In depth
Authorization also required for "virtual" cross-border labor leasing
An exemption authorization is required for cross-border labor leasing (except within the European Economic Area (EEA)). The leasing company must first apply for the exemption authorization with the trade authority. Whether the leasing employee physically moves their place of work to a foreign (non-EEA) country is irrelevant when it comes to the requirement for this authorization. The only decisive factor is whether the company receiving the leased employee is based in a foreign (non-EEA) country. An Austrian supreme court recently confirmed this. As a result, authorization is also required for "virtual" assignments where leased employees perform their work for a foreign company digitally — for example, by email or video conference — exclusively from Austria.
Consequences of not obtaining authorization
If leased employees with a workplace in Austria are provided to work for companies situated in foreign (non-EEA) countries "virtually" without first obtaining an exemption authorization, both the leasing company and the recipient company may face significant administrative penalties. These penalties range from EUR 1,000 to EUR 5,000 (or from EUR 2,000 to EUR 10,000 in the event of a repeat offense). Assignments that violate the authorization requirement may also be prohibited. Moreover, administrative offenses can have an indirect impact on a company's reputation and its perceived reliability, potentially even leading to the loss of its trade permit.
Recommendation
The clarification that "virtual" cross-border leasing also requires authorization has created uncertainty among companies that operate across borders, as many had previously assumed that authorization was not required. Companies that lease out employees or use leased employees should review their current practices and ensure that they have all necessary authorization in place. Notably, this may also affect intragroup employee leasing, which is the temporary assignment of employees from one entity within a corporate group to another.
We would be happy to support you in reviewing your labor leasing practices and applying for exemption authorizations. We can also advise you on the impact on your company in detail.
*****
Click here to read the German version.
