Austria is a modern state in Central Europe, bordering 8 jurisdictions including countries such as the Czech Republic, Slovakia, Hungary, Slovenia, Italy, Liechtenstein, Switzerland and Germany. In 1955, the Austrians chose neutral status for their state, so Austria is part of the EU and the Schengen area, but avoids participation in military blocs.
Austria is one of the most prosperous countries in Europe today, where culture and art are combined with dynamic economic development. The favourable location and well-developed transport infrastructure provide Austrian businesses with easy access to the huge EU market. And the relatively lenient tax regime combined with additional optimisation opportunities. Among them: group taxation schemes and incentives for companies engaged in scientific research contribute to the country’s development as a business centre of Europe.
Starting a company in Austria is relatively easy for those with EU citizenship or an Austrian residence card. It is a little more difficult to start a business in this country for foreign entrepreneurs from outside the European Union. But active assistance in the incorporation process by our experienced corporate attorneys will make this task much easier for you.
Foreign entrepreneurs choose this picturesque country as the place to register their company to take advantage of unique business advantages. These are just some of the most interesting opportunities that attract foreign businesses to Austria:
High economic stability combined with the state’s impeccable business reputation;
The purchasing power of Austrians, citizens of one of the richest countries in the Schengen area, is no less high;
A favourable location on the map, giving companies registered in Austria access to a huge external market;
A reliable and convenient banking system;
Loyal taxation system, which provides a wide range of tools to optimise the company’s taxes;
Highly skilled and available labour force;
Relatively simple company registration procedure in Austria.
Those entrepreneurs who plan to start a company to operate in Austria should know that the Austrian authorities divide all existing business activities into 3 broad categories:
Free enterprise is an activity that does not require special professional skills or education from the entrepreneur and his employees. For example, Austrians consider trading and advertising agencies to be such activities. To obtain a free enterprise permit, a businessman only needs to be over 18 years of age, have a police certificate of no criminal record and submit an application to the local magistrate.
Regulated entrepreneurship. It assumes that the businessman and his employees have the necessary education or professional qualifications for the work. In order to obtain a permit for this type of activity, documentary proof of your competence as a professional (certified copy of a diploma, certificate of completion of professional courses, etc.) is sent to the magistrate together with the application.
Licensed business is an activity where incompetence on the part of the businessman or his employees could lead to serious consequences. For example, causing harm to health or destruction.
For example, electrical installation work is a licensable business activity that requires additional authorisation from the competent authorities of the state. In Austria, it is not permitted to install electrical wiring in commercial and residential premises without a licence, and violations of the prohibition lead to serious legal consequences.
Corporate law provides for many convenient legal forms for organising a business. Our company’s specialists recommend that you carefully study the most popular options in order to choose the most suitable type of company for your project.
A joint stock or public company is a convenient option for registering an offshore company. The liability of shareholders in such a business structure is limited to the actual value of the shares they own.
The minimum declared share capital of an AG is €70,000. At least 25% of this amount must be paid before the application for registration is submitted. Shares in public companies can be freely bought and sold on the securities market.
This type of company can be established by one or more shareholders — individuals or companies. If the AG is owned by a single shareholder, the name must appear in the Commercial Register.
Austrian corporate law requires that a shareholding company must have a supervisory board of at least three members. It is considered to be more complicated to open an AG in Austria than a simple limited liability company, as the application for registration of such a company must be signed not only by the shareholders, but also by the members of the board of directors and the members of the supervisory board.
Before filing for registration with the Commercial Register, business owners must appoint a board of directors, which can only include people and a supervisory board.
The members of the Management Board and the Supervisory Board are appointed for a limited period not exceeding 5 years. If necessary, they may be elected or reappointed.
The third, but first in importance, AG management body is the General Shareholders’ Meeting, which, according to current regulations, must be held at least once a year (ordinary) or more frequently (extraordinary) if the state of affairs requires prompt intervention by the shareholders. The General Meeting of Shareholders is authorised to appoint and remove directors and members of the Supervisory Board, as well as to approve the candidature of the independent auditor and the results of the audit preceding the AG’s annual accounts.
At other times, in contrast to the flexible company and the GmbH, the shareholders have no influence whatsoever on the management board’s decisions related to the commercial activities of the shareholding company.
Austrian AGs submit audited annual accounts and prepare a separate management report. The annual report must be prepared, audited by an auditor, approved by the AGM and submitted to the Austrian Commercial Register within 9 months after the end of the reporting period.
The private limited liability company is extremely popular with foreign investors in Austria. A GmbH, like a joint-stock company, allows the liability of the members for the company’s debt obligations to be limited only to the amount of their investment in the founding capital.
The operation of a limited liability company in Austria is not as strictly regulated as a commercial AG. The minimum amount of share capital for such a company is only €10,000, and for registration it is sufficient to pay half of this amount by depositing the money in an Austrian bank account. The paid-in share capital, once officially registered, can be used for the commercial activities of the GmbH.
To register such a company in Austria, one founder is sufficient. The Austrians call such business structures Ein-Personen-GmbH, i.e. a limited liability company with one member. In a limited liability company, the sole founder may also solely manage his business as a director.
There are no restrictions in Austria related to the tax or state affiliation of the shareholders of the GmbH.
Austrian GmbHs can be managed by a single director. The country’s corporate laws require that the position of managing director of a limited liability company be held only by people and not by legal entities. The director of an Austrian GmbH can be a shareholder or a hired manager with absolutely any citizenship and tax residence.
Austrian-registered limited liability companies are suitable for most types of manufacturing, trading or service activities. A GmbH is not suitable only if you plan to open a pharmacy, an investment fund, a political organisation, a mortgage bank or an insurance company.
In 2024, a new type of business organisation – the flexible company – will be available for registration in Austria. FlexKapG successfully combines the qualities of a limited liability company and a joint-stock company and can be transformed into a GmbH or AG at the decision of the founders.
It is similar to a standard limited liability company in a significant number of respects. The registration of a flexible company also requires one founder, with a minimum authorised capital of €10,000. At least half of this amount is paid before the application is submitted to the Registrar. As in a GmbH, only a natural person is appointed to the position of managing director in FlexKapG.
What are the differences in a flexible company? They relate to shares and equity:
The minimum shareholding of a shareholder in the share capital of a company is only €1;
Shares in such a company can be transferred on the basis of an internal company document drawn up by a proxy or a notary, rather than a notarised deed of transfer as in the same GmbH;
In order to attract additional investment or incentivise its employees, a flexible company may issue additional shares for an amount not exceeding 25% of the share capital.
The new shares do not give their holders voting rights in the company, but they are entitled to attend the Shareholders’ Council and can veto certain corporate decisions. In addition, FlexKapG’s new shareholders will be the first to be offered controlling shares when the founders sell them for any reason.
A European company is a legal entity subject to the same rules of limitation of liability of founders as in AG. But unlike a joint stock company, a European company is usually registered by 2 founders — legal entities with offices in different EU or EEA countries.
An exception to this rule would be the registration of a European company in Austria by a single founder who is himself also an SE, acting in relation to the newly established business structure as a parent company.
Establishing a European company will be a significantly more complex and costly process than registering a joint stock company or a limited liability company. Therefore, SEs are more often registered by existing European companies that already own a business in Austria or are planning to acquire a business or shares in other Austrian companies.
In Austria, an open or general partnership occurs when at least two natural or legal persons cooperate and act as one organisation. In the OG, all partners are jointly and fully liable for the results of the organisation.
To establish an Austrian general partnership, the founders only need to obtain a trade licence and registration certificates from the Commercial Register.
Once officially registered, an Austrian OG is considered a legal entity, although it differs in a number of respects from the previously discussed corporate forms. In particular, partnerships are not subject to taxation. The profits are freely distributed among the partners, and they privately report and pay income tax at their tax residence.
Each OG member may participate in the management and representation of the partnership. However, this is not a prerequisite for participation in a general partnership. Some founders prefer the services of hired directors.
The process of setting up an Austrian company of this type is virtually the same as that of a general partnership. The distinguishing feature of a KG is that at least one founder in the organisation must be the General Partner, taking full responsibility for the management of the company, its obligations and rights. The other partners are limited partners, as they only risk their investment in the limited partnership.
All other formal requirements for KG are also no different from those for a general partnership.
This corporate structure is very similar to the Austrian limited liability partnership, where only one partner takes full responsibility for the company’s debts. The main difference between stGes is that a silent partnership in principle does not imply any responsibility or management authority for the silent partners, while in KG they can participate in decision-making under personal responsibility.
Austrian tax law differs significantly from the laws governing taxation in neighbouring countries. Corporate structures such as GmbHs or AGs are subject to unlimited taxation on all their income (both domestic and foreign) if their registered office or place of management is in Austria.
Each company registered in the Commercial Register can request a tax number, as well as a VAT identification number, either on its own or through its solicitor.
The current effective corporate tax rate in this country is 23 per cent. A two-tier taxation is applied to corporations. This corporate tax rate applies to corporate profits regardless of whether the profits are distributed to shareholders or retained by the company.
At the shareholder level, distributed profits are subject to income tax at a rate of 23% for shareholders of companies and 27.5% for other recipients.
In Austria there is such a concept as nominal tax. This is when at the beginning of the accounting period a company pays a minimum tax at a fixed rate, which at the end of the financial year is deducted from the accrued amount of corporate tax. This means that even loss-making commercial structures are obliged to pay a minimum amount to the state treasury, which can then be deducted from the corporate tax when the businessman’s business goes up.
For a publicly traded company, this amount is €875 for each full quarter of the financial year.
For those GmbHs registered before 30 June 2013, the minimum corporate tax for each full quarter of the accounting period is €437.50. Newer Austrian limited liability companies pay the minimum corporate tax at the rate of:
€125 euros for each quarter during the first 5 years of its existence;
€250 per quarter for the next 5 years and then at the standard quarterly rate of €437.50 that was quoted earlier.
The current VAT rate in Austria is 20%. As in other European countries, this tax is charged on certain types of goods and services at a reduced rate of 10-13% or not at all.
At the municipal level, Austrian entrepreneurs pay a property tax calculated by local authorities according to a complex formula taking into account the type, purpose and location of the real estate. The national average is around 1 per cent. The purchase of real estate by companies is also subject to a tax of up to 3.5% of the purchase price.
To find out more about all the fiscal payments your business may face in Austria, as well as legal methods of tax optimisation, contact Imperial & Legal’s advisors.
The format of a short article will not allow for a detailed account of all the intricacies accompanying the opening of a company in Austria. Even an experienced businessman is better to enlist the support of experienced professionals before starting to register an Austrian company.
We will explain how our employees help entrepreneurs to launch their business in Austria using the example of the incorporation of a GmbH — a limited liability company.
At this stage, you prepare the following documents and information in close co-operation with our experts:
Notarised copies of passports of all founders and directors;
Documentary evidence of the place of residence of the founders and directors;
The company’s registered office is in Austria;
A list of suggested names for the future company;
List of planned areas of activity of the GmbH;
Confirmation of the legal origin of the funds that will be used to pay for the authorised capital of the future company.
We are ready to provide you with several options of inexpensive offices that you can rent as a legal address in Austria. Imperial & Legal consultants will check the name of your future company for compatibility in the Commercial Register.
As early as the preparation stage, it is advisable to hold a foundation meeting, draw up and sign a memorandum and articles of association. Our involvement will ensure that all your statutory documents are drawn up in German and in full compliance with Austrian standards.
The next step is for our agents to schedule a meeting with an Austrian notary, at which the director and founders of the future company must be present. If the GmbH is opened remotely, the interests of the shareholders can be officially represented by our employee on the basis of a power of attorney.
The verification and notarisation of the signed incorporation documents is essentially the moment of establishing your Austrian company.
In materials devoted to opening a company in Austria, it is often written that not only a citizen, but also a foreigner can register a company in this country, but it will be better for everyone if this foreigner has the status of an Austrian resident.
What does this mean in practice? Financial institutions in Austria are renowned for their reliability and… selective approach to potential customers.
To ensure that the company registration process is not cut short 2 steps before its completion, our specialists will help at least one foreign founder of a GmbH to obtain a residence permit in Austria. For this purpose, it is necessary to formalise:
Red-white-and-red card;
Blue resettlement card;
EU or business visa.
If you do not have time to obtain a long-term Austrian visa, another solution may be to appoint an Austrian resident as a nominal founder of the future company.
When the bank in Austria has checked your documents and made a favourable decision, the authorised capital is deposited in a special account. According to the law, to open a limited liability company in Austria, half of the declared amount of the authorised capital is sufficient. We would like to remind you that its minimum amount for a GmbH is 10,000 euros.
Our goal at this stage is not only to deposit the required amount into a special bank account, but also to obtain the relevant certificate from the Austrian bank.
As you have been actively assisted in the previous 4 steps by our team of experienced corporate lawyers, it will take government officials no more than 10 working days to register your company.
Your company and its founders will be entered into the Austrian Commercial Register. How open is the information placed there? It is known that, for a fee, the country’s authorities provide interested parties with access to information from the official company register.
We have compiled a small table for your convenience:
It usually takes about 5 weeks for a foreign entrepreneur to start a company in Austria.
At the same time, state registration alone will not be sufficient for the successful operation of an Austrian company. You will need to obtain a commercial licence (without which you cannot carry out trading activities). Tax registration is also required, as well as registration with the official social security authorities if you plan to operate from Austria and employ local staff.
Imperial & Legal’s specialists have been successfully helping enterprising foreigners to incorporate their businesses in the UK and EU countries for many years. The accumulated experience combined with our company approach to work, when an individual solution is selected for each client, allows us to assert that with legal support of our specialists you will spend exactly as much time on company registration in Austria as is required by law!
A limited liability company is not bound by as many formalities as a joint stock company in the process of incorporation and carrying on business activities:
SMEs run through a GmbH generally do not have a supervisory board. The company is therefore managed more quickly;
In the case of small GmbHs, there is generally no requirement to audit the annual financial statements (unless the company is required to form a supervisory board). Moreover, small companies of this type are not required to file detailed annual financial statements with the Commercial Register to report, they only need to provide a balance sheet;
A limited liability company can be managed by one director who is also the sole shareholder of the company. A joint stock company, on the other hand, will require 4 different officers to register and operate: at least three members of the supervisory board and one director.
GmbH & Co KG is a combination of partnership and company in which the corporate component — GmbH acts as general partner, allowing the shareholders to act as limited partners.
As a result, the investor or investors generally have only limited liability to creditors of the partnership, both as shareholders of the general partner of the GmbH and as full limited partners.
GmbH & Co KG are used to optimise taxes and to facilitate the allocation of profits and losses between the parent company and its subsidiaries.
Once an Austrian company has been incorporated, several tasks must be dealt with promptly:
Submit an application for tax registration;
Register as a VAT payer (relevant for companies planning to sell their goods and services in the EU);
Issue share certificates to the shareholders of the company;
Register employees for social security (if you have an existing office in Austria).
These tasks are successfully solved with the help of our company’s consultants, which is why many Austrian businessmen continue to cooperate with us even after they receive their company registration certificate.
Austria attaches great importance to the inflow of foreign investment into the national economy and therefore provides tax incentives to foreign businesses through various instruments. Let us consider the most popular of them.
The Austrian authorities give two or more business entities the possibility to form a tax group in order to reduce their tax base.
In addition to officially registered Austrian companies with foreign capital participation, wholly foreign companies can also be included in a tax group. However, a precondition for the participation of a foreign business entity in the group is that the parent company abroad must directly or indirectly own more than 50 per cent of the shares of its Austrian subsidiary.
In calculating the tax base of a tax group, the profits and losses of the local group of companies as well as the losses of the foreign subsidiary are taken into account. This method significantly reduces the total amount for calculating the corporate tax of the entire group.
Austrian companies that have received awards for research and technical development are eligible for tax credits. Austria’s R&D tax credit for companies was originally 12 per cent, but was revised to 14 per cent in 2018. This unique opportunity is also enjoyed by those companies that engage in such work on a contractual basis.
A double taxation agreement has been signed with more than 90 countries to ensure that no foreign capital companies registered in the country will bear the burden of double taxation.
You can use this feature in one of two available ways:
With the “benefit at source” method. You can opt for the benefit at source by submitting the relevant receipts for payment to the Austrian tax office;
By way of a tax refund. If your company has already paid tax twice — at the place of registration and at the place where the income arises — you can apply for a refund.
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