Overview Starting a Business: Your Guide on Starting a Business in Austria
Establishing A Business In Austria
Austria is an excellent location to start your new business. It has an advanced industrialised economy with a skilled workforce, business-friendly tax regime, high consumer spending, and political stability.
Austria is located in the heart of the EU, which gives businesses easy-access to several major markets including Switzerland, Italy, Germany, and France. It is a beautiful location to work from, which makes it even easier to attract high-quality employees.
There are several steps involved when establishing a new business in Austria. These steps include choosing a business structure, deciding on a business name, and registering your business for tax purposes. This guide will explain the entire process.
Who Can Set Up A Business in Austria?
Any person over the age of 18 who is a citizen of an EU country, EEA state, or Switzerland is legally allowed to start a business in Switzerland. Residents of other locations may need to obtain a residency permit to start a business (depending on the business structure being used).
An economic entity established in Austria requires a registered office and an Austrian bank account for depositing the capital. A foreign company with its corporate headquarters outside the EU/EEA must have a “permanent representative” with his/her residence in Austria.
Due to strict EU money laundering regulations it can also be a challenge to open a bank account in Austria.
Starting A New Business In Austria
Choosing a business structure
The first decision you will need to make is one of the most important — deciding which business structure is appropriate for your enterprise. It will determine your taxation and liability obligations under Austrian law. In Austria, there are several types of corporation and partnership structures available:
Limited liability company (Gesellschaft mit beschränkter Haftung, GmbH)
Gesellschaft mit beschränkter Haftung (GmbH) is the most popular business structure amongst entrepreneurs doing business in Austria because of the protections that it provides to investors and administrators.
A GmbH is its own legal entity with its own legal personality. The company can acquire rights, assume obligations, sue other parties, and be sued. The owners/shareholders of the company are not personally responsible for its liabilities or legal obligations.
To form a GmbH, the business must have at least one director, one shareholder, a legal registered address in Austria, and at least €35,000 EUR share capital (€10,000 for startups). At least half of the shareholder capital must be deposited before incorporation. The business must also be registered with the Commercial Registrar of the city of incorporation.
Joint-stock company (Aktiengesellschaft, AG)
The Aktiengesellschaft is another business structure which provides liability protection for its shareholders and administrators. The key difference between an AG and GmbH is that an AG is designed for companies interested in raising large amounts of capital or listing on the Vienna Stocks Exchange.
To be registered as an AG, a business must have at least one director, one shareholder, a legal registered address in Austria, and at least €70,000 in share capital with minimum of 25% paid prior to incorporation. An AG must also have a statutory auditor and submit complete financial statements to tax authorities.
Societas Europea (SE)
This is a public liability limited company which is registered in compliance with the corporate law of the European Union (EU). It is a useful option for companies that operate in may countries throughout the EU.
An SE must have a registered office and head office in the same country and a presence in other EU countries. It should also have at least €120,000 of subscribed capital. It can be established through a merger, company conversion, as a subsidiary, or as a holding company.
General partnership (Offene Gesellschaft, OG)
The limited partnership and the general partnership are the second and third most popular business structures after the limited liability company. They are simple business structures that are easy to setup.
All partnerships must have a minimum of two owners. The owners must create a written partnership agreement, which will be submitted to the Commercial Registry. The partners in a general partnership are legally and financially liable for the actions that the business undertakes.
Limited partnership (Kommanditgesellschaft, KG)
A limited partnership resembles a general partnership. However, it only requires one of the partners to have full liability for the business’ obligations, rights, and management.
Silent partnership (Stille Gesellschaft, stG)
In this type of partnership, one partner is the proprietor and has full liability. The other partners are ‘silent’ and do not take an active role in managing the business.
Civil law partnership (Gesellschaft bürgerlichen Rechts, GesbR)
A civil law partnership is not a legal entity and is typically used for time-limited partnerships between business and individuals.
Obtain confirmation that your business is new
If you are starting a new business, you may be exempt from paying certain establishment fees. However, you must obtain confirmation from the Economic Chamber that your business is a new enterprise. You can do so by lodging form NeuFö2 (available on the Austrian Ministry of Finance website) with the Economic Chamber.
If your business is confirmed as being a new enterprise, you may be exempt from paying:
- Real estate transfer tax
- Stamp duties
- Certain administrative fees
- Charges for new registration in the commercial register and the cadastral register
- Ancillary wage costs and social security contributions (for 1 year)
Decide on a business name
New business will need to choose a unique business name that does not infringe on any existing trademarks and does not closely resemble the names of other businesses. The name should avoid prohibited words which cannot be used on a business name. This includes words which make the company appear as if it is an official government body, offensive words, and words that intentionally mislead as to the nature of the business.
Certain business structures will have naming unique requirements. For example a Joint-stock company must include the letters “AG” at the end of its business name, LLCs must include GmbH, partnerships must include OG or KG, and so on.
Prepare Business/Company Registration Documents
Once you have settled on a business structure, your can begin completing the documents required for business registration and incorporation. The types of documents that are required will vary based upon the type of business structure you have decided upon.
Registering a business as a company requires more paperwork registering as a partnership. For example, some of the documents required by a GmbH include:
- Articles of association/Company agreement (notarised)
- Shareholders resolution on appointment of managing directors (notarised)
- Specimen signatures of managing directors (notarised)
- Declaration on the payment of company tax
- Confirmation that an Austrian bank has received the minimum amount of capital required for incorporation and declaration of payment from directors
- Document from the local Economic Chamber confirming the company’s name is valid (required when corporations use certain words in their name)
- Shareholder resolution regarding election of supervisory board (notarised)
Preparing these documents will require various pieces of information including:
- The personal details of directors/chairman (DOB, passport, names)
- Registered office address in Austria
- Scope of activities
- Shareholder contributions
- Balance sheet for annual accounts
- Details of business licenses already granted, and so on.
The complexity of launching a business as a corporation is why most business people obtain assistance from lawyers who specialise in company law.
A partnership would only need a partnership agreement, declaration of business start-up or transfer, specimen signatures, names/DOB/addresses of the partners, date of conclusion of partnership agreement and a couple of other details.
Open a bank account and deposit minimum capital requirement
If the business entity needs to deposit share capital, an Austrian bank account will need to be opened and the capital will need to be deposited. A confirmation of the deposit must be obtained and submitted when the business is registered.
Entry in the Commercial Registry
The business must apply with entry with the Commercial Registry. This requires the lodgement of several documents, prepared earlier. The documents that are required will vary between different types of business entities, however it will always include:
- Identification details for administrators and shareholders
- Details of agreements (partnership agreements or company agreements)
- Specimen signatures
- Resolutions on appointments and share capital deposit details (for companies)
Tax Office Registration
After a business registered with the Commercial Register, the register will notify tax authorities that a new business has been formed. The tax authorities will then request that the business file for tax registration. The business must complete several forms to do so, then send those forms back to the tax authorities.
Other documents that need to be supplied may include the the opening balance sheet, excerpt of the company register, articles of association, the managing director’s identification card, and a specimen signature sheet from the business’ representatives.
The tax authorities will then issue a VAT number and tax identification number to the business. All new businesses must obtain a tax number within 1 month of being established.
Register trade with the trade authority (Bezirksverwaltungsbehörde)
Businesses conducting an activity that is subject to the Trade, Commerce and Industry Regulation Act (1994) will need to registered with the competent trade authority in the location where the business operates. Evidence of professional competence may also be required for certain types of business.
Business operators who are not registered in GISA Gewerbeinformationssystem will need to provide identification documents to the trade authority. The types of documents which are necessary will vary based on the type of business being operated. You can learn more at Wien.gv.at.
Register with other bodies
The business must also submit information to:
- Regional medical insurance company (GKK)
Before the business hires employees, they must be registered with a medical insurance company. If the business is a company, the director must also be registered.
- Commercial Social Insurance
Managing directors must register for Commercial Social Insurance.
- Municipality registration
The business may need to register with local authorities if they require planning or usage permission.
Take advantage of investment incentives
The Austrian government offers incentives for businesses that inject capital into certain areas of the economy. Your newly established business should see if they are eligible for any tax rebates or other incentives.
Currently, the Austrian government is focussed on providing incentives for businesses that are:
- Small to medium enterprises
- Involved in research and development
- Performing activities that improve regional economy development
- Providing education and training services
- Helping to modernise and restructure the economy
- Working to protect the environment
Taking advantage of these incentives can help your business get off to a flying start.
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