, Vienna Blümel: zero tolerance for subsidy fraud amounts to careful handling of tax money. Financial Police takes stock of first weeks of short-time working and illegal employment – 460 violations in 1,946 companies

“Our short-time working model has created a way for companies to retain as many employees as possible. €10 bn have been made available for this purpose. We intend to protect people from unemployment and enable the economy to ramp up quickly by retaining experienced teams. We are as accommodating as possible but also as rigorous as required in our actions. That’s why there’s zero tolerance towards those who try to take advantage of tax payers”, said Finance Minister Gernot Blümel about the Financial Police’s initial investigations into how companies have implemented short-time working.

For three weeks, the Financial Police has been inspecting short-time working and employment tasks in order to combat undeclared work, social security fraud and tax fraud.  Around 350 police officers have checked a total of 5,119 persons in 1,946 companies at 1,205 locations nationwide since 21 April 2020. A total of 460 offences have been recorded under the Foreign Employment Act, the General Social Security Act, the Unemployment Insurance Act, the Wage and Social Dumping Control Act and the Working Hours Act.

Charges have been filed against 31 persons suspected of making fraudulent claims under the current short-time working regulations, and these have been forwarded to the Task Force for Social Benefit Fraud at the Federal Criminal Police. In addition, tax evasion charges have been filed against nine of the persons whose short-time working arrangements were inspected.

“The majority of companies are working to secure jobs and businesses in the current crisis. Our measures are helping these companies. In order to protect honest businesses and the honest working population, we will continue to take decisive action against all fraudulent activity. I will say it again: a time of crisis does not constitute a legal vacuum. The brazenness which the financial police frequently encounters during inspections confirms our stance on subsidy fraud”, said the Finance Minister.

During an inspection of a construction site in Waldviertel, three employees of an Austrian company who had been furloughed were found to be doing bricklaying work. Investigations into furlough arrangements are currently underway. Additionally, two Slovenian companies were acting as subcontractors to this Austrian construction company – one had six Bosnians, the other a Serb working on site.  Neither of the two Slovenian companies had any documentation in accordance with the provisions of the Wage and Social Dumping Control Act. Violations of the Wage and Social Dumping Control Act and the Employment of Foreign Nationals Act have therefore been established.

An iron manufacturing company in Upper Austria was also particularly brazen. In this case, in order to justify the fact that an employee was found to have no health insurance, they submitted a form that was intended to identify him not only as a key worker, but also as employed “on a voluntary basis”. The company has been reported.

At a major construction site in Vienna, the Financial Police identified 14 unregistered employees. On closer inspection, it turned out that they had in fact previously been registered as company employees but had been de-registered at the beginning of the crisis and have since been working unofficially.

The Financial Police’s findings are being forwarded directly to the AMS (Austrian Labour Market Service). Companies face massive penalties. Depending on the offence, penalties for tax evasion include fines of up to twice the amount evaded and up to four years in prison. Fraudulent use of subsidies is punishable by up to 5 years’ imprisonment. Additionally, there are high penalties for forgery and fraud. Inspections are not carried out without prior suspicion and risk analysis. Honest companies therefore have little to fear.