Starting A Business In Austria: A Comprehensive Guide

Austria is a wealthy European nation with a GDP per capita of USD 48,586, making it an attractive prospect for new businesses. The country offers a convenient location, efficient public administration, economic and political stability, and a productive and affordable labour market. The process of setting up a company in Austria is straightforward for EU citizens with a resident card, but it is more complicated for non-EU citizens. Foreign investors should be aware that they will need a work visa to set up a company in the country. In terms of business structure, the most popular option in Austria is the private limited liability company (GmbH), which requires a minimum investment of EUR 35,000, 50% of which must be deposited in a local bank before company registration.

Choosing a legal entity

Austria offers a variety of legal entities for those looking to start a business. The choice of legal entity depends on factors such as the size of the business, ownership structure, and tax and liability considerations. Here is an overview of the commonly chosen legal entities in Austria:

• Private Limited Liability Company (GmbH): This is the most popular type of legal entity in Austria. It offers limited liability protection, with shareholders' liability limited to their capital contributions. The minimum share capital required is 10,000 euros, with at least 5,000 euros paid in cash. A single person can establish a GmbH and simultaneously serve as its managing director, making it a viable option for small businesses and startups.
• Public Limited Liability Company (AG): This is similar to a GmbH but allows companies to trade their shares on the stock exchange. The minimum share capital required is 70,000 euros. This option is suitable for businesses seeking access to capital markets and a broader shareholder base.
• Partnership: Partnerships are suitable for those who want to create small to medium-sized businesses. There are several types of partnerships recognised in Austria, including general partnerships (OG), limited partnerships (KG), dormant partnerships (stG), and civil law partnerships (GesbR). Each type of partnership has different liability structures, with general partners typically having unlimited liability, while limited partners' liability is restricted to their capital contributions.
• Sole Proprietorship: This is the simplest form of starting a business in Austria. It is suitable for natural persons who want to be self-employed and have full control over their business. There are no share capital requirements, but sole proprietors must register their trade name and obtain the necessary licenses.
• Branch and Representative Offices: These are options for foreign companies looking to establish a presence in Austria. A branch office is dependent on the parent company and completes the activities of the parent company, while a representative office is typically used for market research and promotional activities without engaging in direct sales.
• Subsidiary: A subsidiary is an independent entity, often established as a limited liability company. It can make its own decisions and is treated as a local company in the Austrian market. This option allows foreign companies to have more control over their operations in Austria while still benefiting from the country's business-friendly environment.

Understanding tax requirements

Austria's tax regime is affordable and offers incentives such as group taxation schemes and R&D tax credits. The country has signed double tax treaties with over 70 nations to prevent double taxation.

Corporate Tax

A uniform corporate tax of 23% is levied on all companies operating in Austria. This is a reduction from 25% in 2024.

For limited liability companies, a minimum of EUR 3,500 is levied, while for joint-stock ventures, the minimum is EUR 1,750.

Value-Added Tax (VAT)

A 20% VAT is applied to most goods and services.

Income Tax

Sole traders earning EUR 30,000 or less are eligible to pay between 23% and 50% income tax.

Withholding Tax

A 25% withholding tax is levied on interest earnings, including incomes from security earnings.

Business Capital

The minimum investment required to start a business in Austria varies depending on the type of legal business structure.

For limited liability companies, the minimum investment is EUR 35,000, with at least EUR 17,500 deposited in a local bank. For joint-stock ventures, the minimum is EUR 70,000, with 25% paid in cash.

Tax Registration

After registering your company, you must comply with post-registration requirements, including filing for tax registration and registering employees for social security.

Tax Exemptions and Credits

Austria offers a 25% reduced rate on dividend income for its companies, and foreign tax credits are also available.

Research and Development Incentives

Austrian companies offering research premiums are eligible for attractive tax incentives. The R&D tax credit was increased from 12% to 14% in 2018 and is also available to companies engaged in contract R&D.

Registering your company

Choose the Legal Structure

First, you must select the appropriate legal structure for your business. Austria offers various options, including:

• Sole proprietorship or sole trader: The simplest form suitable for natural persons with no share capital requirements. However, trade name registration and specific licenses are necessary.
• Limited liability company (GmbH): The most popular type, allowing single-person establishment with limited liability. It requires a minimum share capital of EUR 10,000, with at least EUR 5,000 paid in cash.
• Public limited company (AG): Similar to GmbH but with the ability to trade shares on the stock exchange. It requires a minimum share capital of EUR 70,000.
• Partnerships: Including general partnership (OG), limited partnership (KG), dormant partnership, and civil law partnership. Partnerships typically require at least two founding members and have no share capital requirements.
• Branch office: A non-independent entity that depends on the parent company for management decisions. It can be established quickly and has minimal setup requirements.
• Subsidiary: An independent entity, often structured as a limited liability company, that can make its own decisions and is treated as a local company.

Prepare the Necessary Documents

Once you've chosen the legal structure, gather the required documents:

• Notarized passports or IDs of shareholders, depending on their nationality.
• Statutory documents such as the Memorandum and Articles of Association.
• A lease contract proving the company's local address in Austria.
• Information about the company's managers or directors, including their passport or ID copies.
• Details about the share contribution of each shareholder.

Register with the Trade Register

Submit the above documents to the Trade Register to obtain the company's Certificate of Incorporation. This typically takes around 6 days to process.

Open a Bank Account

Open a corporate bank account with an Austrian bank. Deposit the initial capital and obtain confirmation of the account opening, as it is mandatory for business registration.

Register for Tax and VAT

Register your company for tax and VAT purposes with the tax authorities. This can take up to two weeks. You will need a tax number and, if applicable, a VAT identification number.

Comply with Post-Registration Requirements

After registering your company, ensure you comply with the following:

• File for tax registration.
• Issue share certificates to shareholders.
• Register employees for social security.
• Display the company seal, if applicable.

The company formation procedure in Austria is generally considered fast and efficient, and you can expect to complete the registration process within a matter of days. Additionally, Austria offers attractive tax incentives and a flexible company registration process for foreign investors.

Opening a corporate bank account

Once you've decided on a business structure, you'll need to open a corporate bank account. Here's a step-by-step guide to opening a corporate bank account in Austria:

Choose a Bank: Select a bank that caters to your business needs. Some popular options include Bank Austria, N26, and Anglo-American banks with a presence in Austria.

Contact the Bank: Get in touch with your chosen bank to understand their specific requirements and gather the necessary documents.

Documents Required: The documents you need will vary depending on the bank and your business structure. However, some common documents required for opening a corporate bank account in Austria include:

• Certificate of Incorporation or Formation (not older than 3 months and certified by a notary public)
• Memorandum and Articles of Association
• Proof of Appointment of Directors (certified by a notary public)
• Power of Attorney (if the account is to be opened by an agent)
• Identification documents for authorized signatories (passport, driving license, or identity card)

Minimum Share Capital: For a private limited liability company (GmbH), the minimum share capital is €35,000, with at least €17,500 to be deposited in a local bank before company registration.

Account Fees: Some banks may charge account opening fees, maintenance fees, or transaction fees. Be sure to clarify these charges with your chosen bank.

Online Banking: Many banks in Austria offer online banking services, allowing you to manage your account and transactions digitally.

Timing: The time it takes to open a corporate bank account can vary depending on the bank and the complexity of your business structure. However, some banks, like N26, allow you to open an account in just a few minutes using their mobile app.

Applying for a business license

To obtain a business license in Austria, you must first choose the appropriate legal entity for your business. The Company Act is the primary legislation that outlines the process of establishing a business in the country. The following are the types of legal entities you can set up in Austria:

• Sole proprietorship or sole trader: This is the simplest form of starting a business in Austria, and it can only be established by natural persons. There are no share capital requirements, but you must register your trade name with the Companies Register and obtain the necessary licenses from the authorities.
• Limited liability company: This is the most common type of company in Austria and can be either private (GmbH) or public (AG). A GmbH must be formed by at least one shareholder, with a minimum share capital of €10,000, while an AG requires a minimum share capital of €70,000 and allows shares to be traded on the stock exchange.
• Partnership: This is suitable for creating small to medium-sized businesses and can be structured as a general partnership, limited partnership, dormant partnership, or civil law partnership. At least two founding members are required, and there are no share capital requirements.
• Subsidiary, branch, and representative offices: These are options for foreign companies to enter the Austrian market. A subsidiary is an independent entity, typically structured as a limited liability company, while a branch office is dependent on the parent company and completes the activities of the parent company under its licenses and permits.

Once you have determined the legal structure of your business, you can proceed with the company registration process. Here is a step-by-step guide to obtaining a business license in Austria:

• Reserve your business name: You can do this online, and it usually takes a few hours to complete.
• Draft and notarize statutory documents: This includes the articles of association, memorandum, and other relevant documents. This step can take up to two days.
• Process documents with the Trade Register: Submit your documents to the Trade Register for approval, which typically takes about six days.
• Open a corporate bank account: You will need to deposit the initial capital into this account. The process usually takes one day.
• Obtain clearance from the Economic Chamber: This will grant you permission to operate your business and typically takes one day.
• Register with the tax authorities: You will need to register for tax and VAT purposes, which can take up to two weeks.
• Apply for the business license: Submit your application, which should take less than one day to process.

The entire company formation procedure in Austria is relatively fast and straightforward, and you can expect to obtain your business license within a short timeframe. It is recommended to seek assistance from company formation specialists or legal advisors to ensure compliance with all legal requirements.

Frequently asked questions