Business Entities in Austria:
Incorp International have successfully assisted Clients with establishing the best Austrian corporate structure to suit their business interest. The most common legal corporate structure preferred by many entrepreneurs is the setup of a limited liability company (LLC) in Austria. A public limited company (PLC) is also a very interesting alternative option for investors who are able to afford the €70,000 required for share capital. Foreign companies are also permitted to incorporate branches or representative offices.
The Austria limited liability company (GmbH)
1. The Austrian LLC (locally known as GmbH) is the type of business entity most commonly chosen by entrepreneurs looking to setup a business in Austria. One director and shareholder must be appointed, both allowed to be any nationality and residency. Still, the company must have a legal registered address located in Austria for registration purposes with the Commercial Registrar of their city of incorporation;
2. The minimum share capital required to complete the incorporation process has been reduced to €10,000 in July 2014 for startups, of which have of the amount must be paid-up in cash prior to the commencement of incorporation. However, standard share capital requirements of €35,000 still apply from the 11th year after Austria company setup;
3. Austrian companies are subject to value added tax registration if their annual turnover is expected to be above €30,000.
The Austria public limited company (AG)
1. The Austrian PLC, commonly known as corporation (AG) is a legal entity recommended when entrepreneurs intend to raise important amounts of capital and/or list the company on the Vienna Stock Exchange market. The AG requires a minimum share capital of €70,000 for incorporation and at least 25% of the capital must be paid-up before Austria business setup
2. At least one shareholder and one director must be appointed, whom can be of any nationality and need not to be resident of Austria. The AG must also appoint a statutory auditor. Like an Austrian LLC an Austrian Public Limited Company must submit financial statements with the Austrian Tax Administration.
The Austria branch office (Niederlassung)
Foreign companies are allowed to establish branches in Austria. The branch can be 100% foreign owned. Foreign companies established outside the European Economic Area (EEA) must appoint an individual representative, who must be resident in Austria. This entity is also permitted to open and maintain a corporate bank account in Austria.
The Austria representative office (Representanz)
The Austrian representative office of a foreign entity is allowed to engage in market research and promotion of the parent company business’ products and services. Just like the branch office, this entity is required to appoint a resident representative in Austria if the parent company is located outside the EEA.
Austria, officially the Republic of Austria is a federal republic and a landlocked country of over 8.7 million people in Central Europe. It is bordered by the Czech Republic and Germany to the north, Hungary and Slovakia to the east, Slovenia and Italy to the south, and Switzerland and Liechtenstein to the west. The territory of Austria covers 83,879 km2. Austria is one of the richest countries in the world, with a nominal per capita GDP of $43,724. The country has developed a high standard of living and in 2014 was ranked 21st in the world for its Human Development Index.
The official and spoken language of Austria is Austrian German.
Austria attracts a wide range of foreign investors, especially in the service sector. This is due to the fact that Austria’s economy is one of the most advanced, very suitable for starting companies. The main partners of trading are Germany and Italy. The economic infrastructure in Austria is based on the well-developed industry, the sector of banking, as well as transportation, services and commerce.
Business Entities and Formation of Company
The individuals who can afford to bring a contribution to the capital of an entity and who desire to have their personal assets protected in case of bankruptcy can incorporate an Austrian company.
Joint Stock Company
Austrian joint stock company (Aktiengesellschaft) is a company type designed for large businesses. A minimum share capital of EUR 70,000 is necessary to start this type of company. One shareholder is required to start this type of business with his liability limited by his/her contribution to the capital. The capital is divided into shares which can be offered to the public.
The daily decisions are taken by the management board, appointed by the supervisory board which is elected by the highest instance in an AG, the general meeting of the shareholders.
The most popular type of business in Austria is GmbH (Gesellschaft mit beschränkter Haftung) which can be established by limited liability members with a minimum share capital of EUR 35,000, from which at least EUR 17,500 must be deposited at registration. A general rule states that EUR 7,000 is the minimum contribution of each shareholder of the Austrian GmbH. The shares of an Austrian GmbH cannot be freely traded to the public. The management of this type of business is assured by a director appointed by the highest instance in a GmbH, the general meeting of the shareholders.
Usually the individuals (and sometimes some corporate bodies) willing to share the same liabilities and who cannot provide a minimum share capital can open a partnership which can be general, limited, civil or silent.
The most popular form of Austrian partnership is the general partnership, formed by two or more individuals or corporate bodies united under the same name (usually the partners’ name) with the same economic objectives. The individuals who decide to incorporate a general partnership in Austria must be aware that all the members have full liabilities for the company’s debts and have equal rights to manage the partnership. A major advantage is that no minimum contribution must be delivered by its members at the time of incorporation.
Limited Liability Partnership
If there are at least two types of partners from which one has full liability on the entity’s debts and can take the major business decisions, while the other one has his liabilities limited by the contribution brought to the capital and has no decisional power, they together can incorporate limited liability partnership in Austria.
The third form of partnership which can be incorporated in Austria is the silent partnership formed only by silent partners and which is not considered a legal entity.
Civil Law Partnership
A type of partnership for professionals this time is the Austrian civil law partnership which is formed by members who combine their knowledge in order to achieve certain economic objectives. A certification of their knowledge owned by each individual must be registered before being part of this type of partnership. It is reorganized as Austrian general partnership, if the annual turnover in one year is above EUR 600,000 EUR or in two consecutive years is above EUR 400,000 EUR.
If a foreign entrepreneur is willing to open a business here, he/she can opt for opening a branch (Zweigniederlassung) which is not considered a legal entity, but extensions of their parent companies that will provide the capital, all their assets and the management. One of the particularities of this type of business is that the name of a branch is the same as the name of its parent company, followed by the termination Zweigniederlassung Osterreich (branch in Austria) or Zweigniederlassung Wien (branch Vienna).
An Austrian representative office can be incorporated in Austria by the foreign companies, but just like the branches, is not considered a legal entity. Moreover a representative office cannot perform any commercial activities at all and it is established more in order to explore the Austrian market and see the opportunities offered by it.
Company Formation of Austria
A limited company can be founded by one person with a minimum capital of €35,000 of which only €17,500 needs to be paid in full. There is no requirement for the directors or shareholders to be Austrian residents. The GmbH is the most convenient form of organization owing to the relative flexibility it offers, most foreign owned businesses in Austria are operating as a GmbH. The Gesellschaft mit beschränkter Haftung (GmbH) is a separate legal entity that limits the responsibility of the shareholders to the amount of share capital.
Documents & Information
To begin incorporation of your GmbH Company we need following documents:
- Check-list you will receive from our consultant
- Passport copy of the director
- Passport copy of shareholder(s)
Incorporating your GMBH
First you should provide us with the chosen company name and desired corporate structure, including shareholders and directors. The required documents must be sent, including passport copies, check list with contact information and details about future company’s business activities. We then prepare The Articles of Association (Gesellschaftsvertrag). The minimum share capital of €17,500 needs to be deposited to the appropriate bank.
The name of the company must end with GmbH to denote limited liability, sometimes it is required to provide a special expert opinion on the permissibility of a company’s name issued by the chamber of commerce to the commercial register, especially if company’s name includes a reference to Austria.
- Directors may be of any nationality and may reside anywhere.
- Only one director is required. Although there may be several.
- Directors can be residents or non-resident.
- Corporate directors are allowed.
- Nominee directors are allowed. Incorp International will provide this service.
- Shareholders may be of any nationality and may reside anywhere
- Only one shareholder is required. He can be the same person as the director
- Shareholders can be residents or non-resident
- Corporate shareholders are allowed
All Austrian GmbH’s must have a legal address. It’s the address, to which the company receives its mail. The registered office must be a physical address in Austria. We provide such services.
Share Capital Requirements
The minimum share capital of a GmbH is €35,000 but only €17,500 of the total share capital must be paid in before registration.
There are no share certificates in an Austrian company, so a valid transfer of the ownership of shares is only possible by signing documents’ at notaries.
Advantages of Company Formation in Austria
- An Austrian company is legally exempt from dividends tax received from a foreign subsidiary. Austria levies no withholding tax on dividends paid to the foreign parent.
- As a member of the European Union (EU), Austria is governed by the provisions of the EU’s Parent-Subsidiary directive. Thus, an Austrian holding company which holds at least 25% of the shares of an EU subsidiary can receive dividends from the subsidiary free of withholding tax.
- An Austrian company can access a large network of double taxation treaties which Austria has signed with major trading nations around the world.
- A minimum of one shareholder and one director is required to form a company in Austria. The shareholder and director can be the same person, and does not need to be Austrian resident. Corporate shareholders are allowed to form a company in Austria.
Disadvantages of Company Formation in Austria
- A GmbH pays corporate profits tax of 25% on all income. In addition, financial statements must be submitted annually to the Austrian Chamber of Commerce. Our company will assist clients to complete this statutory obligation efficiently and effectively.
- Austrian company formation requires a minimum share capital of 35,000 EUR, of which at least half (17,500 EUR) must be paid in.
- A register containing information about shareholders and directors is available for public viewing.
- Company formation in Austria is a relatively time consuming process. According to the World Bank’s Doing Business 2011 Survey, Austria is the world’s 32nd easiest place to do business. The survey measures factors including business start-up procedures, time, cost and minimum capital required to start a business.
Incorp International also deals in readymade austrian companies. These shelf companies in Austria come with and without the bank account opening option. Do contact our incorporation specialists to discuss your needs.