AUSTRIA Law and Practice Contributed by: Philipp Scheuba, BLS Rechtsanwälte GmbH
3. Overseas Firms Doing Business in the Jurisdiction 3.1 Overseas-Based Insurers or Reinsurers Generally, every (re)insurance company needs an Austrian concession to offer insurance and reinsur- ance services in Austria. With regard to (re)insurance companies that do not have their headquarters in Austria, the Insurance Supervision Act does differen- tiate between (re)insurers domiciled in other signa- tory countries of the European Economic Area (EEA insurers) and (re)insurers based in other jurisdictions (referred to as “third-country insurance and third- country reinsurance companies”). EEA insurers may carry out their business either by establishing a branch office in Austria or according to their freedom to provide services within the European Economic Area. Thus, EEA insurers do not require an additional licence to do business in Austria. However, there is a duty to notify their competent home coun- try supervisory authority of their intention to conduct insurance business in Austria. Other than EEA insur- ers, third-country (re)insurance companies require a licence in order to be able to conduct insurance busi- ness in Austria. Such licence may be obtained from the FMA. In addition, third-country (re)insurers need to establish a branch office in Austria before doing business there. Due to Brexit, the UK is no longer a member of the EU. In terms of the EEA Agreement, the UK is now a third country, which makes it harder for British companies to access the Austrian (re)insurance market. Additionally, Section IV of the Insurance Supervision Act does provide specific licensing requirements for third-country (re)insurers. However, where the Europe- an Commission has determined the solvency regime of a third country to be equivalent in accordance with Article 172 (2) or (4) of Directive 2009/138/EC, the pro- visions of this Section shall not be applied to third- country reinsurance companies having their head office in that third country. Reinsurance contracts concluded with such companies shall therefore be treated in the same manner as reinsurance contracts concluded with EEA reinsurance undertakings. Sec- tion 4, paragraph 19a VAG provides further facilita-
In order to obtain a concession, the company apply- ing for a concession must meet certain requirements. For example, the insurance company has to establish an effective risk management system, whereas capi- tal and liquidity requirements follow the Solvency II Directive and Regulation (EU) 2015/35. Furthermore, the headquarters of the insurance company must be located in Austria. Foreign providers of intermediary insurance or reinsurance services need a domicile or branch in Austria unless bilateral treaties define otherwise. Apart from that, the insurance company needs at least two board members who are able to comply with governance regulations and sufficiency of own funds. Moreover, the purchase of a qualified share (any share which corresponds to at least 10% of the capital or the voting rights) has to be notified to the FMA. Domestic insurance companies may only operate in the legal form of a stock company, societas Euro- paea or a mutual company. There are no differences between writing consumer insurance or corporate insurance regarding these requirements. 2.3 Taxation of Premium The insurance premiums paid by the policyholder are generally subject to the Insurance Tax Act (VersStG), which provides different tax rates for different lines of business. For example, a motor-related insurance tax is charged on motor vehicles registered in Austria, which is cal- culated on the basis of the engine’s displacement or power. For motor vehicles that are not subject to motor-related insurance tax, the motor vehicle tax law applies. Another example is insurance premiums paid for fire insurance, which are subject to the Fire Pro- tection Act; the Fire Protection Act levies a tax of 8%. Health insurance premiums are taxed at 1%, while life insurance premiums are taxed at either 4%, 11% or 18%.
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