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Austria is an attractive country for entrepreneurs due to its stable economy, strategic location, and robust business environment. The country's highly developed transportation services offer companies easy access to the entire EU market. Additionally, Austria's affordable tax regime and incentives like group taxation schemes and research incentives make it a desirable business destination. When starting a business in Austria, it is important to consider the type of business entity, market research, and compliance with legal and tax requirements. Austria offers several business structure options, including joint-stock corporations, private limited liability companies, and partnerships. The process of opening a business in Austria varies depending on whether the entrepreneur is an EU citizen or from outside the EU. While EU citizens with an Austrian resident card only need to register their business, non-EU citizens must obtain a residence permit and navigate additional complexities.
| Characteristics | Values |
|---|---|
| Business structure | General partnership, limited partnership, joint-stock corporation, private limited liability company, GmbH, AG, SE |
| Business entity | Individual entrepreneurs, small businesses, international corporations |
| Requirements for EU citizens | Austrian resident card, business registration |
| Requirements for non-EU citizens | Residence permit, minimum age of 18, no criminal record, trade license |
| Business registration | Register with the Commercial Register, obtain tax identification number, register for VAT and other specific taxes |
| Business bank account | Minimum capital investment, confirmation of account opening |
| Business culture | Formal, scheduled meetings, strict agenda, punctuality, use of formal titles |
| Language | German |
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What You'll Learn
Business structures and their requirements
When it comes to business structures and their requirements, Austria offers a variety of options. The most popular legal form is a limited liability company, known as a "Gesellschaft mit beschränkter Haftung" (GmbH). This structure provides protections for investors and administrators, allowing the company to have its own legal personality, acquire rights, assume obligations, and sue or be sued. To form a GmbH, a business must have at least one director, one shareholder, a legal registered address in Austria, and at least €35,000 in share capital (€10,000 for startups). At least half of the shareholder capital must be deposited before incorporation, and the business must be registered with the Commercial Registrar of the city of incorporation.
Another option is a public liability limited company, known as an Aktiengesellschaft (AG). This structure also provides liability protection for shareholders and administrators. 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 a minimum of 25% paid prior to incorporation. Additionally, an AG must have a statutory auditor and submit complete financial statements to the tax authorities.
For small businesses and individual entrepreneurs, a sole proprietorship is a straightforward structure offering simplicity and direct control. In this case, the owner is responsible for all debts and obligations, and it is best suited for low-risk businesses.
Austria also recognizes partnerships, including general and limited partnerships. In a general partnership, all partners share unlimited liability, while in a limited partnership, some partners have limited liability and limited involvement in management. To form a partnership, you will need a trade license and registration certificates from the Austrian Commercial Register.
It is important to note that the requirements and regulations for each business structure differ, and you should consult relevant Austrian legal and tax professionals for detailed guidance.
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Registration and licensing
If you are a citizen of an EU country, Switzerland, or the European Economic Area, you can open a company in Austria without any special requirements. However, if you are a foreigner from outside these areas, you must first obtain a residence permit, be at least 18 years old, and have no criminal record. Regardless of your nationality, you must also apply for a trade license from the local district authority in your area of Austria. This involves submitting basic credentials such as your name, contact information, company address, designation, and business type.
Once you have chosen your business entity, you will need to navigate the registration process. This includes ensuring that your business name complies with Austrian naming conventions and is unique. You will also need to open an Austrian bank account and deposit the required minimum capital investment. For certain business structures, such as a private limited liability company, the minimum investment is €35,000, with 50% deposited before registration. After registration, you must obtain confirmation of the account opening, as this is mandatory for business registration.
Additionally, your business must apply for entry in the Commercial Registry or Commercial Register. This requires submitting several documents, including identification details for administrators and shareholders and details of agreements. Once your business is registered, the tax authorities will request that you file for tax registration by completing and submitting the necessary forms. You will need to obtain a tax identification number and register for value-added tax (VAT) if applicable. Depending on your business activities, you may also need to register for other specific taxes.
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Taxation and bank accounts
Taxation:
Austria has an affordable tax regime, which is one of the factors that make it an attractive business destination. The country's tax system is relatively simple to follow. As a business owner, understanding the tax landscape is essential. Here are the key points to note:
- Income Tax: Austria has a progressive income tax system, similar to other European countries. The income tax rates range from 23% to 50%. If you are self-employed, your income will be taxed at these rates. However, you won't need to pay any income tax until your earnings exceed €11,000 per year.
- Value-Added Tax (VAT): All Austrian businesses must pay VAT, which stands at 20% of their income. However, partnerships and sole traders earning less than €30,000 annually are exempt from VAT. They will instead pay income tax. Additionally, there are reduced VAT rates of 0%, 10%, and 13% for certain goods and services.
- Corporate Tax: If your company is legally based in Austria, it will be subject to unlimited taxation on its entire income.
- Real Estate Transfer Tax: This tax applies when transferring real estate between family members. The rate was amended in 2016 and currently ranges from 0.5% to 3.5% of the property's value.
- Tax Registration: As a business, you will need to obtain a tax number and a VAT identification number. These are required for tax compliance and can be obtained after registering your company in the Commercial Register.
Bank Accounts:
Opening a business bank account in Austria is a standard procedure when setting up a company. Here are the key considerations:
- Bank Options: Many businesses in Austria use Bank Austria, which offers two types of business accounts: a current account for companies and an Account4Business, which is more suitable for small businesses and sole traders. Other banks, like Bunq, also provide business banking services.
- Requirements: Opening a business bank account in Austria will require a range of documents, including government-issued identification (such as ID cards, passports, or birth certificates). If you are a non-resident, additional requirements may apply.
- Online Banking: Austria's banking system has progressed, offering online and mobile banking options. Some banks allow you to open an account and manage your finances using a mobile app, with contactless payment options available.
- Minimum Deposits: When setting up certain types of businesses, such as a private limited liability company, you must deposit at least 50% of the minimum investment (which is €35,000) into a local bank account before registering your company.
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Employment laws and social security
Austria's employment laws and social security system are comprehensive and provide broad rights, protection, and benefits for employees. The labour code is well-structured and combines Austrian and EU legislation, resulting in unique rules such as collective bargaining agreements and legally binding contracts.
Employment Laws
The Austrian labour law covers all private-sector employees, dependent workers, foreign nationals, and government employees from Austria and the EU. Foreign nationals from outside the EU require a work visa or Red-White-Red card to work in the country, which is valid for one year. The labour code also has provisions for foreign employees posted in Austria temporarily, including the right to a minimum wage and adherence to working hours.
Austrian labour law provides no country-wide minimum wage. Instead, industry-specific collective agreements determine minimum salaries. When no applicable collective agreement exists, employers and employees mutually agree on a minimum salary via an employment contract.
The labour code covers wages and salaries, working hours, benefits and leaves, rights and protection, and termination laws. In the event of termination, employers must observe certain notice periods and dates, with a minimum period of six weeks, increasing to up to five months depending on the length of service.
There are special grounds for termination and protection for certain categories of employees, including pregnant women, new mothers and fathers, employees with disabilities, and those called up for military or community service.
Social Security
Austria offers a high-level, contribution-based social security system overseen by the Federal Ministry of Labour, Social Affairs, and Protection. The system supports anyone in gainful employment and their dependents. Social security covers areas such as unemployment benefits, pensions, childcare allowance, and long-term care.
For self-employed individuals or those starting a business, specific criteria must be met to qualify for social insurance. According to the Commercial Social Insurance Act (GSVG), you are eligible for social insurance if you are self-employed without a trade license and generate taxable income above a certain limit. Social security insurance includes pension, health, accident, and self-employment provisions.
Voluntary unemployment insurance is also available, with monthly flat-rate contributions of €89.78, €179.55, or €269.33.
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Business culture and etiquette
Austria is a small but wealthy and stable country in the EU, with a high quality of life, a key location, and a low crime rate. It is bordered by eight countries and has a similar business culture and etiquette to its neighbour Germany. However, it is important to distinguish between the two cultures.
Austrians are generally conservative in their lives, and this is reflected in their business practices. They are known for compartmentalising their lives, with clear divisions between work, family duties, and recreational activities. They also take great pride in their appearance and dress well, regardless of where they are going or what position they hold. When it comes to business, the dress code is understated and conservative, following most European conventions. Businessmen should wear dark-coloured, conservative business suits, solid conservative ties, and white shirts. Women should wear either a conservative dress or a fashionable business suit.
Punctuality is highly valued in Austria, and lateness, even by a few minutes, can be considered impolite. Meetings are taken seriously and follow a formal procedure, with precise and detailed agendas that are followed rigorously. They aim for decisive outcomes and results, and it is important to provide solid facts and examples to back up proposals, given the Austrian preference for analytical thinking and rational explanations.
Austrians prefer introductions to be made by a third party, and when meeting face-to-face, a handshake that is firm and quick is customary, with eye contact maintained throughout the greeting. It is important to use titles and surnames, as first names are reserved for family and close friends. Business entertainment often takes place in restaurants, where business can be discussed in a relaxed environment, although actual business is not usually conducted during meals.
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Frequently asked questions
If you are an EU citizen with an Austrian resident card, you simply need to register your business. However, if you are from outside the EU, you will need to obtain a residence permit and a trade license from the local district authority. You must also be at least 18 years old and have no criminal record.
There are several types of business structures in Austria, including:
- Joint-stock corporation or company limited by share ownership
- Private limited liability company (GmbH)
- General partnership
- Limited partnership
- Public limited company (AG)
To register your business in Austria, you will need to provide identification details for administrators and shareholders, details of partnership or company agreements, and confirmation of any share capital deposited in an Austrian bank account. You will also need to apply for entry in the Commercial Registry and register for tax.
Austria has a very formal business culture, with a high level of formality and politeness expected in meetings and communications. It is also beneficial to have knowledge of German to improve your work prospects.
