In business circles, Austria is associated with reliability, respectability and stability. The level of wealth of Austrians provides prospects for business development, promoting services and products on the market. Accession to the EU has enabled the country to broaden its business ties and to focus less on Germany alone.

 

Registering a company in Austria is a solution which is suitable for a variety of foreign investors and for a range of commercial purposes. The country’s business legislation as well as its taxation system are in line with EU standards. Therefore, starting a business in Austria can and should be seen as a start in the market of “good old” Europe. And in order to make this step without difficulties and mistakes, please contact Lawrange attorney’s association – we can help.

 

 

Jurisdictional features

 

The rankings of European countries rank Austria in the top twenty (if not top ten) in terms of living standards. GDP per capita amounts to $50-60 thousand. In addition to economic factors, the favourable location – Austria is located in the heart of Europe – offers good business conditions. The Government is using instruments of stimulating the inflow of foreign investments, in particular – tax incentives.

 

For your information! The official language in the country is German – a common language, which increases comfort of doing business. The banking system can be considered a strong part of the economy. Austria has both local and international banking institutions. In addition to industry, the tourism sector plays a significant role in the economy.

 

 

Advantages of starting a company in Austria

 

Entrepreneurs in the country can count on the following prerequisites for business development:

  • high purchasing power of the locals, as Austria is one of the richest countries in the EU;
  • The location is very convenient for the company as it has access to a wide client base (the European Union market);
  • A favourable location – the business has access to a large customer base (the EU market); a solid public administration and well-balanced legislation to regulate the business;
  • political, economic and social stability;
  • opportunity for tax benefits and credits;
  • availability of human resources available for recruitment;
  • availability of an extensive network of double taxation treaties with countries worldwide.

 

Notice! To the list of advantages of Austria as a jurisdiction for setting up a business from 2022 should be added the possibility of registering a company fully online. In particular the corresponding notarial deeds and signatures of the founders will be certified digitally.

 

 

Starting a company in Austria: The available forms of doing business

 

The legislation of the country provides for the following legal forms of business:

  • Sole proprietorship (Einzelunternehmen; EPU);
  • General Partnership (Offene Gesellschaft, OG);
  • Limited Partnership (Kommanditgesellschaft, KG);
  • Silent partnership (Stille Gesellschaft, stGes);
  • Limited Liability Company (Gesellschaft mit beschränkter Haftung, GmbH);
  • joint stock company (Aktiengesellschaft, AG);
  • European company (Societas Europaea, SE);
  • private foundation (Privatstiftung);
  • Branch of a foreign company (Zweigniederlassung).

 

Notice! A non-independent branch is not treated as a separate legal entity. Obligations remain with the foreign company. A minimum share capital is not required, nor are shareholder meetings or the publication of balance sheets. However, separate accounting is required for the branch. Details of the foreign company’s certificate of incorporation must be entered in the Austrian Company Registry, translated into German if necessary. A German translation of the balance sheet of the foreign company must also be filed annually with the Commercial Court.

 

Below is an overview of common business legal forms!

 

 

Individual entrepreneur

This refers to a natural person who runs a business in his or her own name and for his or her own account. In Austria, the number of self-employed persons has reached 300,000, including self-employed persons, i.e. entrepreneurs without employees. It is, as in most other countries of the world, the most popular and widespread form of doing business.

 

Among the features of doing business as an Einzelunternehmen:

  • You need a residence permit to open a sole proprietorship in Austria;
  • The owner is responsible for all business and private assets;
  • The sole proprietorship must be insured by the Social Insurance Institution of Austria;
  • A license has to be obtained to engage in trade;
  • A sole proprietorship can employ employees under an employment contract.

 

Information! If the annual financial turnover of the self-employed exceeds 1 million Euro or two years in a row of 700 thousand Euro, then you are obliged to register in the Register of Companies (Firmenbuch). However, the entrepreneur has the right to register voluntarily in the Firmenbuch in case of any turnover.

 

 

Limited liability company (Gesellschaft mit beschränkter Haftung, GmbH)

For small and medium-sized enterprises it is the best form of business incorporation. The advantage is that the founders have no liability beyond their own contributions, the Gesellschaft mit beschränkter Haftung has its own legal personality. Such a legal entity, which has its own rights and obligations, can institute legal proceedings, and it can also take part in legal proceedings as a defendant.

 

Information! The registration of a business as a GmbH in Austria is governed by the corresponding law – Gesetz über Gesellschaften mit beschränkter Haftung (GmbH-Gesetz – GmbHG). Such companies may conduct any legal business, except insurance and reinsurance, banking and political activities.

 

You can find out more about the details of the establishment and management of a GmbH below.

 

 

Founders and name

A single founder as well as several partners (co-owners) may open a GmbH. Legal entities, both residents and non-residents are allowed as founders. In particular, a person not residing in Austria can become a founder.

 

Each founder has a share in the share capital. The size of the shares varies. Corporate rights, which are registered in the Companies Register, can only be transferred by means of a notarial deed.

 

Each company must have a unique name, which must contain a reference to the legal form (GmbH) at the end. The uniqueness of the name can be checked at the appropriate registry. The name must not: a) be offensive, b) contain forbidden words or phrases (e.g. Austria, Austrian, etc.), c) be misleading, d) be difficult to pronounce. When establishing a company it is possible to ask the Federal Economic Chamber of Austria for name recommendations.

 

 

Authorized capital

The standard minimum initial capital for a GmbH is 35,000 €. However, foreign companies are entitled to a preferential treatment – Gründungsprivilegierung. The minimum amount of the share capital is reduced to €10,000. At least €5,000 (50%) has to be deposited in an Austrian bank before the company registration documents can be submitted to the commercial court. After 10 years the remaining balance of the minimum share capital has to be paid in.

 

For information! The legal requirements are not only related to the total amount of the minimum initial capital (35,000 €). The minimum is also set for each shareholder and amounts to €7,000. For example, for a company with six founders, the minimum authorized capital requirement will be 42,000 € (not 35,000 €). The share capital may be paid in cash as well as in kind. At least half of the share capital must be paid in cash (into an account in any bank in the country). However, if the founders decide to take advantage of the Gründungsprivilegierung, the share capital cannot be paid in kind.

 

 

Personnel requirements

A company of this legal form needs at least one director (natural person), who may be a resident of Austria or any other country. If several managing directors are appointed to the company, they have to make decisions either jointly or in accordance with the articles of association.

 

Peculiarities of the status of the managing director:

  • Appointed by the decision of the founders or by court decision;
  • implements the management of a legal entity, represents the interests of the company in the state and other bodies, in interaction with the contractors;
  • management is performed on the basis of the instructions from the founders, which have to be fulfilled;
  • may be revoked by the founders at any time;

 

Some companies are required to form a supervisory board for management. However, this management body may also be formed voluntarily. The requirement for a supervisory board arises if at least one of the conditions is met:

  1. the share capital exceeds 70,000 €;
  2. the company has more than 50 founders;
  3. The company has more than 300 employees.

 

 

Joint-stock company (Aktiengesellschaft, AG)

Similar to the Gesetz über Gesellschaften mit beschränkter Haftung, the Austrian public limited company also has a legal personality. However, the founders’ contributions to the share capital represent shares (accordingly, the founders are shareholders). This legal form is more suitable for large companies than for small and medium-sized ones.

 

Information! The term Aktiengesellschaft is used for corporations, whose shares are listed on stock exchanges. The abbreviation “AG” should be added to the name of such a company. The Bundesgesetz über Aktiengesellschaften (Aktiengesetz – AktG), the federal law on joint-stock companies, governs the registration of a company in Austria in this form.

 

The minimum share capital of an AktG must be 70,000€. The full amount must be paid in before registration. The nominal value of the shares may be from 1€. Joint stock companies are subject to an annual requirement of submitting financial statements. Only large companies have to be audited.

 

Drafting and registration of the articles of association

The articles of association of Aktiengesellschaft are more complicated to draw up than the equivalent founding document for an Austrian limited liability company. The signature of the articles of association is certified by the notary. The notary directly certifies the signatures of the board members. The articles of association itself must contain the following information:

  1. name of the company;
  2. information on the activities of the company;
  3. address;
  4. information on the amount of the share capital, the nominal value of the shares (if any);
  5. Information on the composition of the Board of Directors.

 

Structure and management system of a joint stock company

When an AG is used as a form of business organization it is necessary to take into account the fact of tightened state control. Otherwise the company may lose its status. It is a question of control, above all, of the structure and management of the company.

 

Important! Austrian joint stock companies are required by law to have a two-tier management system consisting of a management board and a supervisory board.

 

The Management Board is a representative body of the company, consisting of one or more members, and is responsible for the settlement of operational issues. Board members are appointed for up to five years and may be reappointed. The management board must report to the supervisory board.

 

The supervisory board is a mandatory body in the structure of the AG and must have three or more members. The members of this body are appointed by the general meeting. The supervisory board’s functions include the appointment and dismissal of board members, preliminary approval of major transactions and approval of annual financial statements.

 

The general meeting is a management body to which every shareholder of a company belongs. The shareholders must meet at least once a year, within 8 months after the end of the financial year. At a general meeting shareholders decide on the distribution of profit and approve the Supervisory Board and the Management Board.

 

Information! Only the general meeting may approve a decrease or increase of share capital, merger with another company, liquidation, etc. However, at least 75% of the votes of the shareholders (qualified majority) must be obtained for such fundamental resolutions. Decisions of the shareholders’ meeting must be notarised.

 

 

A general society (Offene Gesellschaft, OG)

One form of partnership (partnership). Offene Gesellschaft (open or general partnership) can be formed by at least two persons. In this case the partners are fully liable for the company’s business obligations (all personal assets). The general partnership must register with the national registry of companies and obtain a trading licence in order to conduct business activities. A one-tier taxation system applies to such business entities, i.e. only the corporate income is taxed.

 

 

Limited Partnership (Kommanditgesellschaft, KG)

A form of partnership in which the liability of some of the partners is limited. In a KG at least one partner is the general partner, taking full responsibility for the obligations (debts) of the business. The other partners are liable only to the extent of their contributions. Partners with limited liability are excluded from the management of the company. Also, in this form of business conduct it is not possible to appoint an external manager. Only the general partner may take over the management of the company. As in the case of a general partnership, KG is subject to a single-tier taxation system.

 

 

Steps in incorporating a company in Austria

 

  1. Preparation.
    The articles of association and memorandum of association are prepared with the assistance of a lawyer and notarized. Issues with the name, registered office and managing director are also solved.
  2. Payment of the share capital.
    The share capital is deposited in an open bank account in accordance with the legal requirements according to the legal form of the business.
  3. Submission of documentation for the registration of the company.
    Application for entry of the legal entity into the Register of Companies is made to the Commercial Court.
  4. Obtaining a trading license.
    In order to obtain a trading licence, it is necessary to meet the requirements concerning qualifications and experience, present a certificate of cleanliness, etc.
  5. Registration with the Tax Office and other state authorities.
    We must obtain a VAT number. In addition, the company must register with the social security system.

 

 

Required set of documents for business registration in Austria

 

The key document for setting up a company is the Memorandum of Association. Often this document is drawn up in German by a notary. Sometimes it is also drawn up in two languages: German and English.

 

In order to open a company in Austria, it is necessary to fill in and submit a special application form to the commercial court, attaching the following documents:

  • A notarized memorandum of association;
  • Decision on the appointment of the management
  • Bank reference confirming the payment of share capital.

 

Important! In order to prepare the necessary documentation, employees of the Lawrange attorney’s association will need personal data on the founders of the company and the directors.

 

 

Taxes and accounting

 

If the company is resident in Austria, the worldwide income is taxed at 25%. The minimum corporate tax is 500 € + 20 % VAT. The amount of capital tax is 0.8 – 1%. For certain types of transactions a state duty is levied.

 

Companies registered in Austria have to submit annual reports to the tax authorities. Audit requirements are not imposed on everyone. In particular, for GmbH an audit is required if the company’s assets exceed the amount of about 5 million euros, during two years in a row the turnover is about 10 million euros, the company has more than 50 employees.

 

 

Cost and timing of incorporation

 

If you are interested in opening a company in Austria, we suggest sending a request for a quotation or a consultation. The cost of services will depend on the legal form you choose for the business, business activities and so on. The timeframe for documentation is from three weeks.

 

The basic set of services required to incorporate a company in Austria and their costs from the experts at Lawrange attorney’s association:

  • Document and company registration services – 3950 EUR
  • Registered (legal) address in Vienna and postal service for correspondence per year – 2750 EUR 
  • Fees (court, notary, duties, taxes) per 2 founders – 2500 EUR
  • Approvals from WKO – 800 EUR
  • Bank account opening for the share capital – 950 EUR
  • Local manager – resident of Austria, minimum wage and terms – individually on request
  • Procureur (optional) – on request

 

 

Conclusion

 

Setting up your own business in Austria is an investment that can be seen as one of the best opportunities for diversifying your assets and creating a solid platform in the ‘old Europe’ market. Lawrange offers and recommends a turnkey service whereby with our assistance you will obtain not only a registered company but also an account for it.

 

Upon request, we provide legal and accounting advice for your company while you are still in business. Our advice helps you to legally optimise your tax burden, build labour relations with your staff and interact comfortably with the regulatory authorities. Each of our services is aimed to help your business thrive.

 

 

FAQ

 

How long does it take to register a company in Austria?

On average this legal question is solved within one month.

 

Can a foreign person register a company in Austria?

Yes, a foreigner can own a business in Austria. A residence permit is not required for all types of businesses except for sole proprietorships.

 

Can I open a company in Austria without me being present?

Yes, from 2022 the registration procedure is available online.

 

 

 

 

 

 

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