need for action.

Conclusion

The fines in case of non-compliance with the obligations under the Beneficial Owners Register Act are significant. Therefore, it is important that the legal entities comply correctly and in a timely manner with the obligations, especially regarding the provided automatism in the penalty proceedings. If, however, the reporting obligation is not fulfilled after the imposition of two coercive penalties, one has to expect immediate fiscal penal investigations. We are happy to provide support with regard to the reporting obligations and in case of fiscal criminal proceedings.