3., 4th and 5th COVID-19 Act

To mitigate the consequences of the COVID-19 pandemic, the legislator has amended a large number of laws in addition to providing monetary support for those affected. We have briefly summarized the key changes for entrepreneurs below.

Hardship fund

One of the most significant changes introduced by the 3rd COVID-19 Act is the increase in the resources of the hardship fund. The previously earmarked funds of 1 billion euros will be increased to 2 billion euros. At the same time, the possibility was created for the Minister of Finance to adjust the resources from the fund in agreement with the Vice Chancellor. If necessary, this must be done by ordinance.

A clarification was also made to the effect that “new self-employed persons” (e.g. lecturers; artists; experts; writers; persons who practice health professions on a self-employed basis, such as nurses, etc.) are also covered by the purpose of the hardship fund. The following are therefore covered:

• One-person companies (EPU) including “new self-employed persons” and freelancers,
• Non-profit organizations and
• Small business.

A legal basis is thus also expressly created for members of the liberal professions.

In addition, the group of persons entitled to claim was extended to include landlords of private rooms (in their own household; no more than 10 beds; not subject to the GewO).

Contributions from the fund in question are not included when determining the contribution base under social insurance law.

Labour law

Amendments to the ASVG (General Social Insurance Act) and the B-KUVG (Civil Servants’ Sickness and Accident Insurance Act) ensure that accidents that occur “in the home office” are considered accidents at work.

These laws also provide for exemption from work for members of the COVID-19 risk group if the workplace poses a risk of infection and it is not possible for the person concerned to work from home.

Tax law

The 3rd COVID-19 Act amends the Income Tax Act to the effect that additional allowances and bonus payments made due to the COVID-19 crisis are to be considered tax-free in 2020 up to an amount of EUR 3,000.00. These must be payments that have not normally been granted in the past. The payments must therefore be closely related to the COVID-19 crisis.

Company law

Meetings: In the case of limited liability companies, the annual financial statements no longer have to be adopted in the first eight months of a financial year, but can also be adopted by the end of the current financial year. The same applies to cooperatives (Section 1 (2) and (3) COVID-19-GesG).

Annual financial statements: In general, the deadline for preparing the annual financial statements has now been extended to nine months (Section 3a COVID-19 Company Law Act). The only exceptions to this are accounting documents that had to be prepared by March 16, 2020.

Deadlines/dates: If deadlines or dates for certain meetings have been set in articles of association (articles of association, statutes, foundation deeds), these can also take place at a later date in 2020 (Section 1 (4) COVID-19-GesG).

Notarial deeds and certifications

The regulations already provided for the creation of notarial acts by electronic means are now also to be applied to certifications and notarial minutes. This means that it is now also possible to carry out certifications using electronic communication options.

However, it must be ensured that the notary can establish and verify the identity of a person who is not physically present without any doubt. This can be done by presenting a photo ID as part of a video-supported electronic procedure or by means of a procedure provided for by law, with which the same information is made available in a secure manner as with the presentation of an official photo ID (electronic ID). The Chamber of Notaries is responsible for defining these provisions in more detail.

Tenancy law

Rents: Significant changes in the area of rents were decided through the introduction of the 2nd COVID-19 Youth Act. Tenants particularly affected by the pandemic who are unable to pay the rent for their apartment or are unable to pay it in full are given special protection. Rent arrears during this period do not entitle the landlord to terminate the contract until 01.07.2022. Furthermore, a landlord cannot sue for any arrears of rent in court or cover them from the deposit until 01.01.2021 (§ 1 and § 17 para. 1 2nd COVID-19-JuBG). Interest must be paid on outstanding rent in accordance with the newly introduced provisions on default interest (see below).

Time limits: Fixed-term tenancies that are subject to the MRG and expire after 30.03. and before 01.06.2020 can be extended until 31.12.2020 (§ 5 2. COVID-19-JuBG). In this case, a written agreement between tenant and landlord is required. The minimum duration of 3 years required by the MRG for the tenancy can therefore be undercut during this period. The time limit is therefore not invalid under Section 29 (3) (a) MRG.

If the tenancy agreement is neither contractually extended nor terminated after this extension period has expired, the tenancy agreement is deemed to have been renewed once for three years (Section 5 2nd COVID-19-JuBG in conjunction with Section 29 (3) (b) MRG).

Credit agreements

For loan agreements concluded before 15.03.2020 applies:

The due date for repayments, interest or redemption payments of consumer credit agreements between April 1 and June 30, 2020 will be deferred for three months after the contractually agreed payment date. No interest on arrears will be charged for this period. The prerequisite for this is a loss of income caused by the pandemic, which jeopardizes an adequate livelihood (Section 2 (1) 2. COVID-19-JuBG).

Loan agreements cannot be terminated due to late payment or a significant deterioration in financial circumstances until the deferral expires (Section 2 (4) 2. COVID-19-JuBG).

The borrower and lender should discuss the possibility of an amicable solution and any support measures. If no amicable solution is reached for the period after June 30, 2020, the term of the agreement will be extended by three months. The respective due date of the contractual benefits is also postponed by this period (Section 2 (6) 2. COVID-19-JuBG).

All of this also applies to loans from micro-entrepreneurs (this includes companies that employ fewer than ten people and whose annual turnover or annual balance sheet does not exceed EUR 2 million; Art. 2 para. 3) (Section 2 para. 7 2nd COVID-19-JuBG).

Interest on arrears / contractual penalties

If payment obligations due between 01.04. and 30.06.2020, which were established before 01.04.2020, cannot be fulfilled, the statutory default interest of 4% shall apply at most. Contractual default interest during this period does not apply. Likewise, the costs of extrajudicial debt collection or recovery measures are not to be reimbursed (§ 3 2. COVID-19-JuBG). Only from 01.07.2022 are due claims from this period again subject to interest at the usual or agreed default interest rates.

Furthermore, agreed contractual penalties for any default on performance obligations during the aforementioned period shall not apply (Section 4 2nd COVID-19-JuBG). The agreed default provisions shall only apply to these payment obligations from 01.07.2022 (Section 17 2nd COVID-19-JuBG).

Time limits in civil procedure law

According to the COVID-19-JuBG, deadlines are interrupted until 30.04.2020. With the clarification that has now been made, it has been made clear that Time limits in civil proceedings are triggered on May 1. In accordance with the general regulations, this day is therefore not included in the calculation of the time limit.

Postponement of eviction executions

The law provides for the possibility of postponing eviction executions (Section 349 EO) at the request of the obligor without the imposition of security. However, the prerequisite for this is that the apartment serves to satisfy the urgent housing needs of the obligor and, if applicable, of persons living in the same household as the obligor. Before postponing execution, however, a weighing of interests must be carried out to determine whether the postponement of execution would mean serious personal or economic disadvantages for the creditor. If this is the case, the application for a stay should not be granted.

Deferred proceedings must be continued after six months at the latest (Section 6 2 COVID-19 JuBG).

Insolvency proceedings

With regard to insolvency law, the 4th COVID-19 Act stipulates that the provisions of Section 1 1 COVID-19-JuBG regarding the interruption of time limits shall no longer apply. Time limits that have already been interrupted are to start running again when the 4th COVID-19 Act comes into force. Furthermore, provision is made for courts to be able to extend procedural time limits under insolvency law (ex officio or on application). However, such an extension is only permitted if there is a prospect of an improvement in the economic situation. Furthermore, the court may not act against the interests of the insolvency creditors.

The withdrawal of self-administration pursuant to section 170 (1) no. 3 IO should only take place after a period of 120 days (previously 90 days).

In addition, the debtor is not obliged to file for insolvency due to over-indebtedness if this occurred in the period from March 1 to June 30, 2020. In this case, the debtor does not have to fear liability pursuant to Section 84 (3) no. 6 AktG. During this period, the possibility of creditors filing for insolvency due to over-indebtedness also ceases to apply (this does not apply if the debtor is simultaneously insolvent).

If a debtor’s income or financial situation changes due to the COVID-19 crisis in such a way that they are no longer able to meet the liabilities due under a payment plan, the debtor can request a deferral of the liabilities. The deferral period may not exceed nine months. In this case, too, the interests of (all) creditors must be weighed up (Section 11 2. COVID-19-JuBG).

In addition, the 4th COVID-19 Act stipulates that a (cash) loan from a shareholder to his company should not be subsumed under Section 1 EKEG if the loan was granted and counted for no longer than 120 days during the COVID-19 crisis (until June 30, 2020). The loan amount granted is therefore not to be regarded as replacing equity. This provision is intended to promote the liquidity of companies through shareholder loans during the “corona times”.

Rankings

The 4th COVID-19 Act also provides for an extension of the usability of land register rankings. These do not expire in the period from 16.03.2020 and 30.04.2020. Once again, the Minister of Justice is authorized to extend this period.

Please do not hesitate to contact us if you require further information on the regulations outlined or if you need legal advice on the current situation. We are also happy to provide advice by telephone or video conference. Please contact us at 01/505 77 00 or office@toplaw.at