Personnel provisions according to UGB and tax law

Alongside liabilities provisions are a significant item on the liabilities side of the balance sheet and thus a central component of annual financial statements in accordance with the Austrian Commercial Code (UGB). There are many reasons for creating provisions and accountants are confronted with a number of questions. In addition to differing corporate and tax law standards other areas of law and disciplines (e.g. labour and social law civil law public law finance and actuarial mathematics as well as corporate accounting and auditing) must also be taken into account in the area of provisions. The accounting of personnel provisions in particular is therefore a specialist area that cuts across various disciplines. In addition to severance payments pension provisions and tax provisions which must be reported separately the balance sheet structure pursuant to Section 224 of the Austrian Annual Accounting Act (UGB) provides for a fourth item under provisions which summarises a large number of different provisions as 'other provisions' whereby the last item also includes various obligations towards employees which is explained in detail in this paper.