Austrian Constitutional Court (VfGH): transferring responsibilities to COFAG is unconstitutional

In its decision G 265/2022-45 of 5 October 2023, the VfGH overturned several regulations regarding COFAG in the Austrian ABBAG Act as unconstitutional.

In the course of its decision, the VfGH has decided that the requirements to transfer responsibilities of the state’s private-sector administration to the private legal entity COFAG were only met in part which is why this transfer violates the principle of objectivity. Furthermore, the VfGH decided that the regulation of section 3b para. 2 Austrian ABBAG Act stating that there is no legal entitlement to COVID-19 subsidies being granted also violates the principle of objectivity.

Therefore, both regulations were overturned by the VfGH as unconstitutional. The repeal of the unconstitutional regulations applies with expiry of 31 October 2024. Consequently, the Austrian federal legislator has to pass more detailed regulations on the further activity of COFAG as well as on the expectedly required liquidation of the entity. Until then, COFAG may continue to fulfil its transferred responsibilities and also to pay out financial aid.

Furthermore, in other proceedings, the VfGH also repealed parts of the regulations passed as ordinances regulating the distribution of subsidies by COFAG. In this respect, the VfGH especially ruled the regulations on COFAG’s freedom from instructions (VfGH 05/10/2023, V 236/2022) and linking the receipt of financial aid to the applicant’s appropriate conduct in relation to tax (VfGH 05/10/2023, V 145/2022, G 172/2022) being unlawful. The repeal of the unlawful regulations applies with expiry of 15 October 2024.

These decisions by the VfGH do not require further action by the applicants at the moment.

Authors: Daniela Stastny / Stefan Ilic