Founding A Company In Austria: A Comprehensive Guide

Austria is an attractive location for foreign business owners due to its prosperous economy, strategic location, and highly developed transportation services, which provide easy access to the entire EU market. The country's affordable tax regime, group taxation schemes, and research incentives also contribute to its success as a business hotspot. For EU citizens with a resident card for Austria, setting up a company is straightforward and only requires registering the company. However, for non-EU citizens, a work visa is necessary before establishing a business in the country. This article will provide an introduction to the process of founding a company in Austria, covering topics such as company registration, taxation, cultural norms, and the advantages of doing business in this European powerhouse.

Registering your company

Understanding the Business Landscape in Austria:

Austria offers a strategic location in the heart of Europe, providing easy access to the entire EU market. The country's prosperous economy and affordable tax regime make it an attractive destination for foreign businesses.

Choosing a Company Name and Address:

The company name and address are of utmost importance when establishing your business in a foreign market. In Austria, the company name should indicate the partnership type (general or limited partnership) and the corporation type (private or public company). You can seek guidance from the Austrian Federal Economic Chamber (WKO) for choosing an appropriate company name.

Additionally, ensure that you have a proper address for your company. This address will be used for all official correspondence, including insurance, taxes, and social security matters.

Legal Requirements and Visa Considerations:

Swiss and EEA citizens can expand their businesses in Austria without acquiring a special visa. However, nationals from other countries must obtain a work visa before setting up their company. The validity of these visas varies, but they typically last for 6 to 12 months.

Registering your Trade or Business:

If your business is based on a free trade, you can register your trade electronically with the district office of the WKO. For other types of businesses, registration takes place at the district authority or the magistrate of the company's future location.

Obtaining Necessary Licenses and Permits:

Depending on the nature of your business, you may need to obtain specific licenses and permits. Licensed and regulated trades require proof of qualifications and/or experience, while free trades only require individuals to be over the age of 18 and possess a criminal record certificate.

Compliance with Taxation Requirements:

Companies operating in Austria are subject to different taxation requirements. A 25% corporate tax is levied on the company's total income and net profit. There are also varying minimum amounts for different business structures, such as EUR 3,500 for limited liability legal structures and EUR 1,750 for joint-stock ventures.

Registering with the Social Insurance for Trade and Industry:

Upon establishing your company, you must register with the Social Insurance for Trade and Industry (SV). If you do not receive the necessary documents from the SV within a month, proactively reach out to them.

Applying for a Tax Number and VAT Identification:

Within one month of notifying the SV, apply to the tax office for a tax number and a VAT identification number. These are crucial for complying with taxation requirements.

Registering Employees:

If you have employees, it is mandatory to register them with the responsible social insurance institution before their first day of employment.

Additional Compliance Requirements:

Austrian law mandates strict accounting and record-keeping procedures for businesses. Managers are responsible for preparing annual financial statements, notes on account status, and annual reports within specified timelines. These documents must be approved at an annual general meeting and filed with the commercial register by the ninth month of the financial year.

By diligently following these steps, you will be able to successfully register your company in Austria and navigate the administrative requirements associated with establishing your business.

Taxation and other costs

Taxation is a key consideration when founding a company in Austria. The country offers an affordable tax regime, which is one of the reasons it is an attractive business hotspot.

Companies operating in Austria are subject to a uniform corporate tax, which was reduced to 23% by 2024. This corporate tax is levied on a company's total income and net profit. There are no other tax burdens, such as trade tax, property tax, or inheritance tax. As a limited liability company (GmbH), you are also subject to value-added tax. A 25% withholding tax is levied on interest and security earnings. The minimum share capital for a GmbH was EUR 35,000 until 31 December 2023, but it was reduced to EUR 10,000 from 1 January 2024. Formation costs and fees are linked to the amount of minimum share capital.

If you are a sole trader, your income tax liability will depend on your earnings. If you earn EUR 30,000 or less, you will pay between 23% and 50% income tax.

There are other costs to consider when founding a company in Austria. For example, you will need to register your company, and this may involve legal fees. Additionally, you will need to open a business bank account and pay the capital contribution. If you are not an EU citizen, you will need to obtain a work visa, which can be valid for 6 to 12 months on average. You will also need to register your employees with the responsible social insurance institution before their first day of employment. This is usually done by your tax advisor.

Choosing a company name and address

Choosing a Company Name

When selecting a name for your company in Austria, it is essential to consider the partnership type and the corporation type. If your company is a general or limited partnership, this should be mentioned in the name. Additionally, indicate whether it is a private or public company. Seeking guidance from the Austrian Federal Economic Chamber can help you ensure your company name complies with local regulations.

Selecting a Company Address

Your company must have a local address in an Austrian city. This address will be used for all official correspondence, including insurance, taxes, and social security. You will need to provide a lease contract as proof of your company's local address when registering.

Registering Your Company Name and Address

To officially register your company in Austria, you will need to submit specific documents to the Trade Register. These documents include passports or notarized IDs of shareholders, the company's statutory documents (Memorandum and Articles of Association), the lease contract for the local address, information about company managers or directors, and details about the share contribution of each shareholder.

Additionally, you will need to open a local bank account and deposit the minimum capital investment. Obtaining confirmation of the account opening is mandatory for business registration. Remember that the whole incorporation process can be conducted remotely, so you may not need to travel to Austria to complete these steps.

By following these guidelines and working with local advisors, you can successfully choose a company name and address when establishing your business in Austria.

Company culture and business etiquette

Austria is a small country with a rich and stable economy, and its location at the heart of Europe has made it a hub of East/West relations. Its business culture shares similarities with its neighbour Germany, but there are also differences that should be noted.

Punctuality

Punctuality is a cornerstone of Austrian business culture. Being punctual for meetings and appointments is essential, and lateness, even by a few minutes, is considered impolite. It is also important to schedule meetings in advance, with appointments made 3-4 weeks ahead of time.

Dress Code

Austrians take pride in their appearance and dress well, even when dressed informally. In a business context, the dress code is understated and conservative, following most European conventions. Businessmen typically wear dark-coloured, conservative suits, solid-coloured ties, and white shirts.

Hierarchy and Respect

Austrian business culture has a well-defined and strictly observed hierarchy, with clear distinctions between roles and departments. Formality and respect are important, and academic titles and individual achievements are valued. When addressing colleagues, it is customary to use titles and surnames, reserving first names for family and close friends.

Business Manners

Austrians are generally conservative, reserved, and polite in their business dealings. They tend to be more emotional than Germans and avoid confrontational behaviour. It is important to avoid high-pressure tactics and respect your counterpart's point of view, showing goodwill and being prepared to make concessions.

Business Socialising

Austrians tend to keep a clear division between work and play, and business socialising is more formal than in some other European countries. Events outside of work often have a professional networking focus, and it is important to take time for appointments with customers, demonstrating good table manners and engaging in small talk.

Language

English is common across Austria, but Austrians will appreciate any effort to communicate in German. When exchanging business cards, it is advisable to have your information printed in German on one side.

Visas and work permits

If you are a citizen of Switzerland or an EEA country, you do not need to acquire a special visa to start a business in Austria. However, for nationals of other countries, a work visa is mandatory before setting up a company in Austria. These visas are typically valid for 6 to 12 months.

If you are a non-EU citizen, you must obtain a residence title or a visa for short-term activities to carry out self-employment in Austria. There are various residence titles available in Austria, and you can apply for these to engage in self-employed work. To obtain a residence title, you must meet the specific conditions of the title and prove that you meet the general conditions for residence titles in Austria, such as having adequate accommodation.

One option for residence permits is the Red-White-Red Card, which is issued for a maximum of 24 months and entitles you to fixed-term settlement and the pursuit of a self-employed occupation. As a start-up founder, you will be awarded a Red-White-Red Card for the first two years, and subsequently, a Red-White-Red Card Plus, provided that all legal requirements are met. The Red-White-Red Card Plus entitles you to fixed-term settlement and unlimited labour market access, including self-employment and gainful employment without restrictions to a specific employer.

To qualify as a start-up founder for the Red-White-Red Card, you must achieve sufficient points within a legally stipulated points system. You can collect points in various categories, such as education, work experience, and language skills. Additionally, you must provide proof of an investment transfer of at least €30,000, with at least 50% derived from equity capital.

Another option is the Residence Permit – Self-Employed ("Aufenthaltsbewilligung Selbstständige"). However, this permit is recommended only if you plan to temporarily stay in Austria for work lasting more than six months. If your work will be for less than six months, a Visa C or Visa D is sufficient.

If you are establishing a limited liability company (GmbH), you are subject to corporate tax and value-added tax. You will need a tax number and a VAT identification number, which you or your tax advisor can request after your company is registered.

Frequently asked questions