When procuration becomes costly – liability risks for tax debts

Authors: Laura Baumgartner-Viechtbauer and Simon Scherzer

In a recent ruling (VwGH June 26th, 2025, Ro 2023/13/0020), the Supreme Administrative Court addressed the question of whether authorized signatories (“Prokuristen”) also belong to the group of representatives mentioned in section 9(1) and specified in sections 80 et seq. of the Austrian Federal Fiscal Code (BAO). Laura Baumgartner-Viechtbauer and Simon Scherzer have examined this topic in more detail for you.

According to section 80 BAO, persons appointed to represent legal entities are obliged to fulfill all duties of the represented company, in particular to ensure that taxes are paid from the funds they manage.

Representatives who do not fulfill the imposed tax obligations can be held personally liable under section 9 BAO. Accordingly, the representatives referred to in sections 80 et seq. are liable – alongside thetax-liable company – for the company’s taxes if these cannot be collected due to culpable breach of the duties imposed on the representatives. Four requirements can therefore be derived from section 9 BAO:

Representative status: The liable party must belong to the group of representatives mentioned in sections 80 to 83 BAO.
Culpable breach of duty: The liable party must have culpably violated a tax obligation.
Causality: The breach of duty must be causal for the damage incurred (tax shortfall).
Uncollectibility of taxes: The taxes must be objectively uncollectible.

In everyday language, liability under section 9 BAO is referred to as “managing director liability.” Against this background, the question arises whether an authorized signatory – even though not explicitly mentioned in sections 80 et seq. BAO – also qualifies as a representative within the meaning of section 9 BAO and is therefore potentially personally liable.

Overview of the Supreme Administrative Court’s decision

The group of representatives subject to liability under section 9 BAO is not limited merely to managing directors, but is considerably broader. In its ruling, the Supreme Administrative Court examined in detail that those liable under section 9 BAO also include the groups of persons mentioned in sections 80 to 83 BAO. These comprise not only statutory representatives, but also authorized persons. Sections 80 to 82 BAO primarily regulate statutory representation, whereas sections 83 and 84 BAO deal with authorized or voluntary representation – this also includes procuration (“Prokura”).

This is in line with the intention of the historical legislator: Even in earlier tax codes, liability was not limited to statutory representatives. The general principle was always that both statutory representatives and authorized persons could be held responsible for the duties of the entities they represented. With the introduction of the BAO, this possibility – albeit only as a liability for default – was explicitly retained. As stated in the materials to the BAO: “The liability previously imposed in section 109 AO on statutory representatives and other authorized persons for culpable breach of their duties shall be retained, but restricted to a liability for default.”

Practical implications

In practice, this means that authorized signatories can be held personally and unlimitedly liable for tax debts and related additional claims (e.g., late-payment surcharges). To this end, they are held liable by means of a liability notice (§ 224 BAO).

Liability under section 9 BAO is designed as so‑called liability for default. This means that representatives under section 9 in conjunction with sections 80 et seq. BAO are liable only if the taxes cannot be collected from the tax‑liable company (the primary debtor) and the uncollectibility is due to a culpable breach of duty by the representative. Uncollectibility exists if enforcement measures have failed or would foreseeably fail. Liability can only be asserted once uncollectibility has been established.

Section 9 BAO speaks of liability “alongside” the primary debtor. This means that the tax authority can pursue the liable representative alongside the primary debtor, but it does not exclude that the representative may be held solely liable – for example, if the primary debtor no longer exists (e.g., in the case of dissolved companies).

The authorized signatory can only avoid liability if they have not acted culpably. However, judicial practice holds that the potentially liable authorized signatory has a qualified duty to cooperate and disclose information (VwGH June 24th, 2021, Ra 2021/16/0014). Accordingly, there is an obligation to prove that no breach of duty has been committed. If this proof cannot be provided, the tax authority is entitled to assume a breach of duty (reversal of the burden of proof). In practice, this means that authorized signatories must ensure that they can prove at any time that they have acted in accordance with their duties. They should set up internal control systems or review existing ones to ensure that tax obligations are reliably fulfilled.

Disclaimer

This article is for general information only and does not replace legal advice. Haslinger / Nagele Rechtsanwälte GmbH assumes no liability for the content and correctness of this article.