In brief: In everyday language, “embezzlement” or “misappropriation” is often used as a catch-all term when someone uses another person’s money or company assets for an unauthorised purpose. Legally, however, the conduct may constitute misappropriation (§ 133 StGB), breach of trust (§ 153 StGB) or fraud (§ 146 StGB). The decisive question is whether entrusted property was appropriated, an authority to deal with another person’s assets was knowingly abused, or the victim was induced by deception to make a disposition causing financial loss.
The correct legal classification is more than a question of terminology. It determines which elements of the offence must be proved, which defence arguments may be available and which steps a company or an accused person should take.
Key points at a glance
- Misappropriation: Property entrusted to a person is appropriated for that person or a third party with the intent to obtain an unlawful benefit.
- Breach of trust: A person knowingly abuses their authority to dispose of another person’s assets or to bind another person and thereby causes financial loss.
- Fraud: Deception causes the victim to perform, tolerate or omit an act that results in financial loss.
- For all three offences, the applicable penalty depends materially on the value of the property or the amount of the loss; where the amount exceeds EUR 300,000, the sentence may be up to ten years’ imprisonment.
- Active repentance may remove criminal liability under the strict requirements of § 167 StGB. The timing of full compensation is critical.
- Why is breach of trust often described as “embezzlement”?
In everyday language, “embezzlement” is often used for any unauthorised use of another person’s money—for example, where a managing director uses company funds for private purposes or an authorised person withdraws money from a company account. Under Austrian criminal law, however, such conduct may often constitute breach of trust rather than misappropriation.
The distinction primarily depends on the legal position in which the person acted. If a person received property for safekeeping or for a specific purpose and later appropriates it, this points to misappropriation. If, by contrast, the person is entitled to dispose of assets on behalf of another and abuses that authority, breach of trust may be the relevant offence.
What is the difference between misappropriation, breach of trust and fraud?
| Offence | Decisive distinguishing feature |
| Misappropriation (§ 133 StGB) | The property was initially entrusted to the person. Its later appropriation breaches the duty to handle the property only as agreed or to return it. |
| Breach of trust (§ 153 StGB) | The person has legal authority to dispose of another person’s assets or to bind another person. That authority is knowingly abused in an unjustifiable manner. |
| Fraud (§ 146 StGB) | The victim is induced by deception to make a disposition of assets. The deception is the reason why money or other property is handed over. |
Rule of thumb: Misappropriation focuses on entrusted property, breach of trust on abused decision-making authority, and fraud on a disposition caused by deception.
What constitutes misappropriation under § 133 StGB?
Misappropriation occurs where a person appropriates property entrusted to them for themselves or a third party with the intention of obtaining an unlawful benefit for themselves or that third party. In simplified terms, “entrusted” means that the person received the property subject to an obligation to use it only in a particular way, safeguard it or return it.
The offence is not limited to tangible objects. Intangible assets with economic value may also constitute property within the meaning of § 133 StGB. Whether misappropriation has in fact occurred in a particular case depends especially on the specific agreement, the person’s power of disposal and the point at which the intention to appropriate arose.
Typical examples of misappropriation
- An employee receives cash with instructions to deposit it into the company account but keeps the money.
- Money held on trust is used for private purposes contrary to the terms of the trust arrangement.
- Entrusted goods are sold and the proceeds are retained for private use.
The timing is important when distinguishing misappropriation from fraud. If the property is obtained by deception and the person intended from the outset not to use or return it as agreed, the conduct may constitute fraud. If the intention to appropriate arises only after the property was initially received in good faith, misappropriation is more likely.
When does conduct constitute breach of trust under § 153 StGB?
Breach of trust requires a person knowingly to abuse their authority to dispose of another person’s assets or to bind another person, thereby causing financial loss. An abuse exists where the person acts in an unjustifiable manner contrary to rules designed to protect the assets of the beneficial owner.
The central distinction from misappropriation is that the person is, in principle, authorised to make decisions concerning the other person’s assets, whether by legal transaction or by virtue of their corporate office. The conduct becomes criminally relevant where that authority is knowingly exercised outside the limits intended to protect those assets.
Typical examples of breach of trust in a company
- A managing director arranges private payments from the company account even though they are not in the company’s interests and have no legal basis.
- An authorised signatory uses their signing or disposal authority to transfer company assets for their own benefit.
- An authorised person withdraws funds from another person’s account and uses them contrary to the account holder’s binding instructions.
Not every economically disadvantageous or risky decision amounts to breach of trust. The offence requires, in particular, a legally relevant abuse of authority, knowledge and financial loss. In the context of business decisions, it is therefore necessary to examine the actual scope of the person’s decision-making powers and discretion.
When does conduct constitute fraud under § 146 StGB?
Fraud occurs where a person, acting with the intent to obtain an unlawful benefit, deceives another person about facts and thereby induces that person to perform, tolerate or omit an act that causes financial loss to that person or a third party. The deceived person makes the disposition because they are acting under a false understanding of the facts.
Typical examples of fraud
- False invoices are sent for services that were not provided.
- A non-existent investment opportunity is presented in order to obtain payments from investors.
- A vehicle or another asset is obtained by deception even though it was clear from the outset that the agreed return or payment would not be made.
Complex cases may involve several acts requiring separate assessment. For each transaction, it must be analysed whether property was entrusted, an authority was abused or a disposition of assets was caused by deception.
What penalties apply to misappropriation, breach of trust and fraud?
The basic forms of misappropriation, breach of trust and fraud are generally punishable by imprisonment for up to six months or a fine of up to 360 daily rates. The applicable range increases with the value of the misappropriated property or the amount of the loss:
- more than EUR 5,000: imprisonment for up to three years;
- more than EUR 300,000: imprisonment from one to ten years.
Fraud may also be subject to specific aggravated forms under § 147 StGB, for example where certain false or falsified evidence is used. The applicable penalty must therefore always be assessed on the basis of the full circumstances of the case.
Further reading: Misappropriation: penalties, limitation periods and active repentance—what matters now.
When do misappropriation, breach of trust and fraud become time-barred?
The limitation period generally depends on the maximum statutory penalty. For a basic offence carrying no more than six months’ imprisonment, the period is generally one year; where the maximum penalty is three years, it is five years; and where the maximum penalty is ten years, it is ten years. The commencement, running and possible extension of the period may depend on additional circumstances in the individual case.
A reliable limitation analysis therefore requires precise determination of the date of the offence, the amount of the loss, the applicable aggravated form and any procedural steps relevant to limitation.
Is active repentance available for misappropriation, breach of trust and fraud?
Yes. Misappropriation, breach of trust and fraud are offences for which active repentance under § 167 StGB may remove criminal liability. The entire loss caused by the offence must be compensated in full and in time; under certain conditions, a binding agreement providing for full compensation may also be sufficient.
The requirements must be satisfied before the authorities become aware of the person’s culpability. Repayment after a criminal complaint has already been filed or after the authorities have obtained such knowledge will often be too late. Any payment or agreement should therefore be legally reviewed and documented in advance.
Active repentance must be distinguished from diversion. Diversion may terminate criminal proceedings without a conviction where the statutory requirements are met, but it presupposes pending criminal proceedings and further conditions.
Further information: Diversion: no conviction—termination of criminal proceedings without an entry in the criminal record.
What should a company do if it suspects misappropriation?
Where there is a suspicion that employees, corporate officers or business partners have used company assets for an unauthorised purpose, hasty action can create additional risks. A structured internal investigation helps establish the facts, preserve evidence and avoid incorrect decisions.
- Preserve evidence: Retain accounting records, payment approvals, emails, access logs and relevant contracts in their original form.
- Restrict access: Review existing permissions on a risk-based basis without deleting data or altering the facts under investigation.
- Define the investigation mandate: Clearly identify the relevant period, transactions, responsibilities and reporting lines.
- Conduct the legal assessment: Misappropriation, breach of trust and fraud have different legal requirements; the colloquial label is not decisive.
- Coordinate any criminal complaint and compensation: Once prosecution of an offence prosecuted ex officio has commenced, simply withdrawing the complaint cannot terminate it. At the same time, the timing and form of compensation may be decisive for active repentance.
Relevant service: White-collar crime and internal investigations at PAULITSCH LAW.
What should an accused person consider?
A person confronted with an allegation of misappropriation, breach of trust or fraud should not give an unprepared account of the facts to investigators, employers or business partners. Statements made at an early stage may shape the further course of the proceedings.
- Do not make an unprepared statement: Before questioning, obtain access to the case file and review the defence strategy.
- Preserve documents: Retain contracts, instructions, powers of attorney, approvals and communications in an organised manner; do not delete or alter data.
- Document authority and procedures: In breach-of-trust cases in particular, it is essential to establish the legal and internal scope of the person’s actual decision-making powers.
- Coordinate compensation with legal counsel: A payment may be appropriate, but it must be considered in light of active repentance, civil claims and the defence position.
Legal assistance: Criminal defence in Vienna.
Frequently asked questions about misappropriation and breach of trust
Is misappropriation the same as breach of trust?
No. Misappropriation concerns the appropriation of entrusted property. Breach of trust concerns the knowing abuse of a legally conferred authority over another person’s assets, causing financial loss.
Is every private use of company funds misappropriation?
No. Depending on the person’s position and power of disposal, the conduct may in particular constitute breach of trust. In the case of a managing director or authorised signatory, the focus is often on the abuse of conferred authority over company assets. The precise classification depends on the individual case.
What is the difference between misappropriation and fraud?
In misappropriation, the property was initially entrusted and was appropriated only later. In fraud, the victim is induced by deception to hand over property or make another disposition causing financial loss.
What is the penalty for misappropriation in Austria?
The basic offence is punishable by imprisonment for up to six months or a fine of up to 360 daily rates. If the value exceeds EUR 5,000, the penalty is up to three years; if it exceeds EUR 300,000, the penalty is one to ten years’ imprisonment.
Can repayment remove criminal liability?
Subject to the requirements for active repentance under § 167 StGB, full and timely compensation may remove criminal liability. A key issue is whether the authorities have already become aware of the person’s culpability.
What should a company do if an employee is suspected of misappropriation?
The company should preserve evidence, review access rights, conduct a structured internal investigation and coordinate the legal classification and next steps before filing a criminal complaint.
Conclusion: The correct classification determines the strategy
Misappropriation, breach of trust and fraud are often conflated in everyday language but differ fundamentally under criminal law. The key questions are: Was property entrusted? Did the person have authority over another person’s assets? Or was a disposition of assets induced by deception?
For companies, controlled fact-finding and timely preservation of evidence are essential. Accused persons should coordinate statements, compensation and further steps with specialist criminal defence counsel at an early stage. PAULITSCH LAW advises companies, corporate officers, employees and injured parties in suspected cases and in investigative and criminal proceedings.
Legal basis and currency
Legal basis: §§ 133, 146, 147, 153 and 167 StGB and § 57 StGB. Current as at 6 August 2026. This article provides general guidance and does not replace an assessment of the individual case.
