The current Austrian interest rate landscape
The Interest Law Amendment Act, which has been in effect since 1 August 2002, also brings about a change in statutory interest rates. The following interest rates are based on the calendar year.
| Bank interest rates from 9 November 2001 | |
| Base rate (formerly discount rate) | 2,75% |
| Reference interest rate (formerly Lombard rate) | 4,50% |
| Marginal lending facility | 4,25% |
| Deposit facility | 2,25% |
| Statutory interest rates | |
| General interest rate | 4,00% |
| Since 1 August 2002 (ZRÄG), this interest rate also applies in Commercial law (previously 5 %), as well as for the Compound interest calculation. | |
| Late payment interest | |
| – In the Bilateral business agreement since 1 August 2002 due to the ZRÄG (8 % above the base rate) | 10,75% |
| – General rate of interest on arrears in the absence of any other statutory provision | 4,00% |
| Bills of Exchange and Cheques Law | 6,00% |
| Tax law | |
| Deferral interest (4 % above the base rate) | 6,75% |
| Deferral interest (1 % above the base rate) | 3,75% |
| Interest on claims (from 1 October of the following year – 2 % above the base rate) | 4,75% |
| For Late payments are 3 types of Late payment penalties provided for and specifically: | |
| Initial late payment penalty | 2,00% |
| Second and third late payment penalties for further late payments, each additionally | 1,00% |
| For Late submission from declarations of levy can a Late payment charge to be levied by the imposed levy. | up to 10,00% |
| Social Security Law | |
| Late payment interest | 7,21% |
| This interest rate is 3 % above the secondary market yield on German government bonds for October of the previous year (Section 59 of the ASVG) | |
| Employment law | |
| – Interest on arrears in accordance with Section 49a of the ASGG (8 % above the base rate), as is the case with business transactions between two entrepreneurs | 10,57% |
| – However, if the delay in payment is based on a reasonable legal opinion, then only | 4,00% |
Payment default
– The relevant EU Directive provides – in the absence of any other contractual agreement – for default interest to accrue automatically no later than 30 days after the invoice date (objective default without any element of fault).
– According to Austrian law The regulation according to §1334 ABGB, according to which payment default follows maturity, remains in force. Payment must generally be made without undue delay. This period can usually range from a few days to about 1 week.
Credit interest in the banking sector
– Interest rate conflicts between banks and customers in the past
The EU Competition Commission deemed the members of the „Austrian Lombard Club“ to be in breach of competition law. Various Austrian banks were subsequently accused of having charged excessively high interest rates on loans in the past. The Association for Settlement Control offers its services to ensure the correct calculation of interest on personal loans. In the meantime, several court cases have already resulted in convictions against banks or settlements involving substantial interest repayments.
– Basel II – Future interest rate trends
As a result of the new regulations governing banks’ adequate capital adequacy, the assessment of borrowers’ creditworthiness – in the form of a ‘rating’ – will be of decisive importance in determining the level of lending rates. The higher the risk, the higher the interest rates will be. Although the new regulations will not come into force until 2007, Basel II is already a reality today, as banks are already beginning preparations for their internal rating systems. Borrowers are advised to prepare the necessary documentation (business performance indicators) accordingly in order to avoid increased borrowing costs (by up to 2.5 %). Certain concessions are expected for small and medium-sized enterprises.
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