Labour cost obligation for shareholders with significant shareholdings

3. March 2020 | Reading Time: 3 Min

ZTG 2019 Ziviltechniker rechtsform gmbh steuerberatung tpa

New situation regarding the ancillary labour cost obligation for shareholders/managing directors with significant shareholdings: The BFG (Austrian Federal Fiscal Court) has now confirmed the obligation to pay the employer’s contribution for an architect with a 30% shareholding. TPA tax expert Günther Stenico summarizes the details of the case.

Managing director submitted fee notes to GmbH (limited liability company under Austrian law)

A consultant engineer holding a share of 30% in Ziviltechniker GmbH, who was also managing director, submitted fee notes to the GmbH. He paid taxes on the associated income as self-employment income; no employer’s contributions (Dienstgeberbeitrag, DB) and local taxes were paid.

Remuneration paid to employees, independent contractors and persons holding significant shares in corporate entities within the meaning of § 22 (2) of the Einkommensteuergesetz 1988 (Austrian income tax act; EStG), i.e. holding a share of more than 25% in the capital stock or nominal capital of the company, and who “otherwise [meet] all the criteria of employment” are subject to the obligation to pay the employer’s contribution (DB) (and under certain conditions also the surcharge to the employer’s contribution (DZ)).

New: Obligation to pay ancillary labour costs for managing directors holding a share of more than 25%

In its decision RV/7104669/2018 dated 29/11/2019, which was published on 7 February 2020, the BFG referred to supreme court case law. As early as June 2016, the Austrian Supreme Administrative Court (VwGH) adjudicated that any remuneration received by a managing director holding a significant share, i.e. more than 25%, will trigger DB and (if applicable) DZ, provided that the shareholder has performed the work charged to the company him/herself (“höchstpersönlich” – in person).

Due to the person concerned being a shareholder and acting as managing director, it is to be assumed that he/she is integrated in the employer’s business entity (in this case: Ziviltechniker GmbH). Any other elements such as the lack of business risk and any manifestly “current” salary payments will only be relevant in exceptional cases.

The objection, which was also submitted in the relevant proceedings before the Supreme Administrative Court, that the managing director holding a significant share in the company had performed his activity within the scope of an individual enterprise had not been considered relevant by the Supreme Administrative Court. Now the BFG has followed that decision, also because no appropriate evidence of the development or existence of an independent architect’s office was provided.

Fee notes must be considered in assessing the DB

From the BFG’s point of view, there can be no doubt that the fees regularly charged in equal amounts by the individual enterprise (under the title “standard processing fee and flat rate accessory charges”) are emoluments received by the party submitting the invoice in person, within the meaning of § 22 EStG 1988. Such emoluments must be included in the basis of assessment of the DB.

TPA tip

In case of a share of more than 25% in the nominal capital, the managing director’s remuneration usually is subject to DB and local taxes. For the ancillary labour costs to be avoided, shareholdings must be reduced to a maximum of 25% in particular.


Please get in touch with your TPA tax advisor if you have any questions about the current changes regarding the obligation to pay ancillary labour costs.



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