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An article by sms.law Partner Stephan Schmalzl and sms.law Associate Nikolaus Rakos

The Supreme Administrative Court (VwGH) ruled in its decision of June 25, 2025 (case no. Ro 2023/13/0020) that all representatives, as defined in Sections 80-83 BAO, can be held liable under Section 9 of the BAO. This includes authorised signatories (Prokuristen). This ruling may have far-reaching consequences for authorised signatories in the future.

👉 Facts of the case

In 2015, an insolvency proceeding (restructuring proceedings without self-administration) was initiated against a limited liability company (GmbH, the “Company”), followed by a bankruptcy proceeding. Following finalisation of the bankruptcy proceeding, the company was struck off the companies register in accordance with Section 40 of the Austrian Commercial Register Act (Firmenbuchgesetz). The authorised signatory was, among others, responsible for the company’s payment transactions, including tax payments. Further, the authorised signatory acted as an authorised representative vis-à-vis the tax authority by contacting the tax authority’s collection agent regularly with regard to payment of VAT and income tax.

The tax office (Finanzamt) issued a liability notice to the authorised signatory (Prokurist under Section 49 of the Austrian Company Code (UGB)) of the limited liability company for certain outstanding tax debts for the years 2014 and 2015, alleging that the authorised signatory qualifies as a representative within the meaning of Sections 9 and 83 of the BAO. The authorised signatory lodged an appeal against this decision. The Federal Finance Court (BFG) overturned the tax office’s liability notice on the grounds of substantive unlawfulness. The tax office filed an official review appeal (Amtsrevision) with the VwGH.

👉 Principles of liability under Section 9 BAO

According to Section 9 para 1 of the BAO, the representatives referred to in Sections 80 et seq. of the BAO are liable, alongside the taxpayer they represent, for the taxes payable by the latter to the extent that the taxes cannot be collected as a result of a culpable breach of the obligations imposed on the representatives. In addition to Section 9 para 1, the second paragraph stipulates that notaries, lawyers, and certified public accountants are liable for actions they have taken in the exercise of their profession when advising on tax matters, but only if such actions constitute a breach of their professional duties.

👉 Person within the meaning of Sections 80 et seq BAO?

Pursuant to Section 80(1) of the Federal Tax Code (BAO), individuals appointed to represent legal entities, as well as legal representatives of natural persons, are obliged to fulfill all obligations incumbent upon the persons they represent. Furthermore, these individuals are authorised to exercise the rights to which they are entitled. It is imperative that they ensure the timely payment of taxes from the funds they administer. Persons appointed to represent legal entities are therefore liable, alongside the persons liable for tax whom they represent, for the taxes due if these cannot be collected due to a culpable breach of the obligations imposed on the representatives.

Section 83 BAO provides for the right of a taxpayer and its legal representatives to be represented by natural persons with full legal capacity, legal entities, or registered partnerships, unless the personal appearance of the party or its legal representatives is expressly required. They must identify themselves by means of a written power of attorney. 

👉 Legal opinion of the Federal Finance Court in its ruling RV/2100214/2023 of 24 April 2023

The BFG essentially stated, with reference to the established case law of the Supreme Administrative Court, that a managing director of a limited liability company is obliged to check/monitor an authorised signatory entrusted with tax matters at appropriate intervals, whereby this monitoring must be designed in such a way that possible tax arrears cannot go unnoticed. On the other hand, a managing director is not obliged to check/monitor the activities of another managing director (entrusted with or responsible for paying the company’s taxes) unless there are concrete indications that justify doubts about the proper management of the company.

If, therefore, an authorized signatory who handles the company’s tax matters were to be considered a person appointed to represent a legal entity within the meaning of Section 80 (1) BAO, the managing director would only have an ad hoc but not ongoing duty to monitor his activities – comparable to the situation of several managing directors, one of whom handles tax matters.

In the opinion of the BFG, Section 83 BAO stipulates that the representative is entitled, on the basis of a power of attorney, to make any declaration to the tax authority on behalf of the represented party. Nevertheless, the BFG stated that this does not imply the transfer of the obligations incumbent on the represented party.

👉 Considerations and assessment of the VwGH in its current ruling

In its assessment, the Supreme Administrative Court particularly addressed the historical development of Section 9 (1) BAO. The legislative materials relating to the original version of the BAO provided that the liability of legal representatives and other authorised representatives previously provided for in Section 109 of the Tax Code (Abgabenordnung – AO) should be adopted but limited to liability for default. Section 109 (1) of the Reich Tax Code 1931 (Reichsabgabenordnung 1931 – RAO 1931) stipulates personal liability for “representatives and [the] other persons referred to in Sections 103 and 108”. According to Section 108 RAO 1931, persons acting as authorized representatives or persons with power of disposal had the duties of a legal representative. The provision of Section 108 in turn goes back to the Reich Tax Code 1919 (Reichsabgabenordnung 1919 – RAO 1919), which first stated that the civil law liability provisions were not sufficient for tax law. Legal representatives and their authorised representatives should be personally liable if the tax authorities suffered damage through their fault.

Based on this historical review, the VwGH held it to be evident that the historical legislator wanted to retain the liability of an authorized representative even with the introduction of the BAO. Similarly, legal literature expresses the opinion that the liability provided for in Section 9 (1) BAO can in principle apply to any of the representatives named in Section 80 to 83 BAO. In the past, the Supreme Administrative Court has also indicated that a person authorised by the taxpayer may also belong to the group of “persons referred to in Sections 80 et seq.” mentioned in Section 9 (1) BAO.

The Supreme Administrative Court therefore considered the appeal review by the tax office to be justified and overturned the ruling of the BFG on the grounds that its content was unlawful.

👉 Conclusion

Section 9 (1) BAO merely refers to the persons named in Sections 80 et seq. BAO. Until now, it was unclear whether the reference to Sections 80 et seq. BAO was limited to the provisions up to and including Section 82 BAO or whether it also covered arbitrary representatives within the meaning of Section 83 BAO. The fact that the wording of Section 9 (1) BAO does not contain any clear reference to a restriction of liability to legal representatives also speaks in favor of the new decision by the VwGH, and against the interpretation of the BFG, which followed established case law. It is not yet clear whether this decision remains an isolated case due to the highly unusual circumstances (ongoing contact between the authorised signatory and the tax office over a considerable period of time). The frequently used term “managing director liability” however may be insufficient, and also authorised signatories, or other individuals authorised to act on behalf of others in relation to tax obligations, may have to be more cautious when it comes to non-payment of taxes due to an insolvency.

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