Corporate Criminal Law in Austria

In Austria, companies can be held criminally liable under the Corporate Criminal Liability Act (VbVG) for offenses committed by their decision-makers or employees. This establishes not only personal criminal liability for the individuals involved, but also an independent liability of the company itself.

For affected companies, the question often arises under which conditions such liability can occur and what consequences such proceedings may entail.

Who is covered by corporate criminal law?

The VbVG applies to legal entities such as limited liability companies (GmbH) and stock corporations (AG), as well as registered partnerships (OG, KG) and European Economic Interest Groupings.
However, it does not apply to the federal government, the provinces, and municipalities insofar as they act in the execution of laws, nor to estates.

Attribution to the entity

The liability of an entity is always linked to a criminal offense committed by a natural person. The decisive factor is whether this act can be attributed to the company.

Attribution is particularly possible if

• the offense was committed for the benefit of the company, or
• the offense violated obligations that affect the entity itself.

A benefit to the company may already exist if costs are saved or an economic advantage is sought through the offense. It is not required that the identity of the perpetrator is known.

Decision-makers vs. employees

The law distinguishes between decision-makers and employees in terms of attribution.

Decision-makers include, for example, managing directors, members of the management board, or authorized signatories, as well as persons who exercise significant influence over management. If a decision-maker commits a criminal offense in connection with their function, it can be directly attributed to the company.

In the case of offenses committed by employees, the company’s liability is primarily possible if organizational deficiencies within the company enabled or significantly facilitated the offense. This refers, for example, to inadequate control mechanisms, missing policies, or insufficient compliance structures.

The criminal liability of the company exists alongside the liability of the acting individual.

Attention: The separate criminal liability of the natural person and the company also applies where the perpetrator and the company are economically identical (e.g., a “one-person GmbH”). This can have significant consequences, particularly in financial criminal proceedings.

Proceedings against the company

If the public prosecutor assumes that not only individuals but also the company may be responsible for a criminal offense, charges are generally brought not only against the individuals concerned but also against the entity. The company has an independent position in the proceedings and enjoys the rights of an accused party.

In the main hearing, the court decides on two distinct issues: the criminal liability of the accused individuals and the responsibility of the company.

First, the judgment concerning the natural persons is announced. If a conviction follows, the main hearing is then continued and a separate decision is made as to whether the entity is also responsible for the offense and whether a corporate fine is to be imposed.

In practice, both proceedings are often closely linked, as the company’s liability regularly derives from the conduct of a decision-maker or employee.

In rare cases, it may occur that the accused natural person is acquitted, but the proceedings against the entity are nevertheless continued. This may be the case, for example, if organizational deficiencies within the company are identified during the proceedings that enabled or facilitated a criminal offense, without this organizational fault being clearly attributable to a specific executive.

Consequences of a conviction for companies

The corporate fine

If a company’s responsibility is established, the court imposes a corporate fine.

This is calculated in daily rates. The number of daily rates can be up to 180 and depends on the penalty applicable to the underlying criminal offense. The amount of a single daily rate is determined based on the economic capacity of the company and can range between EUR 50 and EUR 30,000. The company’s retained earnings in recent financial years are also relevant for determining the amount of the fine.

When determining the fine, the court takes into account both aggravating and mitigating circumstances. Mitigating factors may include, for example, if a company had already implemented appropriate compliance measures prior to the offense or actively contributes to clarifying the facts and compensates for the damage after the incident becomes known.

Under certain conditions, the fine may also be conditionally waived in whole or in part.

Additional negative consequences of a conviction for companies

In addition to the fine itself, a conviction under the Corporate Criminal Liability Act can have far-reaching effects beyond criminal law.

These include, for example:

• damage to reputation and loss of trust among business partners or customers
• difficulties or exclusion from participation in public procurement procedures
• civil law claims for damages
• potential problems in credit negotiations with banks

These economic and reputational consequences can often weigh more heavily on companies in the long term than the fine itself.

Possibility of avoiding a conviction

A violation of the Corporate Criminal Liability Act does not necessarily lead to a conviction of the company in criminal proceedings.

The law explicitly provides for possibilities to refrain from prosecuting the entity or to resolve proceedings through diversion. Under Sections 18 and 19 VbVG, the public prosecutor may refrain from prosecution under certain conditions. Furthermore, the proceedings may also be concluded through diversion—either by the public prosecutor or the court—such as by the payment of a sum of money or the fulfillment of certain conditions.

A key requirement is that there are no special or general preventive reasons opposing such an approach. In practice, factors such as the company’s willingness to cooperate, comprehensive clarification of the facts, compensation for damages, and improved compliance structures play an important role.

For companies, this has the particular advantage that no entry is made in the corporate register of sanctions.

For affected companies, this means: Early, strategically well-considered action can have a significant influence on the further course of the proceedings and, in individual cases, help to avoid a formal conviction.

Conclusion

Corporate criminal law has become a central component of Austrian criminal law. For companies, this means that not only the individual actions of decision-makers and employees, but also organizational precautions and compliance structures determine criminal liability. A well-implemented compliance system can therefore not only reduce risks but also have a mitigating effect in criminal proceedings.

In the event of criminal proceedings, early, strategically well-considered action can have a significant impact on the further course of the proceedings and, in individual cases, help to avoid a formal conviction.

If your company is affected by a criminal allegation or fears such proceedings, early legal advice can be decisive. Our law firm supports you strategically in risk analysis, compliance measures, and representation in proceedings. Contact us without obligation to coordinate your next steps.