Payroll audits

Directors of companies limited by shares are, under certain circumstances, personally liable for unpaid taxes and duties. A prerequisite for the personal liability of directors (for non-payment) is a culpable breach of duty by the directors.

In a recent case decided by the Austrian Supreme Administrative Court (Verwaltungsgerichtshof - VwGH), the audit conducted by the director only covered the total amount, but not the composition of the duties. Accordingly, there could be no question that an audit of the proper performance of the delegated tasks had taken place.
 

Even slight negligence is culpable

According to the established case law of the Supreme Administrative Court, any form of fault is considered culpable, including slight negligence. If the responsible representative delegates his tax duties to another person, this does not relieve him of his responsibility. The director of a limited company must ensure that tax obligations are actually fulfilled by taking appropriate supervisory and monitoring measures, in particular by setting up control mechanisms.

The activities of authorised persons must be checked at such intervals that a breach of tax obligations cannot go undetected. A duty to supervise exists even if there has been no wrongdoing in the past.