Paid privately for an Austrian OG: claiming reimbursement of necessary business expenses

If a shareholder pays necessary business expenses of an Austrian OG from personal funds, section 110 UGB may support a reimbursement claim. The provision covers expenses in company matters that the shareholder may regard as necessary in the circumstances.

Under section 110(2) UGB, money spent must bear interest from the time it was spent. For future expenses needed to deal with company matters, section 110(3) UGB allows the shareholder to request an advance.

The review separates personal expenses, the shareholder’s own losses, advances and values that must be handed over to the OG. A payment does not become a company expense merely because it is posted to a shareholder account or later described as a cost.

OG business expenses: what section 110 UGB reimburses

Section 110(1) UGB requires the company to reimburse a shareholder who incurs expenses in company matters that the shareholder may regard as necessary in the circumstances. The rule therefore looks at the specific task and the situation in which the expense was incurred.

The statutory claim concerns the shareholder’s expenditure. The invoice may be in the shareholder’s name or addressed directly to the OG. The key points are whether the payment concerned a company matter and whether it could reasonably be seen as necessary at the time. The bookkeeping label does not decide the issue by itself.

The statutory reimbursement right operates alongside contractual management rules. The articles may regulate responsibilities, approval reservations and accounting procedures. Those rules should be read together with section 110 UGB where a shareholder has paid for an acquisition, advice or a payment to a business partner from personal funds.

When private expenses may count as necessary

Each expense needs a specific connection with the OG’s business. Relevant indicators include the reason, timing, recipient and whether the expense was intended to provide a recognisable benefit to the company. Section 110 UGB does not create a presumption in favour of every payment made privately.

Personal living costs, private purchases and payments without a company connection belong in a different category. The same applies to voluntary additional costs where the business purpose would have required a lower amount. For mixed expenses, the business share should be shown separately.

The articles, internal rules or a shareholder resolution may require prior approval. The absence of approval alone does not answer the reimbursement question. The specific classification under section 110(1) UGB and the agreed management rules remain relevant. The overview of management and representation helps identify the responsibility structure.

Which shareholder losses may be reimbursed

Section 110(1) UGB mentions losses as well as expenses. It covers losses suffered directly through the shareholder’s management or through dangers inseparably connected with it. The review therefore concerns the shareholder’s own financial loss and its direct connection with management.

A general loss of the OG is different. The fact that the company completes a transaction at a loss does not automatically turn that amount into the shareholder’s personal claim under section 110 UGB. A mere timing connection is also insufficient if the shareholder’s own loss cannot be identified.

The file should describe the action, the related risk, the loss and the shareholder’s own payment or liability. It should also show whether an insurance payment, a credit to the shareholder account or another reimbursement has already covered part of the loss.

Why interest starts when the expense is incurred

Section 110(2) UGB provides that the company must pay interest on money spent from the time of the expenditure. The date of each payment is therefore important. A combined account without expenditure dates makes calculation and review more difficult.

The interest rule concerns money spent. It is distinct from profit participation, remuneration for management and financing of the OG. The statutory starting point also does not answer every question about the applicable rate or a valid contractual arrangement. Those matters require review of the agreement and the circumstances.

The schedule should show the principal amount, payment date, payee, receipt and interest period separately. If the expense was partly reimbursed or settled through the shareholder account, the remaining amount should retain its own payment and accounting history.

Requesting an advance for future OG expenses

Section 110(3) UGB allows a shareholder to request an advance for expenses needed to deal with company matters. The provision therefore concerns a future expense and a specific connection with an OG task.

Before payment, the parties should record the purpose, the expected amount and the later accounting procedure. A lump sum without a stated purpose leaves open which company matter it is meant to finance. The advance should be documented separately from a contribution or a shareholder loan.

After the expense, receipts and the actual flow of funds belong in the account. Money the shareholder receives for the management of the business or obtains from it may also fall under the duty to hand it over in section 110(4) UGB. The overview on reviewing the articles identifies where financing and approval provisions are usually found.

Aligning articles, resolutions and OG accounting

Section 110 UGB is the statutory starting point for reimbursement, interest and advances. The articles, shareholder resolutions, internal rules and actual allocation of tasks must also be reviewed for the specific transaction. They may show who could initiate a payment and which internal records were expected.

The accounts should make the legal basis of a payment visible. A shareholder account can collect several transactions, including personal expenses, advances, withdrawals and repayments. For legal review, those items must be separated again. A transfer between accounts does not replace a receipt or an explanation of the company matter involved.

The articles on the compensation formula using earnings value and book value and on agio in a capital increase show in different settings why payment claims, capital positions and economic values should be recorded separately. An OG expense still requires its own review under section 110 UGB.

Proving expenses with receipts and an itemised account

A reliable expense account starts with one line for each payment. It should show the date, amount, recipient, reason, connection with the OG and proof that the shareholder paid the amount. For a mixed invoice, the company share should be identifiable.

Agreements, emails, orders, delivery records and the company booking should also be preserved where they explain the business purpose. The documents should describe one coherent sequence: which company matter existed, who acted, which payment was made and which amount remains outstanding.

The first-consultation preparation checklist helps organise the file. The articles review checklist covers the contractual layer. The articles of association glossary entry provides a short definition of the central document.

What the shareholder must hand over to the OG

Section 110(4) UGB requires the shareholder to hand over everything received for conducting the business and everything obtained from the management. This duty complements reimbursement. A shareholder who receives money or value for the company must therefore keep it separate from a personal expense claim and from values belonging to the OG.

Several money movements may overlap in practice. A shareholder may receive an advance, use it to pay an invoice and later receive a credit or payment from the business partner. The account must show what was spent, what came back and what must be passed on to the OG.

The handover duty is not a profit distribution or a private withdrawal. It belongs in the management account. Conversely, a handover item should not be set off against a reimbursement claim without reviewing whether different legal bases or different company matters are involved.

Frequently asked questions about private OG expenses

Organise the reimbursement claim in writing

Before sending a payment request, divide the claim into expenses, possible losses, interest and advances. Each item should state its basis under section 110 UGB, the company matter, the date and the amount still outstanding. Values to be handed over should have their own column.

Give the OG the receipts and calculation in a form that allows management to follow the transaction. Unclear combined amounts can mix private costs, capital movements and business expenses. If partial payments have been made, the account should show the remaining balance.

For a specific review, collect the articles, management rules, individual receipts, bank records and previous accounts. We can assess the connection with the company matter, the requirements of section 110 UGB and the separation of reimbursement, interest, advance and handover. Readers who want regular company-law updates can subscribe to BRANDaktuell legal updates.