Friendship service?
There is also a special issue: Even if nothing is paid, the activity can trigger social security contributions if the activity would in principle be entitled to payment. “It is not a tax-related offence, but under certain circumstances, if it is a distant relative, it could be illegal work because they have not been registered with social security,” says Lehner. “The more distant the relationship, the more likely it is that an employment relationship exists.” Postscript: “If a commercial service is provided on the construction site, it is classic botched work.”
And what about on the construction site of a single-family house when friends carry out the electrical and heating installations and painting work? It is then a case of neighbourly help if there is a “legend” about it which is also credible and understandable.
Compulsory social insurance?
“If there are whole hordes of people from different backgrounds on the construction site, then it becomes increasingly implausible,” says Lehner. “If it cannot be made credible that it is just a friendly service, then it falls under social insurance and is therefore illegal work.” Postscript: “There are cases where you say they are in the singing club together and it is conceivable that they help each other.”
If a group of pensioners helps with the grape harvest for free and receives food in return, this is not illegal work. Free meals are not remuneration.
Botches generate 34.52 billion euros in revenue this year
Electrical work, car repairs, beauty treatments and massages, as well as activities around the house and tutoring children – these are the areas in which people in Austria happily do their homework. This is the result of the latest analysis of a survey of 1,000 people by the Linz economist Friedrich Schneider.
The shadow economy is at the top of the accepted minor offenses.
“Botched work is still very popular, almost two thirds of Austrians see it as a minor offence. Most botched work occurs around building or renovating a house,” Schneider told the KURIER. “People have no sense of wrongdoing. They say we pay so much tax that they can afford a few hours of undeclared pay.”
Overall, the shadow economy has increased this year by 1.24 billion euros to 34.52 billion euros, which corresponds to 7.5 percent of Austria’s total economic output.
“And if we do not reduce the enormous tax burden on labor, the level of botched work will continue to increase,” says Schneider.
Meanwhile, 65 percent of Austrians believe that many things are only affordable because of the botched work. Half of those surveyed also said that the state itself is to blame for the high tax burden if many people employ illegal workers.
Wasteful
“People feel that the tax burden is too high. 79 percent of those surveyed also believe that the state is too wasteful with tax money,” says Schneider.
What measures could curb botched work? “I have suggested that the tradesman’s bonus should be extended to household services, so that repairs with invoices are worthwhile,” says the economist. “If it’s worthwhile, fewer people will do it illegally. That would be an incentive-oriented measure that would work quite well.” In addition, companies that work illegally should be barred from public contracts for three to five years.
Compared to the EU-27 states plus Great Britain, Austria is doing well. “There is not as much botched work here as in southern and eastern Europe, because people see that the supply of goods and services works,” says Schneider. Most botched work is in Bulgaria and Croatia.” In Bulgaria, undeclared work accounts for 34.81 percent of value added, in Croatia it is 31.85 percent.
