A peculiarity in austrian law is the Austrian Stamp Duty Act (GebG). The Act contains a list of agreements, such as suretyships, settlement agreements, assignments of rights and rental agreements, which are subject to stamp duty if a ‘written deed’ is executed in Austria, or if any link to Austria exists. However, the Act itself does not precisely define the term ‘written deed’, therefore it is questionable whether or not an e-mail, for instance, would be considered such a deed.
The Austrian Supreme Administrative Court (VwGH) (that is the Supreme Court competent for tax matters in Austria), recently issued a new ruling regarding stamp duty on e-mails. The ruling of December 2010 (published on 7 February 2011) has special significance, as for some time there has been a great concern that e-mails could trigger stamp duty.
In 2007 the Austrian Federal Ministry of Finance issued more than 250 pages of guidelines on stamp duty, which among other opinions, stated that e-mails (even if they were not printed out) were to be considered a written deed within the Act. Although the guidelines were ‘soft law’ and only binding on the tax administration itself (and not on the taxpayers and the courts), their issuance triggered great uncertainty among taxpayers.
This opinion posed a burden for the taxpayers’ day-to-day practice, as stamp duty may not only have been triggered as a result of an original contract concluded via e-mail, but also as a result of any kind of ‘substitute documentation’ sent via e-mail. For example, substitute documentation could be assumed, if after the agreement has been concluded, only one party of the agreement mentions to the other party the existence of the agreement in an e-mail. Therefore, it was almost impossible to avoid stamp duty.
In the recent case decided by the VwGH, a contract had been concluded between the parties via e-mail using a trusted digital signature. The Court of Appeal (UFS) stated that an e-mail that is not printed out is not a written deed within the meaning of the Act, even if a ‘trusted digital signature’ is used. This decision of the UFS, however, was challenged by the tax administration of the VwGH.
In its decision of December 2010, the VwGH did not uphold the original decision of the UFS. The VwGH stated that an e-mail is a written deed within the meaning of the Act and could therefore, in principle, trigger stamp duty. The printing of the e-mail is not required. The rather odd reasoning was that ‘paper’, in terms of the Act, represents every material that is able to display a writing, including computer screens.
Regarding the requirement of ‘execution’ of the written deed, the court held that trusted digital signatures within the meaning of EC Directive 1999/93/EC constitute an execution and consequently the court based its decision on this EC Directive and the Austrian Signature Act (SigG), which implements the EC Directive into Austrian law.
The VwGH did not explicitly state whether e-mails with simple (non-trusted) signatures would also trigger stamp duty (since in the case at hand a trusted digital signature was used). The court based its decision entirely on the EC Directive and the SigG. Conversely, it could be argued by taxpayers that e-mails with simple (non-trusted) signatures cannot trigger stamp duty since they are not executed within the meaning of EC Directive, the SigG and the Act. Since e-mails with simple (non-trusted) signatures are the most common form of communication in day-to-day business practice, such reasoning would be great relief for stamp duty practice in Austria.
To mitigate the risk of triggering stamp duty, agreements, such as settlement agreements, lease agreements or assignments, could be concluded via e-mail. The parties could send the offer and the acceptance via e-mail without using a trusted digital signature. This would allow safe evidence to be created while avoiding stamp duty. Whether the e-mail is printed out or not should not make any difference. From a practical point of view, e-mails should be sent only without a trusted digital signature to avoid stamp duty being triggered.
The Austrian tax administration is not bound to the ruling of the VwGH. Therefore, there remains the risk that the Austrian tax administration does not follow the opinion of the VwGH and levies stamp duty in the first instance. Such assessment would then have to be challenged with the UFS and (if necessary) also with the VwGH, which could be a rather expensive and time-consuming procedure. Furthermore, the VwGH may change its opinion and may hold that even a simple signature establishes an execution of the deed.
With respect to avoidance of stamp duty, it is important to note that the failure to pay stamp duty or to notify an agreement to the tax authority is not a criminal fiscal offence in Austria. Potential consequences are limited to a penalty of up to 100% of the stamp duty if stamp duty was not timely notified to the tax authority. However, when assessing a penalty, the tax administration would have to take into account if the taxpayer relied on an opinion based on a decision of the VwGH. If the parties agree, it may be beneficial to execute agreements via e-mails with simple (non-trusted) signatures, not pay stamp duty and trust that either no stamp duty will be assessed, or that any assessment could be successfully challenged in the courts.