Category: Austria

Even though the Austrian green bond market has not been very active, issuers like Uniqa, Hypo Noe, Verbund, and the Republic of Austria have taken the first steps toward the new asset class. The main feature of such bonds is the intention and/or commitment to invest the proceeds of the issue in green projects. Most issuers initially established stand-alone green bond frameworks based on voluntarily applied market standards. An Austrian green bond standard has not yet been developed. Frameworks used in Austria are usually based on published guidelines, like the International Capital Market Association’s (ICMA) Green Bond Principles. Issuers do consider the upcoming standards of the European Union, too – particularly, the EU Green Bond Standards (EUGBS) and the so-called EU Taxonomy.

In a challenging market environment following the Russian invasion of Ukraine, the development of a European green bond standard – also providing for clear guidance for Austrian issuers – could be slowed down. This important element of the EU’s intention to support the development of green bonds has marginally slipped out of the focus of investors. On the one hand, green bonds have already become a relevant investment class and are playing an increasingly important role in financing assets needed for the low-carbon transition. On the other hand, recent negative trends in capital markets have also affected the marketability of green instruments. As with other bonds, fewer green bond offerings were conducted. For now, the green trend has come to an unexpected halt, also given the focus on securing energy supply irrespective of a green cause. However, the political developments will most likely boost the mid- and long-term pace of the energy transition in Europe. Green bonds will play an important part in financing such a transition.

The current outlook is that the EUGBS will follow the same path as existing market standards, such as the ICMA’s Green Bond Principles. The Commission’s proposal for the EUGBS provides for voluntary applicability. Issuers will decide whether to commit themselves to the EUGBS to use the EU Green Bond designation. The EU Green Bond designation will only be available if they comply with the designated minimum standards. This includes aligning the allocation of net proceeds of EU Green Bonds to EU Taxonomy-compliant use cases and providing a high level of transparency on the use of funds.

The voluntary application of the EUGBS should be considered one of the main elements. Mandatory application of the EUGBS, which was subject to intense discussions in late 2021 and early 2022, seems to be off the table. However, labeling a bond as a “sustainable bond”, “sustainability-linked bond”, or “environmentally sustainable” will most likely trigger additional disclosure requirements for issuers in the future. Such changes are expected to be implemented into the EU Prospectus Regulation framework, which also applies in Austria, thereby setting new standards in terms of ESG disclosure. As it stands, ESG disclosure in an Austrian issuer’s prospectus is often limited, even in the case of sustainable or green bonds.

EU member states are currently negotiating the main elements of the EUGBS. Austria supports the EU Sustainable Finance Strategy and the EU Taxonomy Regulation and has published its commitment to ensuring that they will not be diluted. Nevertheless, the Austrian Federal Ministry for Climate Action, Environment, Energy, Mobility, Innovation, and Technology has expressed its position that technologies such as nuclear energy and fossil gas cannot be classified as green.

Codifying a European standard for green bonds will be a relevant tool for increasing transparency in relation to a product class that has seen numerous individual configurations in recent years, and not only in Austria. At present, investors cannot compare the different types of instruments in a meaningful way, due to the diverse levels of disclosure and presentation. Whether the EUGBS will in fact be the green market standard in Austria is difficult to assess, as the green finance market is still in its developmental phase. In the current political environment, the legislative proposals – which exclude the financing of gas and nuclear power generation – already seem outdated given the current short-term sentiment and the pressure to secure the European gas and power supply. Ultimately, it will be the investors deciding on the success of the EU and, consequently, the Austrian green bond story.

Christoph Moser, Partner, and Angelika Fischer, Attorney at Law, Schoenherr

This Article was originally published in Issue 9.7 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

In a decision published on 26 July 2022, Austrian data protection authority established that Volkswagen was in violation of Articles 13, 28, 35 and 30 of the GDPR.

The problem was initially discovered by the Austrian police when Volkswagen’s test car was stopped for a traffic control. The police noticed unusual extension on the vehicle, which turned out to be cameras that recorded traffic around the vehicle in order to test and train the driving assistance system for avoiding traffic accidents.

However, there was no sign on the vehicle, so other drivers were not informed that their personal data were being processed, who was processing the data, for what purpose and how long the data would be stored.

More violations were found in the lack of a data protection impact assessment (DPIA) and data processing agreement with the service provider that carried out the test drives.

Lastly, in the register of processing activities, there was no description of technical and organizational security measures which have to be implemented pursuant to Article 32 of the GDPR.

Besides these low-severity violations, no issues were identified with regard to collection and further processing of personal data. In line with Article 83 of the GDPR, when determining the amount of the fine, the supervising authority also considered the meaningful purpose of recording (increasing road safety), and the fact that Volkswagen cooperated during the proceeding and immediately remedied the defects.

By Marta Jelakovic, Senior Associate, Ostermann & Partners

Tax legislation updates are the zeitgeist in Austria right now, according to Taylor Wessing Partner Michaela Petritz-Klar, with the energy sector, cryptocurrencies, and online platforms being at the forefront of overhaul efforts.

“From a pure tax perspective, there are a number of issues that are intensely discussed in Austria right now,” Petritz-Klar begins. “As part of a green tax initiative with the aim to incentivize more carbon dioxide-neutral energy usage and tax fossil fuel sources more heavily, the scope of an exemption from electricity duty was widened and now also includes self-produced energy from renewable energy sources.” Furthermore, she says a carbon dioxide duty “shall be introduced for importers/producers or other entrepreneurs placing fossil fuels on the market.” However, due to the war in Ukraine, the carbon dioxide duty is to be postponed until October 2022.

Focusing on a more Austria-specific issue, Petritz-Klar reports that the country has introduced a flat tax of 27.5% on all cryptocurrencies. “The tax is already in place and covers any kind of crypto-related income while excluding NFTs and asset tokens,” she says. “This is a more favorable framework compared to before, when crypto-related activities could be taxed as high as 50%, which adversely affected frequent trading,” she explains. 

Furthermore, Petritz-Klar highlights that, by the start of 2023, “DAC 7 compliant disclosure and reporting obligations will be implemented for specific platform operators. As of 2023, operators of online platforms will have to enable sellers to liaise with users regarding, for example, the renting of immovable property, personal services, or the sale of goods, and will have to implement adequate due diligence procedures to identify the relevant sellers,” she explains. “The platform operators will now have to ensure that relevant seller data is delivered to the tax authorities in time. Right now, it is envisaged that first reports will need to be filed by end of January 2024, thereby still leaving a bit of time for online operators to get acquainted with the new regime,” Petritz-Klar elaborates.

More of an EU-wide issue is the implementation of the new Anti-tax Avoidance Directive 3, Petritz-Klar says. “This targets, in particular, shell companies with little or no substance. The timeline for its implementation is the end of June 2023, with the rules to enter into force as of 2024,” she says.

Finally, as an interesting recent development in the sphere of litigation, Petritz-Klar shares that there has been an increase in COVID-19 subsidies-related disputes. “For lawyers, it is in between civil law and public law and has a lot of constitutional law aspects, meaning that it is interesting to litigate,” she shares. “The longer the COVID crisis went on, the more stringent the approach of the government became, and subsidies applications started getting denied,” Petritz-Klar explains. “Now, a lot of applicants are seeking to litigate to enforce the approval of their application, leading to more work in this regard,” she concludes.

Former Junior Partner Stefan Adametz has been promoted to Equity Partner with Fellner Wratzfeld & Partner.

Specializing in e-commerce, life sciences, and compliance, Adametz has been with the firm since 2014, having first joined as an Associate. In 2016, he was promoted to Junior Partner (as reported by CEE Legal Matters on October 16, 2016). Between 2012 and 2014, he was an Associate at Kerres Rechtsanwalts and, from 2006 to 2012, he served as Deputy Managing Director at the Austrian Chamber of Commerce.

“Adametz is an excellent legal expert who has significantly contributed to FWP reaching a leading position and sustainable value in the specialist fields he advises on,” FWP Partner Markus Fell­ner commented. “His appointment as an Equity Partner confirms the strategy of supporting high potentials, offering them first-class development opportunities and the chance to grow from within the enterprise.”

“I am very pleased to continue my longstanding career at FWP as a Partner, to continue to advise our clients with total dedication, and to contribute to the dynamic development of FWP,” Adametz added.

Schoenherr has advised Red Bull on the establishment of a joint venture with Van Deer-Red Bull Sports Equipment founding shareholders Marcel Hirscher and Dominic Tritscher and the subsequent acquisition of Augment Ski by Van Deer-Red Bull Sports Equipment.

Augment Ski is a ski equipment company. According to Schoenherr, “the goal of the joint venture, Van Deer-Red Bull Sports Equipment, is to set new accents in skiing, together with the managing director Anton ‘Toni’ Giger and the many years of experience of ski world cup star Marcel Hirscher.”

Earlier this year, Schoenherr advised Red Bull on its joint venture with Teletest (as reported by CEE Legal Matters on June 13, 2022).

Schoenherr’s team was led by Partner Peter Madl and Attorney Michael Marschall and included Partner Hanno Wollmann and Associate Verena Krikler.

Schoenherr has advised Austria’s Altstoff Recycling on a cooperation agreement for the construction of a new sorting plant in Upper Austria with Duales System Deutschland and Bernegger.

According to Schoenherr, “with this new sorting plant for lightweight packaging in the Rohstoffpark-Enns, around 100,000 tons of lightweight packaging per year from the yellow garbage cans and the yellow bags are to be processed for subsequent recycling from 2025 onwards. The joint venture partners are thus taking an important step towards achieving the EU recycling targets from 2025.”

According to the firm, “for almost 30 years, Altstoff Recycling Austria AG has been working as a driving force of the Austrian waste and recycling industry and is the market leader among the collection and recycling systems for packaging, waste electrical equipment, and batteries.”

Schoenherr’s team included Partners Sascha Hoedl and Hanno Wollmann, Attorney Christoph Cudlik, and Associate Stefan Holub.

Brandl Talos has advised Sportradar Group AG on the formation of a joint venture with Ringier AG. Reportedly, Bowmans and Baer & Karrer also advised the Sportradar Group, and Webber Wentzel advised Ringier on the deal.

Closing of the transaction is contingent on regulatory approval.

Sportradar Group is a provider of sports data and content. Ringier is a Swiss technology and media company.

According to Brandl Talos, “the joint venture aims at bringing sports closer to fans in Africa, a dynamic and emerging region in the global sports industry. It combines Ringier’s media expertise with Sportradar’s sports data and product portfolio and builds on a long-standing relationship of collaboration and innovation between the two Swiss-based companies. In the joint venture, Sportradar and Ringier are backing the pan-African media company Pulse, already part of the Ringier portfolio.”

Last year, Brandl Talos advised Sportradar Group on a ten-year partnership with the NHL (as reported by CEE Legal Matters on July 8, 2021) as well as the acquisitions of InteractSport, (as reported by CEE Legal Matters on May 24, 2021), Synergy Sports (as reported by CEE Legal Matters on March 30, 2021), and Fresh Eight (as reported by CEE Legal Matters on March 18, 2021).

Brandl Talos’ team included Partner Thomas Talos, Attorneys Stephan Strass and Daniel Schmidt, and Associate Celine Dobnikar.

Herbst Kinsky, working with Watson Farley & Williams’ Munich office, advised software and IT service provider Mait on its acquisition of enterprise resource planning specialist Nittmann & Pekoll. The Wiener Advocatur Bureau reportedly advised sellers Christian Nittmann and Angelika Pekoll-Sarica.

According to Herbst Kinsky, with a turnover of EUR 130 million and more than 5,700 customers, the Mait Group, founded in 1994, specializes in “innovative digital solutions in product development, corporate management, and IT services. More than 580 Maits implement specific solutions in close cooperation with their customers at 24 locations in Germany, Austria, and Switzerland.”

“Through the acquisition, Mait not only enters the ERP business in Austria but also grows by more than 200 customers and a 62-strong team of ERP experts at the Vienna and Wels locations,” the firm informed.

Herbst Kinsky’s team included Attorneys-at-Law Wolfgang Schwackhoefer, Valerie Mayer, Christoph Ludvik, and Constantin Hofer and Associates Elisabeth Fitzek and Irmgard Nemec.

Wiener Advocatur Bureau could not confirm its role in or comment on the deal.

Dorda has advised the DigitalBridge Group on its joint acquisition with Brookfield Infrastructure and its institutional partners of a 51% stake in GD Towers from Deutsche Telekom. E+H and Latham and Watkins advised the bidding consortium of GIP, KKR, and Stonepeak. Reportedly, Allen & Overy and Morgan Lewis also advised DigitalBridge, Freshfields and Weil, Gotshal & Manges advised Brookfield Infrastructure, while, on the sell side, Gleiss Lutz, Noerr, CMS, Schoenherr, Cuatrecasas, and Freshfields advised Deutsche Telekom on the deal.

Closing is expected in late 2022, pending regulatory approval. According to Dorda, the transaction values GD Towers, the mobile telecommunications tower business of Deutsche Telekom, at EUR 17.5 billion, on a consolidated basis, including the assumption of net debt.

According to the firm, “GD Towers is Germany’s largest tower company, owning 7,000 towers and communication sites in Austria and owning and operating over 33,000 towers and communication sites in Germany. GD Towers is led by an independent management team with decades of European tower company experience and a track record of delivering consistent growth and stable cash flows. GD Towers’ high-quality portfolio is supported by an anchor tenancy agreement with Deutsche Telekom, which will retain a minority 49% ownership stake in GD Towers following this transaction.”

“The partnership being formed today is about building the next generation digital infrastructure champion of Europe,” said DigitalBridge CEO Marc Ganzi. “The combination of Deutsche Telekom’s leading mobile network and market position, alongside one of the largest real asset managers in the world in Brookfield, combined with the digital infrastructure domain expertise of DigitalBridge, creates a team of unmatched capabilities to support GD Towers as it grows to meet the evolving network demands of enterprises and consumers across Europe.”

Dorda’s team included Partners Andreas Mayr, Gunnar Pickl, Thomas Angermair, Stefan Artner, Christoph Brogyanyi, Heinrich Kuehnert, Bernhard Mueller, Veit Oehlberger, Nino Tlapak, and Paul Doralt, Counsel Andreas Seling, Attorneys Patricia Backhausen, Florian Nikolai, Florina Thenmayer, Julia Haumer-Moerzinger, Alexandra Ciarnau, Julia Haunold, Magdalena Nitsche, and Stanislav Nekrasov, and Associates Philipp Paertan, Isabel Maurer, Philipp Fedan, Michael Hardt, Angelika Holzer, Mirko Marjanovic, Vivien Lux, and Jia Zhou.

E+H’s team included Partners Marco Steiner, Karolin Andreewitch-Wallner, Judith Feldner, Philipp Schrader, and Ulrike Sehrschoen, Senior Associate Johannes Feilmair, and Associates Laura Glibusic, Titus Kahr, and Anna Talos.

Editor’s Note: After this article was published, Allen & Overy confirmed its involvement on behalf of DigitalBridge. 

Earlier this year the European Banking Authority (EBA) published the final Guidelines on the limited network exemption (LNE) under the Payment Service Directive 2 (PSD2). Following the consultation phase initiated by the draft, further clarifications were added which are relevant to all service providers who plan to rely on the exclusion as well as those who already do.

Most importantly, the EBA Guidelines require a resubmission of the notification for entities which rely on the LNE and have already submitted a notification in the past.

The Financial Market Authority (FMA) – as the relevant National Competent Authority (NCA) in Austria – has notified the EBA that it is fully compliant with the Guidelines. The FMA has published the German translation of the EBA Guidelines on its website and in July 2022 published updated notification forms which implement the new EBA Guidelines.

Background of the EBA Guidelines The so-called “limited network exemption” consists of three different sub-exemptions from the licence requirements and scope of PSD2, i.e.:

• instruments allowing the holder to acquire goods or services (i) within the premises of the issuer, or (ii) within a limited network of service providers under a direct commercial agreement with a professional issuer (limited network exemption in the narrower sense);
• instruments which can be used only to acquire a very limited range of goods or services (very limited product range exemption); and
• instruments for the acquisition of specific goods or services for specific social or tax purposes (social and tax exemption).

Key aspects of the new EBA Guidelines on the Limited Network Exemption under PSD2

The following points will have the most significant impact on the current and future scope of application of the LNE:

• Technical and contractual restrictions are required cumulatively: the issuer of the instrument must use technical as well as contractual restrictions in order to ensure that the instrument is only used in a limited way and does not allow for the possibility to develop into a general-purpose payment instrument. The EBA Guidelines already in their draft version clarified that contractual restrictions alone are insufficient.
• In-premises exemption not available for online businesses: payment instruments allowing the holder to acquire goods or services only in the premises of the issuer can only be used in physical premises and cannot be used in online stores. This means that any issuer who plans to issue or already has issued a payment instrument to use in an online store relying on this exemption, must or will have to rely on a different exemption. The EBA clarifies that “within the premises” sets out a restriction on geographical location(s).
• Functional connection between goods and/or services: for the instrument to be considered limited under the very limited product range exemption a functional connection between the goods and/or services should exist and the assessment by the NCA of this functional connection should be determined by the specific category of goods and/or services with a common purpose as identified by the issuer. This corresponds to the current regime applied by the FMA. The EBA Draft Guidelines originally proposed that the functional connection depends on a leading product/service whose ancillary services will then be covered by the instrument.
• Quantitative information required: in order for the regulator to be able to review the notification by issuers relying on the LNE in the narrower sense and the very limited product range exemption, the issuer has to provide information such as, but not limited to, geographic area, volume and value of (expected) payment transactions or the maximum amount to be credited to the payment instrument as all envisaged by the issuer.
• Provision of services by regulated entities: The EBA clarifies that regulated entities may also issue unregulated payment instruments that fall within the scope of the LNE. However, the provision of services should be distinguishable from the regulated services provided by a specific visual manifestation, e.g. by a common brand for the unregulated product.
• Intermediary receiving funds do not fall under LNE: if the issuer uses a third-party entity as intermediary who receives the funds that are then transferred on the payment instrument, the third-party does not fall within the scope of the LNE as the activity is not directly related to the purchase of goods and/or services. This means that the third-party usually will need to apply for authorisation as a payment institution in order to provide that service.
• Common brand (≠payment brand): Providers in the limited network of the issuer, who rely on the LNE in the narrower sense, have to offer their goods and services under a common brand which characterises the limited network. In the case of a group comprising several retail chains where each chain uses a separate brand, the use of the instrument of one of the retail chains in the other retail chains would not fall under the scope of the LNE as it would entail using the same instrument to make payment transactions to acquire goods and services within more than one limited network. The use of a common payment brand (as opposed to a common general retail brand) would alone not be sufficient in the EBA’s view. Groups of retail chains offering combined payment voucher cards across their various brands should therefore (re)assess whether changes to the current structure would need to be made.
• Changes to the notification process: The EBA Guidelines clarified that the issuer can be established in an EU Member State different from the one where the payment instrument is used. It underlines that there is no geographical limitation of the LNE, and that cross-border provision of services is permitted (which so far has been seen differently by some EU Regulatory, e.g. the German BaFin). Hence the notification should not be submitted in the country in which the issuer is established, but only in the countries in which the payment instrument is used by users and the threshold is exceeded. Regarding the threshold the EBA Guidelines further clarify that a notification should be submitted once the threshold is exceeded, even if the time period in which the threshold was crossed is less than 12 months.

This among all the other changes should be taken into account by all issuers submitting their notification to the relevant authorities after 1 June 2022.

Resubmission of existing notifications

Issuers who previously benefitted from the LNE under PSD2 or the E-Money Directive and have already submitted a notification, need to be particularly aware about the differences between the FMA Guidelines and the EBA Guidelines when considering what additional information needs to be provided. A three-month transitional period was granted. This means that according to the EBA Guidelines, the new notification needs to be submitted by 1 September 2022. The FMA should assess the resubmitted notifications in an expedited manner. In July 2022 the FMA published the information on its website that re-notifications of existing LNE notification need to be made by 1 September 2022 and has updated its notification forms to be used therefore.Conclusion

The new EBA Guidelines on the LNE can have a significant impact on providers which already rely on the LNE today because EBA restricts the application of LNE for certain fact patterns (e.g. the use of a common voucher card across different retail chain brands of the same group). This could require introducing changes to the current set-up of exempted payment instruments. On the other hand, the EBA Guidelines clarify that all options of the LNE can also be applied on a cross-border basis (which so far has been interpreted differently by some EU regulators, e.g. by the German regulator BaFin), which will make it easier to set-up an exempted payment product across multiple EU Member States and further harmonises the application of the PSD2 regime in the EU. Generally, providers should evaluate whether they may be able to (continue to) rely on the LNE also under the new EBA Guidelines’ approach. For issuers who already previously benefitted from the exclusion and had previously submitted a notification, the EBA Guidelines set out a requirement to resubmit a new notification by 1 September 2022 which takes into account the EBA Guidelines’ clarifications (and the FMA has published on its website that it will follow this approach).

By Matthias Pressler, Counsel, Maximilian Nusser, Associate, Schoenherr