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Company Types in Austria

Company Types in Austria

The types of companies available in Austria are important for overseas investors when thinking about opening a business in this country. If foreign investors travel to Austria to establish new businesses, they need to know about all of their alternatives.

Our company formation agents in Austria can offer more information on all the types of companies available for incorporation in this country.

The main business forms in Austria

With a diverse range of business models, most types of companies in Austria cater to both individuals and legal entities. Civil and general partnerships, silent partnerships, business cooperatives, limited liability companies (LLCs), and joint stock corporations are all recognized by Austrian law.

Furthermore, there are corporate types that are not directly established by EU regulations but are based on them, such as Societas Europaea (SE) and the European Economic Interest Grouping (EEIG). Private foundations, which are attractive investment vehicles for high-net-worth individuals under tax law, are also widely used in Austria.

Depending on your financial circumstances, you can start a variety of legal enterprises in Austria. You have the option of forming a company, which needs a minimum amount of share capital, or starting a non-corporate firm and investing according to your financial ability.

The main types of companies in Austria that can be incorporated are:

  • The Austrian private limited liability company (GmbH)

This is the most popular type of business in Austria, especially due to its flexibility. In order to set up a limited liability company in Austria, a minimum share capital of EUR 10,000 has to be provided and 50% of this sum has to be deposited in a bank account before company registration in Austria. No requirements regarding nationality or residency are made for shareholders, but their minimum contribution is EUR 7,000 each.

It is also necessary to ensure that all paperwork is properly translated into German, as this is a requirement for registration.

  • The Austrian stock corporation (AG)

One or more shareholders can establish this type of company in Austria provided that they have at least EUR 70,000 as an initial investment. A stock corporation in Austria must have a supervisory board with at least three members. The company is regarded as a legal entity, therefore it is liable for its obligations.

  • Open a (general) partnership (OG)

At least two individuals or legal entities can join and form a partnership in Austria. This also applies to general partnerships. All members of a general partnership share full liability and are considered general partners. However, at least one member must demonstrate skill in the company’s sphere of business.

  • The Austrian limited partnership (KG)

This type of partnership can be set up by at least two individuals or legal entities as well. The partners represent the firm in all aspects. Its key feature is that at least one of the partners must be a general partner, assuming full responsibility for the company’s administration, rights, and duties. At the same time, at least one partner must have limited liability for the amount of his investment.

  • The Austrian silent partnership (stGes)

Silent partnerships in Austria mean that one member is the proprietor with full liability, while the other partners who signed the agreement are silent and, as a consequence, do not take part in the management of the company. It is important to know that registration of silent partnerships with the Austrian Trade Register is not compulsory.

  • The civil law partnership (GesnbR)

This type of partnership is not considered a legal entity. For that matter, it is only suggested for people or businesses who wish to participate in a project for a limited period of time. The incorporation procedure is the simplest.

  • The sole proprietorship in Austria

The simplest business form that can be established in Austria is the sole trader. This can be created by one person. Foreign citizens can open sole traders in Austria only after obtaining a residence permit. They will also be personally liable for the business’ debts and obligation, which is why this type of structure is seldom employed in Austria. The sole trader is most suitable for professional activities, such as accounting and medical ones.

The sole proprietorship is also subject to various licensing requirements just like the other types of Austrian companies

Foreign companies operating in Austria

Foreign companies have three options when setting up their business presence in Austria: the subsidiary, the branch office, and the representative or liaison office.

The subsidiary is an independent business form of the foreign company which can undertake various types of activities in Austria. It can also complete activities outside the scope of the foreign company. The subsidiary can be created as a limited liability company in Austria.

The branch office, on the other hand, is an extension of a foreign company in Austria which means it cannot complete other activities than those of the parent company. Also, from a taxation point of view, the branch office will be taxed only on the income earned in Austria.

The representative office is not a legal entity, as it cannot undertake commercial activities in Austria. Foreign companies usually establish liaison offices with the purpose of prospecting the market before opening one of the types of companies mentioned above.

The European Company in Austria

One of the employed types of companies in Austria is the European Society which can be set up by those who are residents of the European Union or European Economic Area. This business form resembles the limited liability company and must not comply with other requirements, which is why it is very advantageous for persons and companies domiciled in one of the European states located in two areas.

The European Company (Societas Europaea, SE) facilitates cross-border business inside the EU, increasing flexibility and efficiency for multinational enterprises.

If you are interested in this legal entity, our local consultants are at your service with tailored guidance and assistance in registering it.

Steps to open a company in Austria

The procedure of setting up a business in Austria depends on the types of entity selected. In the case of sole traders and partnerships, the process is simple and requires a few steps, among which drafting the paperwork, which implies an application form in the case of the sole proprietorship and the partnership agreement for the other type of legal form.

In the case of companies, such as private and public enterprises, branch offices and subsidiaries, the following steps need to be completed:

  1. trading name reservation is the first step to be completed;
  2. ensuring the company has a legal address is also mandatory;
  3. drafting the Articles of Association and having them notarized;
  4. filing the paperwork with the local office of the Trade Register;
  5. obtaining tax and VAT numbers with the local tax office;
  6. filing for the necessary business permits and licenses, where applicable.

Furthermore, all types of companies in Austria require additional steps, such as opening a corporate bank account and registering for Social Security if you plan to hire employees.

If you want to open a company in Austria and need assistance, our specialists are at your disposal with various services. We can conduct the full business registration process under a power of attorney

Documents required to open a company in Austria

Apart from the sole proprietorship and the representative office, all the other types of companies will need to prepare the following documents for operating in Austria:

  • the Austrian’s company incorporation documents which must be notarized before submission with the Trade Register;
  • the legal address for the company, the address can be in any business center in Austrian cities;
  • the personal information – identification papers – of the shareholders and directors;
  • the declaration through which the directors are appointed and their consent to taking their role;
  • the company name reservation form which is issued by the Austrian Trade Register.

All these documents must be filed when registering a company in Austria and our local consultants can help with their preparation and submission with the Companies Registrar.

Trading name reservation based on company type in Austria

According to the Company Act, local and foreign investors benefit from the same business registration procedures and can set up any type of Austrian companies as long as they respect the requirements imposed for each legal entity.

The first step related to opening an Austrian company is to choose and reserve a business name which must be unique. Special requirements must be respected by foreign companies operating through branch offices, as in their case the branch must bear the same name as the parent company. Usually, there are no problems from this point of view, however, foreign companies that have registered their names as trademarks have had no problems. As a matter of fact, the tendency now is for companies to protect their names through trademarks.

Our advisors can perform trading name due diligence in order to ensure a smooth business incorporation procedure no matter the type of company you decide for in Austria.

Business licensing in Austria

Not all types of companies in Austria require business licenses, however, there are certain industries in which these are mandatory and the procedure of obtaining them can be quite lengthy.

Among the operations that need licenses and permits are import and export, finances, and telecommunications. These are regulated by specific authorities that may also impose specific share capital requirements, such as the case of banks and insurance companies that are regulated by the Austrian National Bank.

If you need assistance in such matters, our Austrian company formation officers can help you.

Aspects to consider when choosing the type of Austrian company to open

When determining what type of business to establish, you must evaluate not just your preferences, but also the options available to you to select the one that best fulfills your needs. Different types of companies in Austria have different tax and legal ramifications, so it’s important to evaluate each company’s specific requirements. It’s also crucial to understand the particular operating and registration procedures that apply to each type of business.

While local entrepreneurs know the local market and can make their decisions sooner, foreign investors are usually recommended to research the business environment, the region they want to operate and choose the best city to set up their companies. From these points of view, the expertise of our agents can be very useful, as we can provide detailed information on suitable types of companies, time, and cost of incorporation.

When choosing between the main types of companies in Austria, the most important aspects are:

  • the complexity of the formalities to complete;
  • the capital needed to set up the company (apart from the share capital imposed by the law);
  • the necessary licenses to obtain based on the industry to operate in.

It’s also important to take into account each type of company’s particular continuing compliance responsibilities and potential tax repercussions. Our advisors can help in registering any type of Austrian company.

Taxation of companies in Austria

Irrespective of the business form one chooses to incorporate, all corporations are subject to tax and annual reporting requirements. Our team assists company owners with accounting and bookkeeping services, the preparation of the annual (audited) financial statements, payroll processing and management, invoicing and more. You can reach out to our accountants in Austria for more details. 

Here are the main tax aspects related to opening a company in Austria:

  • the standard corporate tax rate is 23% and it applies to local and foreign companies;
  • a 25% withholding tax on dividends applies to non-resident companies;
  • tax declarations must be filed in electronic format each year by June 30th;
  • VAT registration becomes mandatory once a business exceeds an annual turnover of 30,000 euros;
  • the VAT is levied at a standard rate of 20%, and returns must be filed every month;
  • the minimum corporate income tax (CIT) payable by companies in a tax-loss position is EUR 437.50 for each full quarter of a year for a GmbH;
  • a global minimum tax rate of 15% applies to large company groups with at least EUR 750 million in net sales in at least two of the last four financial years.

In other words, most types of companies in Austria are obligated to pay a minimum corporate income tax, even when they generate tax losses. Our accountants in Austria may guide you in properly addressing these tax issues

For more details about the company types available in Austria, you may contact our team of company formation specialists.