Regulation and Compliance

Licensing procedure

Do foreign designers and contractors need to be licensed locally, and if so, what are the consequences of working without a license?

In principle, every commercial activity in Austria triggers the need for a business license. According to the provisions of the Austrian Commercial Code, a trade is understood to mean any activity that is carried out independently, on one’s own account, at one’s own risk, regularly and with the intention of making a profit. A “commercial” activity is already considered to have been carried out if it is offered to a significant number of people (e.g. through advertising). Foreign designers or contractors must therefore acquire a trade license if they intend to set up a company in Austria, unless they only provide cross-border services for a limited period of time (if special regulations of the trade regulations apply). The provisions of the trade regulations do not apply to architects, as they have to observe the stricter regulations of the civil engineering law. Architects, for example, have to provide evidence of certain university degrees and professional training and experience or, in the case of architects from another EU member state, evidence of equivalent professional experience in order to be allowed to provide services in Austria. Designers or contractors from other EU countries (regardless of whether they work under the Austrian Trade Regulations or the Austrian Civil Engineering Act) therefore have access to the Austrian market within the scope of the freedom to provide services and freedom of establishment if they can prove their professional training and experience meets certain requirements Minimum standards. Foreign employees (including freelancers) from outside the EU require a visa including a work permit. The consequences of non-compliance with the provisions of the trade regulations or other applicable laws are administrative sanctions.

competition

Do local laws give domestic contractors an edge over competing with overseas contractors?

In accordance with the freedoms of the European market, in particular the freedom to provide services and freedom of establishment, any legal prohibition, restriction or discrimination of EU citizens is prohibited. Since the European fundamental rights only apply to EU citizens, contractors from countries outside the EU cannot invoke these rights and may have a competitive disadvantage.

Protection against competition

What legal protective measures are there to ensure fair and open competition, to obtain contracts with public authorities and to prevent bid rigging or other anti-competitive behavior?

Public clients are subject to the Austrian Federal Procurement Act (BVergG), which implements the EU procurement directives in Austria. There are special laws for tenders in the security and military sectors. The BVergG basically applies to all types of public works, delivery and service contracts, regardless of the contract amount. However, below the thresholds of the EU Public Procurement Directives, public contractors have more discretion in choosing the tendering process. The BVergG aims to ensure that tendering procedures are transparent and non-discriminatory and that public contracts are awarded freely and fairly. In the case of discriminatory tender documents, if the contract is not awarded to the best bidder or in the case of other relevant decisions by the contracting authority, the BVergG provides for effective legal remedies and temporary injunctions until the competent public procurement tribunal before the authority, namely the competent administrative court of one of the nine federal states (if the contracting authority a State or a municipality) or the Federal Administrative Court (if the contracting authority is the federal government). In the event of illegal direct awards, the administrative courts are empowered to revoke such contracts. While the material part of the BVergG applies to all public clients and thus to the federal government as well as the states or municipalities, the federal states have nine separate procurement review laws for legal remedies against the decision of a public client, which basically reflect the provisions of the BVergG. In practice, it makes no difference whether review proceedings before the administrative courts are subject to the BVergG or the state laws.

In addition, the federal law against unfair competition prohibits unfair competition, since anyone can be prosecuted for omission and, if they are at fault, for damages if they resort to unfair business practice or another unfair practice that is likely to distort competition to the detriment of companies . Unfair business practices are particularly those that are misleading or aggressive (i.e. a decision that would otherwise not have been made).

bribery

Is the contract enforceable if a contractor obtained the contract illegally, for example through bribery? Are bribes and bribe takers prosecuted and, if so, what penalties do they face? Are bribes allowed under local law?

The illegality of the contract award does not automatically lead to the ineffectiveness of the contract. A contract can only be challenged under certain circumstances (e.g. violation of morality). Otherwise the contract is valid and enforceable. If the unlawfully obtained contract disadvantages the other party, this party can assert the damage resulting from the unlawful conduct. With respect to public officials, bribes and bribes are prosecuted and can be punished with up to 10 years in prison. The actual penalty depends on the value of the benefit accruing from the public official’s unlawful conduct. Austrian law also provides for criminal liability for companies. According to the Austrian Corporate Criminal Liability Act, legal persons are liable for criminal behavior (e.g. bribery) on the part of their legal representatives. With a few insignificant exceptions, Austrian law does not allow the receipt or introduction of bribes.

Report bribery

Are project team members required by local law to report suspicions or knowledge of bribery of government employees, and if so, what are the penalties for failure to report?

According to Austrian law, employees of the project team are not obliged to report suspicions or knowledge of bribery of state employees. The Austrian Corporate Governance Code stipulates that the Management Board reports to the Supervisory Board at least once a year about anti-corruption measures. The regulation is not a legal requirement. Companies either have to comply with the regulations or explain why they did not comply with the regulation. The Austrian Corporate Governance Code is only relevant for listed corporations. With the exception of the Austrian Corporate Governance Code, there are no mandatory laws in Austria that regulate internal compliance rules.

Political donations

Are political donations part of doing business? If so, are there any laws that limit contractors or designers’ ability to work for public institutions because they sponsor political candidates or parties?

Political donations are not a necessary part of doing business in Austria.

The Federal Party Act was changed with effect from July 9, 2019. Parties are only allowed to accept contributions totaling 750,000 euros per year. Contributions of more than € 2,500 in a calendar year must be reported to the Court of Auditors and the results published. Contributions from certain corporations are prohibited, in particular from parliamentary associations or companies, institutions in which the public sector has a stake of at least 25 percent, and foreign persons.

Attention

Is a site manager or other construction professional acting as a representative or representative of a public entity on a project (and its employees) subject to the same anti-corruption and compliance rules as government officials?

According to § 309 StGB, the solicitation or acceptance of bribes of any kind is inadmissible and is punishable by imprisonment of up to two years, in more severe cases up to five years. Additional provisions apply to public sector employees.

Other international legal considerations

Are there other important legal issues that could pose an obstacle to a foreign contractor trying to do business in your jurisdiction?

Contractors participating in tendering procedures may be required to submit annual financial statements, technical qualifications and proof of reliability in accordance with the tender documents. The contractors usually only provide annual financial statements, a confirmation from the tax office that no social security contributions are outstanding, extracts from the criminal records of the managing directors, information on the technical equipment as well as the number and qualifications of the staff. Since July 2020, foreign direct investment can be approved by state authorities, which is usually irrelevant for pure contractors, but can cause difficulties if these contractors invest on a larger scale.

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May 1, 2021