Starting A Business In Austria: Rules For Americans

Austria is an attractive prospect for starting a business, with a stable economy, high purchasing power, and an excellent location that provides easy access to the entire EU market. For an American to start a business in Austria, there are several requirements to meet. Firstly, as a non-EU citizen, a residence permit or visa is necessary. The Red-White-Red Card for Self-employed Key Workers is an option, but it requires a minimum transfer or investment capital of €100,000 into Austria, among other criteria. Alternatively, the Red-White-Red Card for Start-up Founders is a more viable option for entrepreneurs, requiring a business plan, €50,000 in start-up capital, and a score of at least 50 points on a skills assessment system. After obtaining the necessary permits, an American would need to follow the standard process of registering a business, which includes applying for a trade license, registering the business with the Austrian Commercial Register, and complying with various tax and insurance requirements.

Requirements for non-EU/EEA/Swiss citizens to start a business in Austria

Starting a business in Austria is a straightforward process for EU/EEA/Swiss citizens, who are simply required to register their business. For non-EU/EEA/Swiss citizens, the process is more complicated, but still very possible. Here are the requirements for non-EU/EEA/Swiss citizens looking to start a business in Austria:

• Residence permit: Non-EU/EEA/Swiss citizens must obtain a residence permit to live and work in Austria. This can be done by applying for a Red-White-Red Card, which is valid for two years and requires a minimum investment of €100,000 into the Austrian economy. Alternatively, the Red-White-Red Card for Start-up Founders allows non-EU/EEA/Swiss citizens to establish a company to launch innovative products, services, or technologies. This visa requires a business plan, proof of controlling influence, and €50,000 in start-up capital with at least 50% equity share.
• Business visa: For short-term business plans, non-EU/EEA/Swiss citizens can obtain a business visa, which is valid for 90 days.
• Trade license: All businesses in Austria must obtain a trade license from the local district authority. This requires providing personal details, business name and location, and the type of business.
• Registration with the Austrian Commercial Register: Non-EU/EEA/Swiss citizens must register their business with the Austrian Commercial Register, providing personal information such as their passport, details of the business type, and registration fees.
• Translation and notarization: All documents must be translated into German by an official translation service and certified by a notary.
• Minimum investment: To start a limited liability company, which is the most common type of business structure in Austria, a minimum investment of €35,000 is required, with at least €17,500 deposited in a local bank.
• Local bank account: Non-EU/EEA/Swiss citizens must open a local bank account and obtain confirmation of the account opening, as it is mandatory for business registration.
• Taxation: Businesses in Austria are subject to a 25% corporate tax on their total income and net profit, a 20% Value Added Tax (VAT), and a 25% withholding tax on interest earnings.
• Insurance: Businesses must have Public Liability Insurance, which is mandatory in Austria, and may also consider Building and Contents Insurance to protect their property.
• Social security: All employees must be registered with the Austrian Health Insurance Fund and for social security within one month of starting the business.

Business structures in Austria

Austria offers a diverse range of business models, catering to both individuals and legal entities. Here is an overview of the different business structures available in Austria:

Limited Liability Company (GmbH)

The Austrian private limited liability company (GmbH) is the most common and popular form of business in the country. It offers benefits such as limited liability for shareholders, the ability for a single person to establish and manage the company, and less formalities compared to a public limited company. The minimum share capital required is EUR 10,000, with at least EUR 5,000 to be paid in cash. To establish a GmbH, notarised articles of association are necessary, along with registration in the Austrian Commercial Register.

Joint-Stock Company (AG)

The Austrian stock corporation or Aktiengesellschaft (AG) is similar to a limited liability company but requires a larger starting capital of EUR 70,000. It is suitable for large firms and is considered a legal entity, liable for its obligations. An AG must have a supervisory board with at least three members.

General Partnership (OG)

A general partnership in Austria is a non-corporate form of business where two or more individuals or entities partner together and operate as a single organisation. The main advantage is the lack of required starting capital. However, all partners assume directorship and unlimited liability. A trading licence and registration in the Austrian Commercial Register are the only formal requirements.

Limited Partnership (KG)

A limited partnership is similar to a general partnership, but with a distinction in the rights and duties of the partners. At least one partner, the Komplementär, assumes unlimited liability and the right to directorship, while the other partner, the Kommanditist, is a silent partner with limited liability.

Sole Proprietorship

The simplest form of business in Austria is the sole proprietorship, where a single individual is the legal entity. This structure offers the owner freedom of investment and simple accounting. However, the downside is that the owner assumes unlimited liability and is legally responsible. A trade licence and registration with the Austrian Social Insurance Authority for Business are required.

Other Structures

In addition to the above, Austria also recognises other business structures such as silent partnerships (stGes), civil law partnerships (GesnbR), and various options for foreign companies, including branch offices, subsidiaries, and representative offices.

Formalities for creating a company in Austria

Any individual or international corporation can establish a business in Austria, although the process is more straightforward for EU citizens with an Austrian resident card. For non-EU citizens, a work visa is required.

The first step is to choose a legal entity for the business. The most common type of company in Austria is a private limited liability company (GmbH). This requires notarised articles of association, a minimum share capital of €10,000, with at least €5,000 to be paid in cash, and a registered office, name, and managing director. The company must then be registered with the Austrian Commercial Register.

Other types of companies include a joint-stock company (AG), a general partnership (OG), a limited partnership (KG), and a silent partnership (stGes).

The second step is to create a business plan and contact an Austrian bank to prepare for account opening.

The third step is to register the business. An Austrian business license is required for most economic activities. Licensed, regulated, and free trades require different levels of qualifications and proof.

The fourth step is to register with the tax office and register any employees with the responsible social insurance institution.

The cost of incorporating a company in Austria is approximately €7,400 for the first year, with an annual cost of around €3,500 in subsequent years.

Business taxes in Austria

Austria's tax regime is one of the reasons the country is an attractive prospect for foreign businesses. The country offers an affordable tax regime with added incentives, such as group taxation schemes and research incentives.

In Austria, businesses must pay a flat corporate tax rate of 25%. This is a tax on a company's total income and net profit. The minimum amount for limited liability legal structures is €3,500, while this amount is reduced to €1,750 for joint-stock ventures.

All Austrian businesses must also pay a value-added tax (VAT) of 20% on most items. However, some items, like books, food, some transportation, and certain events, have lower tax rates ranging between 10% and 13%.

Businesses in Austria are also subject to income tax, which the country calls Einkommensteuer. Residents have an unlimited tax liability, while non-residents have a limited tax liability. Residents are taxed on a progressive scale, paying between 0% and 55% depending on their income. Non-residents are only taxed on income earned in Austria, not foreign income. The deadline for filing income tax in Austria is April 30 for paper tax returns and June 30 for online filings.

Austria has signed double tax treaties with over 70 nations to ensure companies do not bear the burden of double taxation.

In addition, there is no wealth tax, inheritance tax, or trade tax in Austria. The property tax rate is typically 3.5%, and there is also a real estate tax of 0.1% to 0.2% of the assessed value of the property.

Visas and work permits for foreigners starting a business in Austria

Austria offers several visa options for foreigners looking to start a business in the country. Here is a comprehensive guide to help you navigate the process:

Understanding the Visa Options:

• Red-White-Red Card for Start-up Founders – This visa is designed for third-country nationals who want to establish a company in Austria to develop and launch innovative products, services, or technologies. Applicants must submit a detailed business plan, demonstrate a minimum investment of €30,000 with a 50% equity share, and score at least 50 points on eligibility criteria related to education, language skills, and work experience.
• Red-White-Red Card for Self-Employed Key Workers – This visa is for foreigners whose self-employed role in Austria will create macroeconomic benefits beyond their company's operational gains. To qualify, individuals must demonstrate a minimum investment of €100,000 into the Austrian economy, create or secure jobs, and introduce new technologies.
• Red-White-Red Card for Very Highly Qualified Workers – This visa allows highly skilled workers from third countries to live in Austria for six months to find a job. To be eligible, individuals must score a minimum of 70 points based on criteria such as education, language skills, and work experience.
• Job Seeker Visa – Similar to the Red-White-Red Card for Very Highly Qualified Workers, this visa allows individuals to stay in Austria for six months to look for employment. It is a good option if you don't yet have a job offer but want to explore job opportunities in the country.
• Residence Permit – If you plan to stay in Austria for more than six months, you will need to obtain a residence permit. This applies to non-EU citizens, as EU citizens and their spouses and children can apply for the permit after arriving in Austria.

Understanding Work Permits:

In Austria, work permits are typically linked to the specific visa or residence permit you hold. Here are some important considerations:

• Restricted Work Permit – This permit is valid for one year and is available to non-EU citizens.
• Standard Work Permit – The standard work permit is valid for two years and is also available to non-EU citizens.
• Unrestricted Work Permit – Valid for five years, this permit may be an option for more established businesses or individuals.

Application Process and Requirements:

When applying for a visa or residence permit in Austria, you will typically need to provide the following:

• Valid passport.
• Birth certificate or equivalent document recognized by the Austrian government.
• Recent photograph (typically 45x35mm and taken within the last six months).
• Proof of accommodation in Austria (lease contracts, tenancy agreements, etc.).
• Proof of health insurance that covers all risks in Austria.
• Proof of financial means to support yourself (payslips, bank statements, employment contracts, etc.).
• For business-related visas, you will also need to provide a detailed business plan, proof of investment capital, and any relevant qualifications or work experience.

Additional Considerations:

• Processing times may vary, and applications are typically submitted to the Austrian embassy or consulate in your home country.
• Some visas, such as the Red-White-Red Card, may require additional steps after the initial application, including submitting the application to the Public Employment Service (AMS) for assessment.
• Austria has specific business culture norms, including a high level of formality and punctuality. Learning German can significantly improve your work prospects.
• Austria offers a range of support services for entrepreneurs, including funding opportunities and consultations.

In summary, starting a business in Austria as a foreigner is a viable option, but it requires careful planning and adherence to the country's visa and work permit regulations.

Frequently asked questions