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  • Cosmetics law - an overview

    Cosmetics law is a complex legal framework that regulates the manufacture, sale, labelling and use of cosmetic products. It comprises a large number of legal provisions, regulations and guidelines at national and international level that aim to ensure the safety, quality and efficacy of cosmetics and protect the interests of consumers. EU Cosmetics Regulation One of the central legal regulations in the area of cosmetics law is the EU Cosmetics Regulation (EU Regulation (EC) No. 1223/2009), which significantly regulates the sale of cosmetics in the European Union. This regulation lays down comprehensive safety standards, defines prohibited ingredients and requires clear labelling of cosmetic products. It applies directly in all EU member states and ensures that uniform standards are adhered to throughout the internal market. The EU Cosmetics Regulation stipulates, among other things, that cosmetic products must be safe when used under normal or reasonably foreseeable conditions of use. It contains a list of prohibited ingredients, including CMR substances (carcinogenic, mutagenic or reprotoxic substances), which must not be contained in cosmetic products. In addition, all ingredients used must be clearly labelled on the packaging to enable consumers to make informed choices. Compliance with labelling requirements is an important aspect of cosmetics legislation, which aims to ensure that consumers have all the relevant information about a product. Claims Regulation Another important element of cosmetics law is the Claims Regulation (EU) No. 655/2013, which sets out common criteria for substantiating advertising claims for cosmetic products. This regulation aims to prevent misleading or false advertising claims and to protect consumers from misleading advertising. Advertising claims for cosmetic products must be scientifically substantiated and must not be misleading. Responsible Person (RP) Only cosmetic products for which a legal or natural person within the Community territory has been designated as the "Responsible Person" may be placed on the market. For each cosmetic product placed on the market, the Responsible Person shall ensure compliance with the relevant obligations set out in this Regulation: Safety - Cosmetic products must be safe for human health under normal or reasonably foreseeable conditions of use Notification - Before being placed on the market, the cosmetic product must be notified to the Commission electronically Manufacture in accordance with good manufacturing practice Creating and maintaining the product information file and the safety assessment CMR substances and prohibited substances may not be used, and the substances listed in Annexes III-VI of the Regulation may only be used in accordance with the specified restrictions Nanomaterials - In addition to notification, cosmetic products containing nanomaterials must be notified to the Commission electronically six months before being placed on the market Labelling and advertising claims Notification of serious undesirable effects Informing the public about the qualitative and quantitative composition and about (serious) adverse effects National provisions on cosmetics law & customs law In addition to the EU-wide regulations, there are also national laws and regulations that supplement cosmetics legislation and define specific requirements for the sale and use of cosmetics in a particular country. These national regulations may impose additional requirements on the safety, quality and labelling of cosmetic products and must be observed by manufacturers, importers and distributors. Customs law issues also regularly arise in connection with the import of cosmetic products from third countries. Conclusion Compliance with cosmetics legislation is crucial for manufacturers, importers and distributors of cosmetic products. They are responsible for ensuring that their products comply with the applicable legal requirements and are safe for consumers. This includes ensuring the safety and quality of products, proper labelling and packaging, compliance with advertising regulations and the reporting of adverse effects. Both administrative and criminal sanctions can be imposed for violations of cosmetics law. This can include fines, the withdrawal of products from sale or even legal action against the persons responsible. It is therefore crucial for companies in the cosmetics sector to be fully aware of the applicable regulations and ensure that their products comply with legal requirements. Cosmetics law lawyer Dr Simon Harald Baier LL.M. advises on cosmetics law, customs law issues and all questions of commercial law.

  • Commercial Agency Law and Commercial Agency Agreement in Austria - An Overview

    Commercial agents are tasked with brokering deals for other companies and are obligated under the Commercial Agents Act ("Handelsvertretergesetz" - HVertrG) to continuously seek out new business opportunities. Typically, the commercial agent does not directly conclude these deals on behalf of the company but merely brokers them. Commercial Agency Agreement Usually, a contract is concluded between the commercial agent and the company for which they work (referred to as the principal), which must comply with the legal framework of the Commercial Agents Act. In Austria, the rights and obligations of a commercial agent are primarily regulated by the Commercial Agents Act and EU Directive RL 86/653/EEC. It is important to distinguish between the statutory and contractual rights and obligations and to ensure that the commercial agency agreement complies with the mandatory norms of the Commercial Agents Act. Rights and Obligations of the Commercial Agent The rights of the commercial agent include, among others, the right to remuneration (commission) and accurate accounting. The commercial agent also has control rights such as the right to inspect books and records. Their main duty is to broker or conclude deals while representing the interests of their principal. This also includes the obligation to provide the entrepreneur with the necessary information and to promptly inform them of any concluded business transactions. Obligations of the Entrepreneur In addition to the obligations of the commercial agent, the entrepreneur, or principal, also has certain obligations. This includes the payment of the agreed commission and the provision of support in the form of information and documents. The entrepreneur also has obligations of disclosure, loyalty, and confidentiality towards the commercial agent. The commission entitlements of the commercial agent are not subject to specific regulations regarding the basis of calculation in the Austrian Commercial Agents Act, but generally, no discounts may be considered in the calculation of the commission. Important Contractual Points The commercial agency agreement sets out the fundamental rights and obligations of both parties. The more precise and comprehensive this contract is formulated, the lower the risk of disputes. Frequently asked questions during the contractual relationship concern the scope of the commercial agent's activities, mutual rights and obligations, and the amount of commission. Questions regarding exclusivity, territorial protection, and non-compete clauses may also be significant. Antitrust Law From an antitrust perspective, it is also important to clarify whether the commercial agent is a "true" or "untrue" commercial agent. Only genuine commercial agency contracts are not subject to the prohibition of cartels because they are considered quasi-extensions of their principal. To be classified as such an extended arm of the principal, a commercial agent must bear no or only insignificant risks, namely regarding the contracts concluded or brokered on behalf of the entrepreneur, market-specific investments for this area of activity, and other activities that the entrepreneur deems necessary for the same relevant market. Compensation Claim Section 24 HVertrG provides for a so-called compensation claim for the commercial agent. The compensation claim is due to the commercial agent after the termination of the contract. The prerequisite for this is that the contract was terminated in a compensatory manner (e.g., by termination of the entrepreneur) and that the commercial agent has attracted new customers or significantly expanded existing business relationships. It must be expected that even after the termination of the commercial agent's activities, benefits will accrue to the entrepreneur. The payment of the compensation claim must be fair, taking into account all circumstances, especially the commissions the commercial agent would have earned from transactions with the relevant customers. However, jurisprudence or legislation also grants compensation to the distributor, franchisee, insurance agent, and franchise gasoline station operator in the meantime. Consideration of Statute of Limitations The statute of limitations for claims arising from a commercial agency agreement is usually three years, while compensation claims must be asserted within one year. Commercial Lawyer Dr. Simon Harald Baier LL.M., attorney at law, advises on commercial agency agreements, distribution agreements, and all matters of commercial law and antitrust law.

  • Current ECJ judgement on air passenger rights: No lump sum payment in case of flight delay if the passenger does not show up or rebooks himself

    The Court of Justice of the European Union (CJEU) recently handed down judgements in cases C-474/22 and C-54/23 relating to air passenger rights in the event of delays. These judgements have far-reaching implications for the rights of passengers and the obligations of airlines. Background Two Laudamotion flights from Düsseldorf to Palma de Mallorca were announced with a delay of more than three hours. Two passengers decided not to take the flight as they feared they would miss an important business appointment. The German Federal Court of Justice asked the CJEU whether a passenger whose flight is announced to be delayed by at least three hours compared to the scheduled arrival time is entitled to compensation if he has not turned up for check-in or if he has booked an alternative flight that has enabled him to reach the final destination with a delay of less than three hours. Judgement of the CJEU and effects The CJEU ruled that there is no entitlement to a lump-sum compensation payment in these two cases. This judgement has a significant impact on the rights of passengers and the obligations of airlines. It clarifies that passengers who decide not to take their flight due to an announced delay are not entitled to a lump-sum compensation payment; they would not have suffered an irreversible loss of time and therefore no compensable damage in terms of the lump-sum compensation payment. In addition, a passenger who voluntarily did not take the flight for which he had a confirmed booking and who, thanks to a replacement flight for which he reserved a seat on his own initiative, reached the final destination with a delay of less than three hours compared to the originally planned arrival time, did not suffer a loss of time that would entitle him to a lump-sum compensation payment. The Air Passenger Rights Regulation (Reg. 261/2004) is intended to minimise annoyances and “serious inconvenience” suffered by passengers in connection with a flight can be remedied. However, such an inconvenience, which may result from a passenger having to find an alternative flight themselves, cannot be considered serious within the meaning of the Air Passenger Rights Regulation if the passenger has reached their final destination with a delay of less than three hours. Lawyer aviation law Dr Simon Harald Baier LL.M. advises on all questions of aviation law and represents airlines in the defence of passenger claims.

  • The new flexible corporation (FlexKap / FlexKapG / FlexCo) as an alternative to the GmbH in Austria

    The “Flexible Kapitalgesellschaft” (FlexKap / FlexKapG / FlexCo) is a new form of company that will be available in Austria from 1 January 2024. It is intended in particular for innovative start-ups and founders, but can generally be chosen as an alternative company form, especially to the limited liability company (GmbH). The new flexible corporation (FlexKapG / FlexCo) is strongly modelled on the GmbH. According to the legal definition of the FlexCo Act, a flexible capital company is a capital company that can be founded by one or more persons for any legally permissible purpose. As with the GmbH, the FlexCo can therefore also be founded as a one-person company. The FlexCo has a company name and must be entered in the commercial register, whereby the legal form supplement must read "Flexible Kapitalgesellschaft" or "Flexible Company" and be abbreviated to "FlexKapG" or "FlexCo". The FlexCo differs from the GmbH in several aspects: The minimum share capital of FlexCo is EUR 10,000, just like a GmbH. However, the minimum capital contribution for FlexCo can be EUR 1, which allows for very small shareholdings. In contrast to a GmbH, the shareholders of a FlexCo are also authorised to exercise the voting rights associated with a share on a non-uniform basis. The FlexCo enables the issue of company value shares of up to 25% of the share capital (this is particularly interesting for employee participation). The FlexCo can acquire its own shares under certain conditions. The articles of association can stipulate that the consent of all shareholders is not required for circular resolutions or that compliance with the text form is sufficient (thus simplifying the form of the resolution). In contrast to the GmbH, the transfer of shares is no longer subject to notarisation. The transfer of shares is therefore possible by means of a deed drawn up by a lawyer or notary. Finally, the conversion options between a GmbH and a FlexCo are simplified: a FlexCo can be converted into a GmbH by resolution of the general meeting. It is also possible to convert a GmbH into a FlexCo. It is also possible to convert a FlexCo into an AG. Article at shb-law.at Attorney business law Dr Simon Harald Baier LL.M. advises in connection with company formations, in particular on the formation of FlexKapG/FlexCo and GmbH as well as on all questions of business law.

  • The EU cybersecurity regulations for civil aviation and what they mean for airlines, airports & co.

    Aviation organisations, authorities and their assets are an integral part of aviation products and associated technologies, includes people, processes and other intangible assets and must be protected against information security risks that may potentially impact safety. Therefore, new requirements, referred to as Part-IS ("Information Security"), have been created to set requirements for organisations and authorities across the aviation sector for the management of information security risks with potential impact on aviation safety. The new European regulations on this - Delegated Regulation (EU) 2022/1645 and Implementing Regulation (EU) 2023/203 - cover the identification and management of information security risks that could affect information and communication technology systems and data used for civil aviation purposes. They further cover the detection of information security incidents, the identification of incidents considered as information security incidents and the response to such incidents. Finally, they regulate the restoration of an appropriate level of safety. From when and for whom do the new regulations apply? The Part-IS requirements apply from 16 October 2025 to the following organisations (with certain exceptions): aerodrome operators and apron management service providers production organisations and design organisations The Part-IS prequirements apply to all other organisations and authorities (with certain exceptions) from 22 February 2026: airlines maintenance organisations continuing Airworthiness Management Organisations (CAMO) approved Training Organisations (ATO) aircrew aero-medical centres flight simulation training device operators air traffic controller training organisations (ATCO TO) and ATCO aero-medical centres air navigation service providers U-Space service providers The respective competent authorities (in Austria four aviation authorities have been established, whereby in the scope of the relevant regulation the Supreme Civil Aviation Authority (Ministry of Transport) and Austro Control would be significant), including EASA Content of the requirements The central requirement for the organisations and authorities subject to regulations and an essential element of the Cybersecurity Regulations is the establishment of an information security management system (ISMS). Such a system should be able to detect security incidents, protect against them, respond to them appropriately and restore integrity after an incident. In particular, it requires - in analogy to existing aviation-specific management systems - the definition of responsibilities and accountabilities and the appointment of an accountable manager; the identification and review of information security risks; the assessment of the information security risk; the corresponding development of measures; competent and trained personnel; as well as a monitoring function regarding compliance with the requirements. The Cybersecurity Regulations also provide for the establishment of an internal and external reporting system and the creation of an ISM manual. It is possible to integrate the ISMS into other already existing management systems (e.g. safety management system, security management system). Requirements already arising from other Union legislation (Regulation 300/2008 and NIS Directive) The Cybersecurity Regulations provide that where an organisation is an operator or entity referred to in Member States’ national aviation security programmes under Article 10 of Regulation (EC) No 300/2008 on common rules in the field of civil aviation security, the cybersecurity requirements set out in point 1.7 of the Annex to Implementing Regulation (EU) 2015/1998 shall be considered equivalent to the requirements of the Cybersecurity Regulations (with the exception of the points on external reporting systems of the Part-IS). Regulation (EC) 300/2008 and the associated implementing provisions of Regulation (EU) 2015/1998 contain the basic rules that must be complied with throughout the European Union to protect against terrorist attacks; these rules apply to airports, airlines and a number of other companies. Finally, under the Cybersecurity Regulations, compliance with the security requirements set out in Article 14 of Directive (EU) 2016/1148 (“NIS Directive”), which are equivalent to the requirements of these Regulations, is deemed to be compliance with the requirements. The NIS Directive introduces specific security requirements and reporting obligations for operators of essential services in certain sectors of the economy to promote a culture of risk management and ensure that the most serious security incidents are reported. The NIS Directive is implemented in Austria by the “NIS Act” and the “Network and Information Systems Security Regulation”. Therefore, due to their importance for the maintenance of public transport in the transport sector of interest here, subsector air transport, essential services are the follwing: The carriage of passengers in commercial air transport by an air carrier that carries more than 33% of the passengers handled annually at an airport that handles more than ten million passengers annually; in the field of airport operations, flight handling, in particular passenger handling and baggage handling, as well as the operation of security systems, at an airport handling more than ten million passengers per year; in the field of air traffic control - air navigation services provided by facilities which are responsible for air navigation services as a sovereign task of the Federal Government under the Aviation Act (“LFG”); - aerodrome control services at an airport that handles more than ten million passengers a year. As a result, there are currently three operators of essential services for the air transport sub-sector in Austria: Austrian Airlines AG, Flughafen Wien AG and Austro Control GmbH. Attorney Aviation Law Dr. Simon Harald Baier LL.M. advises on all issues of aviation law and business law.

  • Austrian insolvency law, protection of creditors and instruments for securing payment

    The main purpose of insolvency proceedings under the Austrian Insolvency Act (“Insolvenzordnung”) is to ensure equal treatment of all creditors. All filed claims – apart from the “privileged” claims of segregation, separation and specific estate creditors – are to be satisfied to the same extent. In principle, the entire assets of the debtor are used for this purpose. In the run-up to insolvency proceedings, especially when insolvency is imminent, there is a risk that this primary purpose of the insolvency proceedings will be frustrated: More or less significant parts of the debtor’s assets may be transferred to third parties (often relatives) in order to prevent them from being accessed by creditors, “troublesome” creditors (or creditors who are particularly close to the debtor) are quickly satisfied in full, while the others have to be content with the insolvency quota, which is usually extremely low anyway and even worse as a result of such acts. The Austrian Insolvency Act attempts to counter this problem by creating – for the purpose of restoring equal treatment of all creditors – a claim of the insolvency estate (represented by the insolvency administrator) against the recipient of benefits based on contestable legal acts/omissions for restitution (“legal challenge”). 1. Challenge of benefits received (“voidable preference”) Legal acts of the debtor performed prior to the opening of insolvency proceedings may be challenged within one year by the insolvency administrator especially on the grounds of intention to disadvantage, favoring other creditors or knowledge of the debtor's insolvency or over-indebtedness (the law also recognizes other facts). a. Challenge due to intention to disadvantage Intention to disadvantage exists if the debtor willfully intends that the legal act in question will ultimately thwart the satisfaction of at least one (other) creditor. b. Challenge due to favoring other creditors A favorable act by way of security or satisfaction of a creditor performed after the occurrence of insolvency or after the application for commencement of insolvency proceedings or in the last sixty days prior thereto, but not earlier than one year before commencement of insolvency proceedings (absolute time limit), is voidable if the creditor was aware or should have been aware of the debtor's willful intention to favor the debtor. Furthermore, irrespective of an intention to favor, any security or satisfaction can be challenged – within the same period – whereby the creditor receives something that is not due to him according to the object, the time or the place (e.g. by payment of a debt not yet due). c. Challenge due to knowledge of insolvency or over-indebtedness All legal acts or transactions performed after the occurrence of insolvency not more than six months before the commencement of insolvency proceedings are voidable, if another insolvency creditor obtains security or satisfaction, or the transaction entered into by the debtor with other persons is disadvantageous to the creditors, if the other party was aware or should have been aware of the insolvency/over-indebtedness or the request to commence insolvency proceedings. Over-indebtedness exists when neither existing assets nor expected income of a debtor cover his existing liabilities. 2. Instruments for securing payment International sellers are often confronted with the risk of payment default in case of a (possible) insolvency of the purchasers. How can they protect themselves best without jeopardizing the deal? The preferred instruments will be advance payment or a Letter of Credit. In case of a challenge of the payment by the insolvency administrator, payment under a Letter of Credit will be least likely to be found by a court as disadvantageous to other creditors. In addition, Austrian law provides for another instrument for securing payment – the retention of title until full payment is received by the seller (so-called “Eigentumsvorbehalt”). For that, a corresponding clause based on Austrian law would need to be entered into the sales contract. In the case of items that were delivered under retention of title in the sold goods under Austrian law before the opening of the insolvency proceedings, a right to segregation will be given. The segregation creditor under Austrian law is the owner as title holder of a movable property (an item) which is in the debtor's power of disposal at the opening of the insolvency proceedings. The title holder may request segregation in insolvency proceedings, as the item does not belong to the assets. Creditors entitled to segregation have the supposedly strongest legal position in the insolvency proceedings, as they are not subject to the rules of the general enforcement proceedings of the Insolvency Act. In practical terms, however, this legally strong position receives some limitations. For example, according to the Insolvency Act the insolvency administrator may delay the segregation for up to six months after the opening of the insolvency proceedings, if the object to be segregated is necessary for the continuation of the debtor’s business operation. The retention of title provides additional security, but there still remain risks in practice. Problems may for instance arise especially if the transferred goods are no longer with the buyer or have become a dependent part of another object. Furthermore, the seller usually has to take action to retrieve his property (which is time-consuming and costly). A retention-of-title-clause needs to be thoroughly drafted to be effective in case of an insolvency of the Austrian debtor. Attorney trade law Dr. Simon Harald Baier LL.M. advises on issues of international trade law, in particular on international contract drafting and letters of credit.

  • Aviation law: State aid framework for advantages granted by airports to airlines

    National subsidy and support measures in favour of companies are subject to EU state aid law. If such activities may distort competition and affect interstate trade, they are in principle prohibited. The extent to which an aid measure fulfils the conditions of an exception must in principle be determined by the European Commission, which can approve certain aid. Unlawfully granted aid must be effectively recovered by the affected Member State from the aid recipient. In the aviation sector, in addition to direct state subsidies to airports or airlines, cases are also relevant in which public funds are available to an airport and these benefit an airline in a special form – for example, through arrangements on discounts on airport charges. The legal framework for such subsidies is examined in more detail below: Legal framework – aid from airports to airlines State aid must generally (with a few exceptions) be approved. The European Commission, as the responsible supervisory authority, has drawn up guidelines for the assessment of state aid from airports to airlines. First, of course, it must be examined whether there is any state aid at all – an economic advantage – in favour of an airline. Only if such an advantage exists, can approval be required. The prerequisite is first that the measures granted by a public company are attributable to the state - this is the case with public airports. Whether a company (the airline) has subsequently received an economic advantage is examined on the basis of the so-called “market economy operator principle”. a) The market economy operator principle The Commission considers that agreements concluded between airlines and an airport may be considered to be in conformity with the market economy operator principle if, from an ex ante point of view, they contribute incrementally (i.e. build up gradually) to the profitability of the airport. The airport should demonstrate, when setting up an arrangement with an airline (e.g. individual contract or general airport charging scheme), that it is capable of covering all costs stemming from the arrangement, over the duration of the arrangement, with a reasonable profit margin on the basis of sound medium-term prospects. This should also consider the non-aeronautical revenues expected to be generated by the airline's activities. Similarly, any incremental costs likely to be incurred by the airport in relation to the airline’s activities at the airport should also be taken into account. For example, if the airport needs to build or expand a terminal or other facilities, in particular due to the needs of a specific airline, the corresponding costs should be taken into account in the calculation of the incremental costs. b) Start-up aid However, if the above test does not lead to cost recovery, and therefore state aid to an airline is present, it may still be permissible and approved as so-called “start-up aid”. Start-up aid is state aid to airlines for launching a new route with the aim of increasing the connectivity of a region. For it to be permissible, the following conditions must be met cumulatively: Contribution to a well-defined objective of common interest: E.g. aid to promote the economic development of areas where the standard of living is abnormally low or where there is serious underemployment. Need for state intervention: State aid may only be granted if it can bring about substantial improvements which the market cannot bring about itself. Appropriateness of State aid as policy instrument: The aid measure must be an appropriate instrument to achieve the objective of common interest (business plan). Existence of incentive effect: The aid must lead the undertakings concerned to change their behaviour and to engage in additional activities which, without the aid, they would not undertake or would undertake only to a lesser extent or in a different way or in a different location. Proportionality of the aid amount: Limitation of the aid to the minimum necessary. Avoidance of undue negative effects on competition and trade between Member States: The negative effects of the aid must be limited to a sufficient extent so that the overall balance of the measure is positive. Transparency of aid: Member States, the Commission, economic operators and the interested public must have easy access to all relevant rules and to relevant information on aid granted under them. Conclusions If concrete evidence is found that a public airport is granting aid to airlines, this could be considered admissible as “start-up aid” for the launch of new routes. However, this requires a prior notification to and examination by the Commission. Aid that is not approved would have to be repaid by the recipient of the aid! Whether the criteria of state aid are fulfilled at all is determined by the standard of the “market economy operator”: According to this, state aid would be present, for example, if a public airport were not in a position, during the term of the arrangement with the respective airline, to cover the costs from the arrangement with a reasonable profit margin on the basis of sound medium-term medium-term prospects. This calculation would have to take into account, in addition to the airport charges (net of any discounts, marketing support or incentive schemes), the non-aeronautical revenues expected to be generated by the airline’s activities and any incremental costs. Characteristics that speak in favour of compliance with the market economy operator standard would include risk reduction through diversification (expansion of the airport’s customer base), better allocation of resources, reduction of overcapacities and (free) advertising measures for the benefit of the airport. However, if the bottom line were not an economically reasonable plus, state aid would have to be assumed. Attorney aviation law & competition law Dr. Simon Harald Baier LL.M. advises on all questions of aviation law and competition law.

  • Business Law: Registration and exercise of business by foreigners in Austria

    The Industry Law (“Gewerberecht”) regulates all rights and obligations relating to the registration and exercise of businesses in Austria. Basic requirements for registration and exercise of business by foreigners in Austria (business license) The following applies to both nationals and foreigners: A business can be exercised by a natural person as well as by other legal entities. This includes companies, cooperatives, associations, branches of foreign companies registered in the commercial register, political parties, regional authorities, legally recognised churches and religious communities, chambers and other public corporations. The Industry Code (“Gewerbeordnung – GewO”) distinguishes between free businesses and regulated businesses: Both forms have in common that certain general requirements must be met in order to exercise them. Companies, for example, must be registered in the company register and appoint a managing director under industry law - this person is responsible to the business authority for compliance with the regulations under industry law (they also need to be distingushed from directors under corporate law who might not necessarily be the same individual). Natural persons must, among other things, be of legal age. Free businesses may be registered and exercised without proof of competence, whereas proof of competence (i.e. a certificate of the business' professional and commercial-legal knowledge, skills and experience) is required for the registration of a regulated business. In the case of sole proprietorships, the owner must provide proof of competence or appoint a managing director under industry law. In the case of companies, the managing director under industy law, who must be appointed, must provide proof of competence. In the case of sole proprietorships, the managing director under industry law must be an employee who is employed in the business for at least half of the normal weekly working hours and is fully liable for social security contributions. This also applies to companies; alternatively, the managing director under industry law can be given power of representation (e.g. if the managing director under corporate law also acts as managing director under industry law). Exercise of a business by foreigners The exercise of a business in Austria by foreigners is subject to certain additional requirements: In the case of foreign natural persons, the exercise of the business must not be expressly reserved for Austrian citizens (e.g. in the case of certain weapons businesses). Furthermore, certain international treaties may provide for extensive equality with nationals (EU/EEA citizens and Swiss nationals). However, in the case of third-country nationals, the prerequisite for a business licence is, in principle, legal residence of the foreigner in Austria, whereby the residence title must permit the exercise of self-employed activity. Foreign companies generally require a branch office registered in the company register. Alternatively, it is of course also possible to establish a company in Austria. Foreign companies must also appoint a managing director under industry law who fulfils the requirements for a business licence (and provides proof of competence in the case of regulated businesses). The managing director can therefore also be a third-country national who is entitled to reside in Austria and carry out the activity. If no proof of competence can be provided, a declaratory decision on the "individual" qualification or the recognition of the foreign training is possible in principle. Natural persons without a corresponding proof of competence can consider founding an Austrian company that appoints a competent managing director under industry law. However, caution is advised here – for example, if there is no work permit or if there is no declaratory decision by the Public Employment Service (“Arbeitsmarktservice”) on the significant influence of the foreign partners on the management, the registration of the foreign partners in the company register may be refused. Residence title permitting the pursuit of self-employment There are different residence titles. According to the Settlement and Residence Act (“Niederlassungs- und Aufenthaltsgesetz – NAG”), the business applicant who is not yet legally resident in Austria must prove the required authorisation to exercise a business before a residence title is granted for the first time, if the purpose of residence is to exercise a business. For this purpose, the competent business authority issues a certificate stating that all requirements for the exercise of the business are met with the exception of the residence title. Attorney business law Attorney at Law Dr. Simon Harald Baier LL.M. advises in connection with business licenses and the right of settlement and residence as well as on all questions of business law.

  • Purchase of real estate in Austria by foreigners

    Purchase of real estate in Austria by foreigners can be tricky. Provincial legal regulations If foreigners intend to purchase real estate in Austria, one of the questions that always arises is the planned use of the property. In this context, it should be noted that the applicable regional planning and building laws are the responsibility of the provinces in terms of legislation and enforcement. Building permits are granted and zoning and development plans are issued on the basis of the applicable provincial laws, of which there are nine different ones. If, for example, the property is to be used as a secondary residence (e.g. for holiday purposes), this must also be done within the framework of zoning law, otherwise sanctions may be imposed that could even lead to the revocation of ownership. One set of regulations that is specifically aimed at the acquisition of land by foreigners is the Land Transfer Law. This, too, is a matter for the provinces (federal states) in terms of legislation and enforcement. Approvals by the land transfer authorities are issued on the basis of the respective provincial laws. Approval by the land transfer authorities The acquisition of ownership or co-ownership of real estate by foreigners (third-country nationals) in Austria generally requires official approval. The following are considered foreigners: - anyone who does not hold Austrian citizenship - legal entities as well as partnerships under corporate law that have their registered office abroad; if legal entities as well as partnerships have their registered office in Austria but foreigners hold the majority of shares in them, they are also deemed to be foreigners; the same applies to associations; - foundations and funds whose assets or income, according to their statutory purpose, are exclusively or predominantly allocated to foreigners, or whose administration is exclusively or predominantly the responsibility of foreigners. In the case of certain third-country nationals, a permit requirement may be waived on the basis of bilateral agreements. Only nationals of EU and EEA member states are exempt from the requirement to obtain a permit from the land transfer authorities. They are treated in the same way as nationals. Since land transfer law is a provincial matter, the regulations specifically applicable to a transaction must always be observed. In very general terms, provincial laws may provide for the following conditions for acquisition approval: - Cultural interest: For example, the applicant is of cultural benefit to the municipality or the province - Social interest: The property to be acquired is intended to satisfy a personal housing need of the applicant; gifts between close relatives; anticipation of a testamentary disposition - Economic interest: The acquisition serves, e.g., the establishment, expansion or maintenance of a business - State political interests must not be violated by the acquisition. As mentioned above, differences in state law must be taken into account: In the province of Vienna, for example, no permission is required if married couples acquire real estate or condominiums, provided one spouse has Austrian citizenship. In Styria, for example, this does not apply. In addition to the special rules for the acquisition of land by foreigners, the other requirements for the acquisition of agricultural and forestry land or building grounds must also be met. For example, the Styrian Land Transfer Act stipulates that, in order to acquire building land in certain municipalities, a declaration must be submitted stating that the intended acquisition of rights will not serve to create a secondary residence. Development costs In general, it is important to check whether or not a connection to the public road network as well as to the supply and disposal network (water, sewage, electricity, telecommunications) has already been made (development). If this is not the case, the costs will be incurred at a later date and should be included in the purchase price. Acquisition of real property In Austria, the acquisition of ownership of a property (only) takes place through the corresponding entry in the land register (“Einverleibung”). The signing of the purchase contract and payment of the purchase price does not provide ownership. The priority of an entry in the land register is determined by the date of receipt of the corresponding application for entry in the land register. All rights registered in the rank prior to the registration of the property of the buyer must be taken over by the buyer or act against him. As a rule, it will be in the interest of the purchaser to take over the property free of encumbrances as far as possible. Therefore, if certain rights of third parties are registered (easements or mortgages), the seller and the buyer must agree on how to deal with them. If, according to the respective provincial law, a land transfer authority approval is required for the real estate transaction, this must be legally in force before the entry in the land register takes place, otherwise the land register application will be rejected! Attorney at Law for tourism law and business law Attorney at Law Dr. Simon Harald Baier LL.M. assists you in the acquisition of land and real estate and advises you on all questions of tourism law and business law.

  • Aviation law: How good is the new EU "Regulation on safeguarding competition in air transport"?

    Since 2019, the "Regulation 2019/712 on safeguarding competition in air transport" has been in place, which aims to prevent competitive disadvantages for European airlines. It is intended to enable the European Commission to take measures against unfair and discriminatory practices of non-Union airlines - among other things on the basis of a complaint by airlines or an association. This is because domestic airlines are often exposed to state-subsidised competitors or other unfair practices in global competition and suffer a corresponding competitive disadvantage. National or European competition rules often do not apply in such cases. What can an airline do against unfair or discriminatory practices? One or more EU airlines or an association of EU airlines - in addition to individual member states - has the right to lodge a complaint with the EU Commission. The EU Commission is obliged to initiate an investigation procedure if there is prima facie evidence of the following circumstances: - A distortive practice by a third country or a third country entity (which is, in simplified terms, any natural or legal person in a third country involved in the provision of air transport and related services, such as airlines, ground handlers, etc.) – these are cases of "discrimination" or subsidies; - injury or threat of injury to one or more EU airlines; and - a causal link between the alleged practice and the alleged (threatened) injury. In principle, the Commission has a maximum of five months after a complaint has been lodged to decide whether to initiate proceedings. Discrimination is any differentiation by a third country or third country entity, not justified by objective reasons, in relation to the provision of goods or services (including public services) used for the operation of air transport services or in relation to their treatment by public authorities relevant to those services. This includes practices relating to air traffic control or airport facilities and services, fuelling, ground handling, security, computer reservation systems, slot allocation, charges and the use of other facilities or services for the provision of air transport services. Mostly, it will involve the application of different prices. In turn, a subsidy is a financial contribution or income or price support provided by a government or other public body of a third country. Investigation by the EU Commission Following the initiation of the investigation procedure, the Commission shall seek and verify all information it deems necessary for the purpose of the investigation. For the purpose of a determination of injury, all relevant factors shall be taken into account, in particular: - The situation of the EU carriers concerned, in particular in terms of service frequency, capacity utilisation, network effects, turnover, market share, profit, profitability, investment and employment; and - the general situation in the markets for the air services concerned, in particular with regard to price levels, capacity and frequency of air services or network utilisation. If the investigation is positive and there are no grounds for suspension or termination, remedies against the distortive practice are available (so-called "injury track"). Alternatively, if there is a violation of obligations under international air service agreements or other agreements containing provisions on air services, the proceedings may be suspended and the violation dealt with under the dispute settlement mechanism provided for in such an agreement (so-called "violation track"). Remedies are designed to remove the injury resulting from a practice that distorts competition. They are imposed on the airlines of a third country benefiting from this practice. The Commission may impose financial charges or operational measures to this end. The Commission must also always take into account the Union interest when making its decision - for example, if the other conditions for the imposition of remedies are met, but such imposition would be against the Union interest, the Commission must terminate the investigation without remedial action. The adoption, maintenance, amendment or repeal of remedies are decided through the so-called comitology by examination procedure – here the EU member states have a significant say. The Commission is thus dependent on them, and the effectiveness of the regulation must first pass its practical test. Attorney aviation law & competition law Dr. Simon Harald Baier LL.M. advises on all questions of aviation law and competition law.

  • International Trade Law: Letters of Credit and what to consider in this context

    There are a number of risks involved in international trade transactions between buyers and sellers. Some of these risks relate to payment delays, delivery difficulties and financing issues. Letters of credit have been introduced to address this issue by involving a third party – a bank – in the transaction to mitigate credit risks for exporters. What is a letter of credit? A letter of credit is a written document issued by the importer's bank ("issuing bank") on behalf of the exporter. By issuing the letter of credit, the exporter is assured that the issuing bank will make a payment to the exporter for the commercial transaction conducted between both parties. The importer is the applicant of the letter of credit, while the exporter is the beneficiary. In the case of a letter of credit, the issuing bank promises to pay the stated amount within the agreed period and upon presentation of certain documents. In doing so, it usually uses a receiving ("advising") bank – usually the exporter's house bank. A basic principle of a letter of credit is that the issuing bank makes payment solely on the basis of the documents presented and is not obliged to physically ensure the shipment of the goods. If the documents presented comply with the terms of the letter of credit, the bank is obligated to make payment. The beneficiary (normally the exporter) does not receive payment from the issuing bank until the letter of credit is due and all required documents are presented. Documents often required for a letter of credit are: - ship bill of lading - air waybill - commercial invoice - insurance certificate - certificate of origin - packing list - goods inspection certificate There are also special forms of the letter of credit. In the case of deferred payment letters of credit, for example, the second bank accepts the export documents that conform to the letter of credit, but no immediate payment is made. Only a payment claim of the exporter is documented, which he can assert with the bank after a defined period of time. For refinancing purposes, the exporter can apply to his bank for advance payment of the expected letter of credit amount. Another special form is, for example, the transferable letter of credit. Procedure for letters of credit Importers must follow a specific procedure when applying for letters of credit: After a purchase agreement has been drawn up and signed between the importer and the exporter, the importer applies to his bank for the issuance of a letter of credit in favour of the exporter. The more clearly and unambiguously the purchase agreement is drafted, the easier it is to handle a letter of credit. It is important to check and determine at this stage which documents must (and can) be provided and in what form. The terms of the letter of credit must correspond to those of the purchase contract. Have a draft of the letter of credit sent to you in advance so that you can have it checked yourself, by your lawyer or by your house bank for any necessary changes! The issuing bank (the importer's bank) will then draw up the letter of credit, which should comply with the terms of the purchase agreement, and send it to the exporter's bank. The exporter and his bank should also be sure to evaluate the creditworthiness of the issuing bank. Once this has been done and the letter of credit has been reviewed – particularly with regard to its compliance with the terms of the purchase agreement – the exporter's bank approves the document and sends it to the importer. Then the exporter manufactures and ships the goods according to the agreed schedule. A shipping company or a forwarder helps to deliver the goods. Together with the goods, the exporter also submits documents to his bank proving compliance with the purchase agreement. After approval, the exporter's bank sends these documents to the issuing bank. After reviewing the documents, the issuing bank releases payment to the exporter and sends the documents to the importer, who collects the shipment. What to consider before arranging a letter of credit An important point for exporters is the need to submit documents in strict compliance with the terms of the letter of credit. Any failure to comply with the letter of credit may result in non-payment or delays and disputes in payment. The more clearly and unambiguously the purchase agreement is formulated, the easier it is to deal with a letter of credit. It is important to check and determine at this stage which documents must (and can) be provided and in what form. The issuing bank should be a bank with a good standing. Another point that must be clarified before using a letter of credit is the bearing of costs. If costs are imposed on the exporter, the cost of recovery will increase. Apart from the cost bearing, the cost-benefit ratio of a letter of credit in comparison to other options (e.g. bank guarantee) should also be considered. Attorney trade law Dr. Simon Harald Baier LL.M. advises on issues of international trade law, in particular on international contract drafting and letters of credit.

  • Tourism law: Vacancy tax in Styria – Schladming also participates

    In October 2022, the Secondary Residence and Vacancy Tax Act (StZWAG) of the Austrian province of Styria came into force. It allows Styrian municipalities to levy a tax on vacant apartments (housing vacancy tax) based on a resolution of the municipal council. At the end of March 2023, the municipal council of the Styrian tourist municipality of Schladming decided to levy the constitutionally questionable tax. Housing vacancy tax The subject of the tax are premises suitably equipped for residential purposes, which can be used by the owner without significant modification to meet a housing need, even if only temporary (apartments), at which, according to the data of the Central Register of Residents, more than 26 calendar weeks in the year there is neither a report as a main residence nor as another residence. The following are explicitly exempt from the obligation to pay the tax: - apartments owned by a non-profit building, housing and settlement association; - apartments owned by local authorities; - buildings with up to three apartments, where the owners of the building have their main residence in one of the apartments; - dwellings used for business purposes, including those belonging to agricultural and/or forestry enterprises; - dwellings that are vacant for no more than 26 calendar weeks in a year on the occasion of necessary repair work; - dwellings which are no longer used as a residence by the owners for health or age-related reasons; - provident apartments for children, but not more than one provident apartment per child in Styria; - apartments that are not rentable due to official orders; - buildings with one or more apartments for which the Federal Office for the Preservation of Historical Monuments has issued a notice stating that they are listed buildings; - dwellings owned or used by a foreign state or by organizations established on the basis of state treaties or by persons recognized as extraterritorial, insofar as these dwellings are used for the accommodation of diplomatic missions or for residential purposes for persons recognized as extraterritorial. Who must pay the housing vacancy tax? The persons liable to pay the levy are the owners of the dwelling, but in the case of a building lease, the persons entitled to the building lease. Caution: Obligation for self-calculation! Persons liable to pay the levy must calculate the levy themselves and notify the competent tax office of the self-calculated amount for each calendar year, the usable floor space of the dwelling and the calendar weeks without residence in the year by March 31 of the following year and pay it within four weeks of notification of the self-calculation. Reversal of the burden of proof The otherwise liable person must prove that one of the above exceptions applies. If the circumstances of the individual case make it unreasonable to expect the taxpayer to provide such proof, it is sufficient to establish prima facie evidence. With regard to the exception of provident housing, the person liable to pay the tax must prove that the tax has been paid for any other provisional housing for the same child in other municipalities in Styria for which there is a levy obligation in these municipalities. Preventive housing in municipalities in which no vacancy tax is levied shall not be taken into account. Amount of vacancy tax With regard to the amount of the levy, the Styrian legislator has also given the municipalities some leeway here; it may not exceed a maximum of EUR 1000 per calendar year for apartments with 100 m² of usable floor space and is to be reduced or increased accordingly depending on the actual size. In Schladming the local council has decreed the maximum value. Attorney for real estate law Attorney at Law Dr. Simon Harald Baier LL.M. advises on all questions in relation to a secondary residence, on business law and real estate law.

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