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Fintech Market Overview

This article does not constitute legal advice.

Cross-border payments in Austria

Fintech Software

The Single European Passport is available for regulated companies under, inter alia, CRD IV, MiFID II, the E-Money Directive, the AIFMD and PSD II. This means that fintech companies that are regulated under their home Member State laws and possess a banking licence, a licence as a payment services provider pursuant to PSD II, a licence as an alternative investment fund manager under the AIFMD, a licence a e-money institute or a licence as an investment firm under MiFID II may passport their licence into Austria and provide their services in Austria without having to first obtain a licence from the FMA.1

Where fintech companies do not provide regulated services and are not licensed under their home Member State legislation, no passport is generally available. To the extent that the Austrian Trade Code applies, services may be provided in Austria on a temporary basis only under the EU freedom of services without a trade licence. If a service is targeting the Austrian market on a continuous basis or if the services are continuously provided in Austria, a trade licence will be required.1

Generally, no reverse solicitation exemption will apply (the MiFID II reverse solicitation exemption will only be available to regulated entities from non-European Economic Area (EEA) Member States). This means that licensing requirements will generally apply when a foreign person is acting in Austria. The FMA's approach appears to be much stricter than that of the trade authority. As regards regulated services, to determine whether a regulated business is conducted in Austria, regulatory practice as applied by the FMA focuses on the place where the offer to enter into a contract is made or where the offer is accepted. As a general rule, market operators will be deemed to carry out licensed banking activities in Austria as soon as any counterparty located in Austria is in a position to enter into relevant, legally binding commitments.1

This approach applies irrespective of the means of communication involved. In terms of traditional mail, it will therefore be sufficient if the place of sending and posting the offer to enter into a relevant contract or the acceptance thereof is in Austria. With regard to services offered via the internet, licensing requirements will usually be triggered if clients located in Austria find themselves in the position – technically and legally – to enter into relevant commitments legally binding on them.1

This view has further been corroborated by the Austrian Supreme Court in a decision regarding loans granted cross-border by a Swiss bank. Furthermore, case law with respect to a securities portfolio of an Austrian client that was managed outside of Austria (in this instance, the United States) confirmed that advisory services in respect of such portfolio have to be considered to be provided at the place where the customer at the time of provision of these services is located, irrespective of whether such service is provided from outside of Austria via telephone, facsimile, letter, email or similar. Case law further held that the conclusion of an agreement on portfolio management services (to be provided abroad) in Austria was sufficient to conclude that financial services were subject to Austrian licensing requirements.1

In a digital world, this strict approach particularly poses issues for globally active companies. In this context, companies that may be, or are, subject to Austrian licensing requirements (but have not obtained one) should exercise scrutiny as regards their marketing campaigns. FMA is known for checking whether unlicensed companies that provide licensable business advertise to Austrian customers or target the Austrian market. This includes checking whether apps are available in the Austrian versions of the Android or iOS app stores and whether home pages are offered in the German language or contain specific contact information for Austrian customers. Unlicensed companies that provide licensable business should hence consider including on their websites geo-barriers for clients located in Austria.1

Fintech in Austria

Fintech in other countries

Let's introduce you

Austrian Fintech Lawyers

Viacheslav Losev

Viacheslav Losev

Legal support for FinTech and Blockchain projects

Silvia Calls

Silvia Calls

We work for international SMEs, startups and Telco's

Kristina Berkes

Kristina Berkes

Participation as a lawyer at investment venture funds, leading venture M&A deals in IT, supporting iGaming and business assets

Notes
  1. https://thelawreviews.co.uk/title/the-financial-technology-law-review/austria
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