Koveh

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law

Income tax

Case study 1

Mr x is a resident in country A, and he has a wife and two children.
In year 1:

  • Salary – Taxable
  • Consulting fee made once – Non-taxable if made once.
  • Bank interest payment – usually not taxable?
  • Capital gain from selling market shares – Taxable usually.
  • Rent payments or inheritance – Taxable in AT, but typically not.
  • Lottery wins – in Russia, yes, but generally not taxable. Professional players must pay taxes.

Taxable income: typical sources

  • employment – most popular type of income
  • self-employment
  • business
  • agriculture – not a high piece in developed countries
  • investment income
  • use of intangibles (royalties)
  • Capital gains = sales – cost.

Do all sources of income suffer the same tax burden?

For investment income, we have a 27.5 percent tax.
For real estate, we have a 30% tax.

Income tax rates

  • there is no natural rate of tax.
  • It depends only on policy.
  • People usually mean income tax when saying about tax rates.
  • Income taxes take a considerable part with nothing in return. It creates anger.

Income taxpayers and nontaxpayers are voters. So the social needs have to be solved by taxes.

Ways to design rates

  • Flat rate – the easiest to count.
  • Progressive rate increases with higher income.

If you have >1m€ per year in Austria, you pay 55% of tax; >100k€ 50% of tax.

Political parties use the lowering of low-income taxpayers (30-40% of the population) even though they pay too low taxes.

How is income tax levied?

by tax assessment:

  • on annual bass
  • Taxpayer files a tax return
  • The tax office assesses the tax due

by withholding tax (tax levied by payor), e. g., for:

  • Employment income
  • Investment income
  • In some countries: capital gains
    Withholding taxes are outsourcing for tax regulators. Withholding tax makes
    The employer pays all the taxes instead of the employee.
    Tax administration then always gets money at a time without minor problems as in case if employee paid it.

Withholding taxes employers pay monthly.

Pros and cost of withholding taxes

  • WHT secures tax revenues
  • WHT is efficient for tax administrations (but creates risks for payors)
  • WHT usually works on a gross basis (no deductions from WHT base)

Case study: which expenses are tax-deductible?

Mr. X has made the following expenses in Y1:

  • €1000 for expert literature (for his job) – Tax-deductible, because the book can be helpful only with his job
  • €500 for the business suit – generally tax-deductible, but in some cases, the government can say that you bought these clothes for everyday use. Example with McDonald’s outfit – Tax-Deductible, because no one uses this outfit, not on work.
  • Travel cost to the work – Can be tax-deductible and can be not, depends on policies.
    bank charges €1000
  • Renovation of the apartment last year with €0 for rent – renovation is made once in 10-20 years, so this year was nothing made, so no taxes.
  • A donation to the Red Cross of €200 – Is not tax-deductible. It is not based on business will but the will of a person. Sometimes policies incentivize donations in specific organizations.

Is income tax based on a gross or net basis?

Tax, commonly based on net income:

  • as a consequence of the ability to pay principle
  • Expenses related to items of taxable income are generally tax-deductible

Tax, based on gross taxation

  • In scheduler systems for specific categories of income
  • Where WHTs are applied – then voluntary tax assessment could be possible.

Specific types of expenses might be declared non-deductible, e. g.,

  • if relating to private life
  • if relating to non-taxable income
  • criminal fines, penalties

Sometimes generally, non-deductible are specifically made deductible:

  • Various policy reasons for granting deductions
  • E.g., housing loan, interest, specific donations, etc.

Case study

Mr. X has family-related expenses in Y1:

  • Child support €500 –
  • School fees €5000

Overall, Mr. X covers the general cost of living for his entire family.

Income tax and family situation

Various design options to reflect family situations for income tax purposes.

Individual taxation – not reflected at all:

  • Instead, typically, tax credits (or other family subsidies) are granted.
  • Overall, family income irrelevant to progressive tax rates.

Family/household taxation – overall family income as a tax base:

-Divided by the number of family members (e. g., was in France)

  • Strong lowering effect on progressive tax rates.

Marriage split – Family taxation for married couples:

A limited form of family taxation

  • Equal treatment of unmarried couples/singles
  • All policy options have different effects
2021   english   Government and legal environment   law
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Introduction to tax Law

Why are taxes necessary?

  1. for government – a source of revenue
  2. for business – the cost of (food, income are taxed) business/living
  3. for society – a price for civilization (Oliver Wendell Holmes)

How to measure the importance of taxes?

  1. tax to GDP ratio
  2. “High” and “low” tax countries
  3. Is there a “right” / “fair” level of tax?

Austria has Tax/GDP = 40%. The government wants to lower it, but it is not possible for now. The re are low and high tax countries: AT and Germany are high-tax, Hungary and Switzerland have low-tax.

There is a suitable level of tax: high tax countries provide better services: Free universities, free insurance, and high pensions.
In low-tax countries, services are mostly paid: In Switzerland, citizens should pay for insurance.

VAT is 20% for every consumption is significant.
There are income taxes of 40%-50% in AT. Taxes have a significant impact on the taxpayers’ budget.

Government should adequately justify the amount of tax paid.
Public deficit: Gov spends more money than it gains.

Taxes can help to attract businesses: Ireland was one of the poorest nations in The EU. At the end of 20 century, Ireland decreased the tax to 12.5% from 25%. The population increased by 25%, and before, it was the immigration country. The Republic of Ireland has become so successful that the UK fears that Northern Ireland will become a part of Ireland.

What is a tax?

  1. compulsory
  2. Imposed by legislation / levied by the government
  3. Under the rule of law
  4. For a public purpose
  5. Not paid in exchange for a specific service to the taxpayer

In the UK, there was a discussion that Social networks do not pay enough taxes. People say that they have to pay more. The law did not require that, but there was a public opinion. Some companies voluntarily pay more taxes to the budget to satisfy the public.

There should be a law where it stays that a taxpayer has to pay the taxes. It goes deep into history.

The rule of law means that the payment should be within the limits of the law. High-income people pay more taxes than others, and this is due to democracy: The majority wants wealthy people to pay more.

After the last financial crisis in 2008, many countries asked banks to pay additional taxes to a fund. The government spends money to rescue packages. So they were forced to pay more without any return, even though that banks pay the highest taxes.

Government imposes (облагаться) / levies (взыматься) taxes on different levels of States:

  1. federal
  2. subnational
  3. municipal

States are free to choose the amount of state income taxes.
Florida is an example of a no-state tax, but it still has the federal tax.

There are such municipal taxes (fees) in Vienna as property-related taxes.

What types of taxes may exist?

  1. Income tax – has become less critical over time.
  2. Corporate income tax – Corporate income tax is relatively low
  3. Value-added tax (VAT)/ goods and services taxes (GST)/ sales taxes. Most important, biggest tax in the EU
  4. Wealth taxes
  5. Inheritance and gift taxes
  6. Real estate transfer taxes
  7. Consumption taxes
  8. Energy taxes – e. g., help to decrease the carbon footprint.

Is there a perfect tax mix?

The US does not have the VAT, but it has the sales tax much lower than VAT in the EU. However, the corporate income is much higher than in the EU.

There are not enough consumption and income taxes in developing countries, so the corporate tax is high.

Inflation is essential now. In some decades, money will lose half of its cost due to inflation. That means that people have to spend their money, consume. The government will get its VAT.

What is a purpose of a tax?

  1. to generate revenue for public budgets
  2. to influence behavior
  3. To price-in external cost (Pigouvian Taxes) – A carbon tax.
  4. To purpose non-tax goals. e. g., many tax-exemptions, non-deductions.

Tobacco taxes are paid for centuries even though the harm from them was discovered only in the 20th century. The tax was not about behavior before, but the way how to get extra cash. If gov wants to get rid of tobacco behavior, then gov has to raise tobacco taxes in New Zealand significantly.

In AT salaries as 5k€ and more cannot be tax-deductable because the income was too high.

People in retail, supermarket workers, have a low payment. The government wants to increase the income of these workers by deducting some taxes.

Is a specific purpose/justification legally needed at all?
For the tax as such?/ For the design of a specific tax?

Germany has a problem with introducing carbon taxes. The constitution stays that people and companies pay taxes on consumption, but carbon emission is not consumption; it is production.
Austria can do that, but then everyone will have to pay taxes on the breath.

Who decides on a tax system?

Taxes are at the core of State sovereignty.
“The power to tax is the power to govern” – “Taxes are politics converted into money.”
Tax sovereignty may result in tax competition between states – pros and cons.

European union

  1. VAT – fully harmonized (but not on the tax rate: standard rate from 15% to 27%. E.g., Hungary has 27%)
  2. Income tax – not harmonized
  3. Corporate income tax – Common (Consolidated) Corporate Tax Base (CC(C)TB) proposed
  4. Anti Tax Avoidance Directive (ATAD)
  5. EU fundamental Freedoms – to ensure non-discrimination in the Single Market
  6. Prohibition of State Aid – to ensure fair competition

International Agreements (Tax treaties) – to avoid international double taxation.

2021   english   Government   Government and legal environment   law   WU
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Government and Legal Environment 2

purpose of a company law

  • Maximizing welfare of shareholders, creditors, employees
  • Enabling law and protective measures
  • Broader social objectives:
    • reporting on sustainability (long term influence on environment)
    • sustainability as corporate goal
    • gender and race quotas for corporate boards (in AT >40% of same gender required)

Gesellschaftsrecht – German Law cover company and partnerships
Corporate (company) law and Partnership law are in America. The are separated.

You can’t invent a new type of company type (partnership, gmbh, ag).

General partnership

Every participant is responsible for actions, debts. You can e. g. loose a house of a company will be a bankrupt. You can’t transfer shares – if someone could have a higher pie, then this guy can do stupid thing and then everyone will be responsible for this. Everyone will be dependable on the human more

Limited partnership

Partners are not active managers

Silent partnership

Limited liabilities of silent partner
Partner can be hidden, be anonymous. In a register, silent partner can be not written.
Downside – silent partner can loose a control and will not be reliable for debts of entrepreneur
Account documents are not available for a public.

Partnership under civil law

Not registered.
Joint and several debts of all partner
E.g. go to holiday together and rent a house together.

Criteria for a company

  • Legal personality – legal fiction to take debts and responsibilities.
  • Members not personally liable for company debts – and everything belongs to legal personality
  • Delegate management to third parties. Most of the times – not shareholders. So, you can invest money, but you will not be a manager
  • Transferable shares
  • Investor control / ownership

most of the banks need a human to be a debt taker with your assets to be sure that you will bring the money back.

Types of companies

PLC – Public Limited Company
AG – AktienGesellschaft

Can be listed in stock market, but not mandatory.
More regulations
Usually managers and stakeholders are different people

LTD – Private Limited Company
GmbH – Gesellschaft mit beschränkter Haftunng

Less members (usually 1 member)
More flexibility
managers are usually the owners of a company.

difference between PLC and LTD

Companies can own the other companies. And they are going to be enterprises. But an owner-company is not responsible of a company which is controlled by her. So it is not a big deal if a company will be a bankrupt.

Tax depends on the type of company

Others

  • hybrids of PLC and LTD
  • cooperatives
  • associations
  • foundations

difference between PLC and LTD

Quotas – ?....?

Debts

If a gov will give an insurance to companies, the , taxpayers will pay for that. Creditors will be less responsible, because they know that if they will be bankrupts, then government will help to pay debt.
Banks don’t give a credit of a cost of assets in case that there will be the same situation as it 2008. Margin of 15% – if a immobile property will loose 15% from the moment the debt was given, then still bank will still have a profit, even if a creditor will not be able to pay for debt. Of course, after selling a property, creditor will get the money above the indebtedness, if a property cost more.

Company as a national law

  • We will use Austrian law as a starting point
  • codified law
  • court decisions as results of private enforcement

other

  • Soft law
  • Security law – affects PLC, majority and minority problem
  • Insolvency law – if a company can’t meet the debts, (e. g. bankruptcy). Laws help business and banks to survive and get benefits.

Sources of Law

European Company Law

  • Primary law – freedom of establishment, freedom of capital
  • [Bonus] Century law – freedom to incorporate any company in Europe

Harmonisation via Secondary Law

  • Only selected issues
  • important in securities legislation

Separate Company Forms

  • Societas Europaea
  • nothing for SMEs (small, medium enterprises)

Principals and Agents

Principal’s welfare depends on agent’s actions

Principals – Shareholders. They bring assets and money in heads of Agents.
Agents – Managers. They have to work in interest of Principal

How can Principal control if Agent plays in interests of Principal?
If agent Doesn’t work properly- what to do?

Principal-agents conflicts in company law

Shareholders – management

  • Third party managers
  • agency costs, freeriding
  • importance depends on corporate ownership
    • Widely-held companies vs. concentrated ownership
    • Austria vs. UK

Majority shareholders – minority shareholders

  • more important in Austria
  • salient issue In corporate groups (transfer pricing, corporate opportunities)

Shareholders – creditors

  • creditors have claims (e. g. for loans) but can’t influence running of business
  • important if company is in crisis

Shareholders – employees

  • Employees invest human capital but can’t make any decisions
  • labor law + board level representation
2020   Government   Government and legal environment   law
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Trade Regulations of Austria. Important Notes

This article consists of quotes from the  Austrian trade regulation document, that I found most important. The text was translated and copypasted to this article without any additional edits, except for my thoughts that I marked with bold text. The article will be edited continuously.

Due to irrelevance to the theme of a blog and a huge length, I moved the article to the year 2000. There I put articles, that I want to be public, but dont want to be in the feed.

§ 1. (1) Unless §§ 2 to 4 stipulates otherwise, this Federal Act applies to all activities carried out commercially and not prohibited by law.

(2) An activity is carried out commercially if it is carried out independently, regularly and with the intention of generating an income or other economic advantage, regardless of the purposes for which it is intended; it makes no difference whether the income or other economic advantage intended by the activity should be achieved in connection with activity falling within the scope of this Federal Act or in connection with an activity not subject to this Federal Act.
(3) Self-employment within the meaning of this Federal Act exists if the activity is carried out at your own expense and risk.
(4) A one-off act is also considered a regular activity if, according to the circumstances of the case, the intention of repetition can be concluded or if it requires a longer period of time. Offering an activity forming the subject of a trade to a larger circle of people or in the case of tenders is kept equal to the exercise of the trade. Publication of an activity forming the subject of a trade in registers shall not be considered an exercise if the publication is based on legal obligations.

§ 5. (1) Unless otherwise provided for this Federal Act with regard to individual trades, trades may be exercised on the basis of the registration of the trade in question (§ 339) if the general and the special conditions prescribed for individual trades are met.

(2) Free trades are activities within the meaning of § 1 para. 1, which are not expressly listed as regulated trades (§ 94) or partial trades (§ 31). Without prejudice to any exercise regulations, no proof of formal qualifications must be provided for free trades.

General requirements for the practice of trades

§ 9. (1) Legal entities and registered partnerships (open companies and limited partnerships) can trade, but must have appointed a managing director (§ 39).

(2) If the managing director resigns, the trade may continue to be exercised until the appointment of a new managing director, but for a maximum of six months. The authority must shorten this period if the further exercise of the trade without a managing director poses a particular risk to the life or health of people or if the trade has been exercised for more than six months without a managing director for more than six months in the previous two years before the resignation of the manager.
(3) If registered partnerships want to pursue a business for which the provision of a certificate of competence is required, a general partner who is entitled to manage and represent the company under the articles of association or at least half of the weekly normal working hours employed in the company who are fully subject to insurance in accordance with the provisions of social security law must be appointed managing director (§ 39). This provision does not apply to the trades listed in § 7 para. 5, which are carried out in the form of an industrial enterprise; furthermore, this provision does not apply in the event of the death of the managing director (§ 39), if the company continues to pursue the trade after the death of this personally liable partner, until the end of the abandonment treatise according to this partner, in the case of the prior resignation from the company only until the time of departure.
(4) If a legal person is a general partner of a registered partnership, paragraph 3 shall also be complied with if a natural person is appointed as managing director (§ 39) of this partnership who belongs to the organ of the legal person concerned appointed to represent the legal representation, or who is an employee of this legal person who is fully insured in the company who is fully subject to insurance under the provisions of
(5) If a registered partnership is a general partner of another such partnership, paragraph 3 shall also be complied with if a natural person is appointed managing director (§ 39), who is a general partner of the member company concerned and who has the position prescribed for the managing director in paragraph 3 within this member company. This member company must have the position prescribed for the managing director in paragraph 3 within the registered partnership.
(6) If a legal person is a general partner of a registered partnership and this partnership is a general partner of another such partnership, paragraph 3 shall also be complied with if a person is appointed managing director (§ 39) of the latter partnership who belongs to the organ of the legal person appointed to legal representation, if the legal person within the member company also has the position prescribed in paragraph 3 and if, finally, this member company also has the position prescribed in paragraph 3 within its member company.

§94 Regulated trade

82 business types are regulated. It includes:

  • Monument, facade, and building cleaning
  • Builder
  • Bookbinding; case and cassette production; Production of cardboard goods (connected crafts)
  • Tourist guide
  • Real estate trustees (real estate agents, property managers, property developers)
  • Travel agencies
  • Engineering offices (consulting engineers)
  • Management consulting including the business organization
  • Commercial investment advice
  • Insurance brokerage (insurance agent, insurance broker and advice on insurance matters)
  • Securities intermediaries

§95 (2) In the case of the trades listed in paragraph 1, the appointment of a managing director or a branch manager for the exercise of the trade is subject to approval. The permit must be granted at the request of the trader if the in § 39 para. 2 or § 47 para. 2 are met.

§ 99. (1) The builder (§ 94 Z 5) is entitled to

  1. to plan and calculate building constructions, civil engineering and other related buildings,
  2. to manage building constructions, civil engineering and other related buildings and to carry out construction supervision,
  3. to also carry out building constructions, civil engineering and other related buildings in accordance with paragraph 2 and to demoliate building constructions, civil engineering and other related buildings,
  4. to set up scaffolding that require static knowledge,
  5. for project development, management and control, project management and the assumption of construction management,
  6. within the scope of his business license to represent his client before authorities and bodies under public law.
    (2) The builder is also entitled to take over, plan and calculate and manage the work of other industries as part of his construction management. He is also entitled to carry out this work himself as part of his construction management, insofar as it concerns activities of concrete goods producers, artificial stone producers, terrazzo makers, black-deckers, screed manufacturers, stone wood layers, gardeners, plasterers and drywallers, heat, cooling, sound and fire dampers and sealers against moisture and pressurized water. The builder may take over and carry out the production of screed and drywalling activities independently of a construction management. Insofar as it concerns works of trades not mentioned in this paragraph, he must use the authorized traders to carry out this work. Furthermore, without prejudice to the rights of the well masters, he is entitled to carry out deep drilling of all kinds.
    (3) The qualification for activities in accordance with para. 1 no. 1 and 2 can only be provided by means of a certificate of competence in accordance with § 18 para. 1.
    (4) The authorization of other traders to draw up the preliminary drafts required in connection with the planning of technical plants and facilities in the field of building and civil engineering remains unaffected.
    (5) If the trade of the builders is registered to an extent that does not have the right to comprehensive planning in accordance with para. 1 no. 1, the trade applicant must use the term “construction trader” with the corresponding restriction. Only traders whose business authorization has the right to comprehensive planning in accordance with para. 1 Z 1, may use the designation “builder”. Traders who are entitled to carry out the master craftsman’s trade to a limited extent to the execution of buildings may not use a designation that could give the impression that they are entitled to plan buildings.
    (6) At the request of the trader, the Federal Minister of Economic Affairs and Labour must determine within three months by decision that the trader whose trade license has the right to comprehensive planning in accordance with § 99 para. 1 Z 1 contains, in addition to the designation “builder”, may also use the term “commercial architect” if he
  7. a certificate of training in accordance with Article 49 of Directive 2005/36/EC
    a) either on the basis of the successful completion of the maturity test at a relevant domestic higher technical college (building construction) and worked as a construction trader for at least ten years or in a function equivalent to the same
    b) or on the basis of a domestic relevant university (university) degree program and
  8. in another Member State of the European Economic Area or of the European Union, on the basis of the rules and standards applicable therein or even from the assumption of public contracts in the field of his business license or from participation in public tenders or on the basis of the rules and standards applicable therein, has been excluded from the takeover of private contracts or from participation in private tenders only because
    (7) The traders entitled to exercise the master craftsman’s trade (§ 94 Z 5) or the partial trade originating from the master craftsman’s trade must take out liability insurance for personal injury, property damage and financial loss for their professional activity. Liability insurance must be provided by a company that is authorized to operate in Austria. The insured sum must be:
  9. For a trader entitled to practice the master craftsman’s trade (§ 94 Z 5) or the sub-trade originating from the master craftsman’s trade with a maximum annual turnover in accordance with § 221 para. 2 no. 2 in conjunction with § 221 para. 4 Corporate Code: at least EUR 1,000,000 per claim, whereby it is permissible to limit the insurance benefit per annual insurance period to EUR 3,000,000.
  10. For a trader entitled to exercise the master craftsman (§ 94 Z 5) or the partial trade originating from the master craftsman’s trade with more than one annual turnover in accordance with § 221 para. 2 no. 2 in conjunction with § 221 para. 4 Corporate Code: at least EUR 5,000,000 per claim, whereby it is permissible to limit the insurance benefit per annual insurance period to EUR 15,000,000.
    For these compulsory insurance sums, a deductible of a maximum of five % of these sums per claim may be agreed.
    (8) When registering the master builder’s trade (§ 94 Z 5) or a partial trade originating from the builder’s trade, proof of liability insurance for personal injury, property damage and financial loss in accordance with para. 7 must be provided in addition to the requirements in accordance with § 339 para. 3.
    (9) In the event of freedom of performance of the insurer from liability insurance for personal injury, property damage and financial loss to the insurer’s local authority responsible for the builder (§ 94 Z 5) or a partial trade originating from the builder’s trade and regarding the liability of the insurer in view of a third party, the provisions of § 92 GewO 1994 No. 2/1959, as amended. § 158c para. 2 VersVG applies with the proviso that the circumstance that results in the non-existence or termination of the insurance relationship only takes effect vis-à-vis the third party after the insurer has notified this circumstance to the authority.
    (10) In the event of the abolition of liability insurance for personal injury, property damage and financial loss within the meaning of paragraph 7, the authority must immediately initiate trade deprivation procedure and, if new liability insurance for personal injury, property damage and financial loss is not proven immediately, withdraw the trade license within a maximum of two months. § 361 para. 2 does not apply in this case. Complaints against withdrawal notices have no suspensive effect. The initiation of the trade deprivation procedure must be noted in GISA.

§ 117. (1) The trade of real estate trustees (§ 94 Z 35) includes the activities of real estate agents, property managers and property developers.

(2) The real estate agent’s area of activity includes

  1. the mediation of the purchase, sale and exchange of undeveloped and built-up land and rights to real estate including the mediation of rights of use to real estate (such as acquired through timeshare contracts) and the mediation of the purchase, sale and exchange of apartments, business premises, prefabricated houses and companies;
  2. the mediation of existing contracts for real estate, including the brokerage of existing contracts for apartments, business premises and companies;
  3. the trade in real estate including the hire purchase. This also includes the construction of buildings that the broker as a builder has carried out by authorized traders for the purpose of resale as a whole;
  4. the mediation of participations in real estate funds;
  5. the advice and support for the shops listed in Z 1 to 4. Traders who are entitled to carry out these activities are also entitled to broker mortgage loans as well as to broker private rooms to travelers for temporary residence and to keep a guest room certificate;
  6. the implementation of the public auction of real estate, superaddicates and building rights according to § 87c NO;
    § 158 applies.
    (3) The area of activity of the real estate manager includes all activities necessary and appropriate for the management of built-up and undeveloped properties, the preservation, repair, improvement and renovation of which. This also includes the collection of funds and the payment of payments related to administrative activities. Property managers are also entitled to
  7. to advise homeowners and apartment owners in tax matters under the administrative contract as well as to write documents and submissions;
  8. carry out administrative activities for individual co-owners of a property, provided that this does not create a conflict of interest with the community of owners whose property they manage;
  9. to carry out simple repair and repair work on the objects they manage.
    (4) The scope of activity of the developer includes the organizational and commercial processing of construction projects (new buildings, sweeping renovations) on his own or third-party account as well as the renovation of buildings equivalent to a new building with regard to the construction effort. The developer is also entitled to recycle these buildings.
    (5) Real estate trustees are also entitled to represent their clients before administrative authorities, funds, funding agencies and corporations under public law as well as in court within the scope of their business authorization and mission, provided that there is no legal obligation.
    (6) The establishment of contracts by real estate trustees is permitted if this consists in the completion of formally designed contracts.
    (7) The traders entitled to carry out the business of real estate agents (§ 94 Z 35) must take out financial loss liability insurance with an insurance sum of at least 100,000 euros per claim for their professional activities. For this compulsory insurance sum, a deductible of a maximum of five % of this sum may be agreed per claim. It is permissible to limit the insurance benefit per annual insurance period to EUR 300,000. Financial loss liability insurance must be provided by a company that is authorized to operate in Austria. If the activity of brokering mortgage loans in accordance with para. 2 Z 5 is not excluded from the trade wording, the professional liability insurance or equivalent guarantee in accordance with Article 1 of Delegated Regulation (EU) No 1125/2014 supplementing Directive 2014/17/EU of the European Parliament and of the Council with regard to regulatory technical standards for the minimum coverage amount of professional liability insurance or equivalent guarantee for credit intermediaries, OJ No. L 305, 10/24/2014 p. 1.
    The traders entitled to carry out the business of real estate managers (§ 94 Z 35) must take out financial loss liability insurance for their professional activities with an insurance sum of at least 400,000 euros per claim. For this compulsory insurance sum, a deductible of a maximum of five % of this sum may be agreed per claim. It is permissible to limit the insurance benefit per annual insurance period to EUR 1,200,000. Financial loss liability insurance must be provided by a company that is authorized to operate in Austria.
    The traders entitled to carry out the business of the developers (§ 94 Z 35) must take out financial loss liability insurance with an insurance sum of at least 1,000 000 euros per claim for their professional activity. For this compulsory insurance sum, a deductible of a maximum of five % of this sum may be agreed per claim. It is permissible to limit the insurance benefit per annual insurance period to EUR 1 500 000 for companies with an annual turnover of less than EUR 2,000,000 and to EUR 3,000,000 for other companies. Financial loss liability insurance must be provided by a company that is authorized to operate in Austria.
    (8) When registering the trade of the real estate trustees, proof of financial loss liability insurance in accordance with para. 7 must be provided in addition to the requirements of § 339 para. 3.
    (9) In the event of freedom from performance of the insurer from financial loss liability insurance, the provisions of § 92 GewO 1994 and the provisions of §§ 158b to 158i of the VersVG, BGBl apply to the notification of the insurer to the local authority for the real estate trustee and regarding the liability of the insurer in view of a third party. No. 2/1959, as amended. § 158c para. 2 VersVG applies with the proviso that the circumstance that results in the non-existence or termination of the insurance relationship only takes effect vis-à-vis the third party after the insurer has notified this circumstance to the authority.
    (10) In the event of the abolition of financial loss liability insurance within the meaning of paragraph 7, the authority must immediately initiate trade deprivation proceedings and, if a new financial loss liability insurance is not proven immediately, withdraw the trade license within a maximum of two months. § 361 para. 2 does not apply in this case. Complaints against withdrawal notices have no suspensive effect. The initiation of the trade deprivation procedure must be noted in GISA.

§136a. (1) The commercial investment advisor (§ 94 Z 75) is entitled to

  1. Advice on the development, safeguarding and maintenance of assets and financing with the exception of investment advice on financial instruments (§ 3 para. 2 Z 1 WAG 2018),
  2. Mediation of
    a) Investments and investments, excluding financial instruments (§ 3 para. 2 Z 3 WAG 2018),
    b) Personnel loans and mortgage loans and financing (instences, offerings and other preparatory work on credit agreements and concluding them for the lender) and
    c) Life and accident insurance.
    (Note: para. 1a repealed by BGBl. I No. 155/2015)
    (2) With regard to the mediation of life and accident insurance, the commercial investment advisor is subject to the provisions of §§ 137 to 138 and the other provisions regarding insurance brokerage.
    (3) Commercial investment advisors are entitled to the activities of § 1 Z 45 WAG 2018 as securities intermediaries (§ 94 Z 77). Activities as a tied intermediary according to § 1 Z 44 WAG 2018 may not be carried out in this case.
    (4) When registering the trade of commercial investment advice (§ 94 Z 75), if the activity of the securities intermediary is carried out, proof of the existence of a representative relationship must be attached in addition to the evidence in accordance with § 339 para. 3. The applicant may only start exercising the activity of securities brokerage from the date of entry in GISA.
    (5) The trader must immediately inform the trade authority of the termination of the last representation relationship. After becoming aware of the abolition of the last representation relationship, the authority must immediately initiate a withdrawal procedure regarding the activity as a securities intermediary and, if a representation relationship is not proven immediately, withdraw the authorization as a securities intermediary within two months at the latest. § 361 para. 2 first sentence does not apply in this case. Complaints against withdrawal notices have no suspensive effect. The initiation of the withdrawal procedure must be noted in GISA.
    (6) Commercial investment advisors must meet the requirements of continuous vocational training and further education in order to maintain an adequate level of performance that corresponds to the tasks they perform and the corresponding market. For this purpose, these persons must complete at least 20 hours of vocational training or further education per year from the calendar year next to registration in GISA. This obligation replaces the obligation under § 137b para. 3. Proof of participation in the training must be kept available at the location of the trade for at least five years for inspection by the authority at any time. Commercial investment advisors may only use personnel that meet the requirements of this paragraph.
    (6a) Relevant courses are considered training within the meaning of para. 6. The responsible specialist organization of the Austrian Chamber of Commerce must develop a curriculum for the training content. The curriculum must provide for the trader that at least half of the continuing education obligation may only be carried out with certain independent educational institutions. The curriculum can extend over several years. The curriculum requires confirmation from the Federal Minister for Digitalization and Business Location. The Financial Market Supervisory Authority (FMA) must be given the opportunity to comment within a reasonable period of time by the Federal Minister for Digitalization and Business Location before issuing the confirmation. The curriculum may provide for a smaller minimum number of hours for traders or their staff, provided that areas of activity are excluded from the scope of business.
    (7) Commercial investment advisors acting as securities intermediaries may perform the activities referred to in § 1 Z 45 WAG 2018 for no more than three companies. The commercial investment advisor acting as a securities intermediary must clearly disclose the respective business owner to the contractual partner (securities customers) at each time they take up business and point out the entry in the register with the FMA. If the securities intermediary does not clearly disclose the contractual client, all persons are liable in accordance with § 37 para. 7 WAG 2018 registered business owners in solidarity.
    (8) Commercial investment advisors are entitled to the activities of § 1 Z 44 WAG 2018 as a tied agent. Activities as a securities intermediary according to § 1 Z 45 WAG 2018 may not be carried out in this case.
    (9) When registering the trade of commercial investment advice (§ 94 Z 75), if the activity of the tied intermediary is carried out, proof of the existence of the representation relationship must be attached in addition to the evidence in accordance with § 339 para. 3. The applicant may only start exercising the activity of the tied agent from the date of entry in GISA.
    (10) The trader must immediately inform the trade authority of the termination of the last representation relationship. After becoming aware of the abolition of the representative relationship, the authority must immediately initiate a withdrawal procedure regarding the activity as a tied intermediary and, if a representative relationship is not proven immediately, withdraw the entitlement as a tied intermediary within no more than two months. § 361 para. 2 first sentence does not apply in this case. Complaints against withdrawal notices have no suspensive effect. The initiation of the withdrawal procedure must be noted in GISA.
    (11) Commercial investment advisors must when accepting and transmitting orders in connection with investments in accordance with § 1 para. 1 Z 3 Capital Markets Act, KMG, BGBl. No. 625/1991, § 56 WAG 2018, BGBl. I No. 107/2017 as amended.
    (12) Traders entitled to pursue the trade of investment advisors must take out financial loss liability insurance for their professional activities with an insurance sum of at least 1,111,675 euros for each individual claim and 1,6677,513 euros for all claims of a year. This does not apply to activities for which there is liability protection within the meaning of para. 4 or para. 9 or § 137c. The aforementioned minimum insurance sums increase or decrease as a percentage of the European Consumer Price Index published by Eurostat from 15.1.2013 and thereafter regularly every five years, rounding them up to the next higher full euro amount. The provisions of § 117 para. 8 to 10 must be applied mutatis mutandis. For activities of brokering mortgage loans in accordance with para. 1 no. 2 lit. b, professional liability insurance or equivalent guarantee in accordance with Article 1 of Delegated Regulation (EU) No 1125/2014 must be available from the aforementioned amounts of coverage.
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