Foreign companies seeking to establish a presence on the Austrian market have several choices when it comes to the business form. Among these structures are the branch office, the representative office, and the subsidiary. An Austrian subsidiary company falls under the scope of the Company Law and is subject an easy incorporation procedure. Our company formation agents in Austria can explain the requirements related to opening a subsidiary.
The process for subsidiary creation in 2023 remains essentially unchanged in Austria, continuing to be based on the same mandatory steps required for the creation of a locally registered legal entity.
| Quick Facts | |
|---|---|
| Applicable legislation (home country/foreign country) |
Foreign country |
|
Best used for |
– trading, – IT, – commerce, – pharmaceutical etc. |
|
Minimum share capital |
– 10,000 EUR for private companies, – 70,000 EUR for public companies |
| Time frame for the incorporation (approx.) |
Appox. 5 week |
| Management (local/foreign) |
Local or foreign |
| Legal representative required |
No |
| Local bank account |
Yes |
| Independence from the parent company | Independent legal form |
| Liability of the parent company | The parent company bears no liability for its subsidiary/subsidiaries |
| Corporate tax rate | 25% |
| Possibility of hiring local staff | Yes |
Table of Contents
Steps for opening a subsidiary in Austria
The following steps need to be completed for the creation of Austrian subsidiary company:
- select a company name and reserve it with the Companies House;
- draft the incorporation papers with a local notary office;
- set up a corporate account with a local bank;
- file the documents with the Trade Register and obtain a tax identification number;
- apply for the necessary licenses to start operating.
Voluntarily, the company can also be registered for VAT purposes to simplify the operations once the mandatory registration threshold is reached.
Our company registration agents in Austria can help you set up this business form with the help of a power of attorney.
The minimum share capital for opening a subsidiary in Austria
Foreign companies opening subsidiaries in Austria must open corporate bank accounts and deposit a minimum share capital of 35,000 euros.
In 2023, foreign investors who want to open Austrian subsidiaries can choose the type of legal vehicle they want, however, they need to apply for various business licenses and permits.
Requirements for opening an Austrian subsidiary in 2023
The representatives of foreign companies can open subsidiaries in Austria under the form of limited liability companies which can be public or private. However, the most employed form is the private limited liability company.
Compared to the branch office, the subsidiary is an independent entity which requires the following documents for registration:
- – a copy after the parent company’s certificate of registration issued by the Trade Register in its home country;
- – the parent company’s resolution indicating the opening of the subsidiary in Austria;
- – information about the representative of the company in Austria;
- – the incorporation documents of the subsidiary which must be drafted in German.
All documents must be translated into German and certified by a local public notary.
Our local agents can help with the preparation of the incorporation documents when setting up a subsidiary in Austria in 2023.
Why choose a subsidiary to expand a foreign business in Austria?
Economic forecasts offered by the European Commission and the International Monetary Fund provide for 4.9%, respectively 4.5% increase of Austria’s Gross Domestic Product (GDP) for 2022. This is a great incentive to open a new Austrian company or expand an existing one. Foreign enterprises can choose the subsidiary because:
- – it offers great flexibility in terms of operations;
- – it will be treated as a domestic business;
- – the parent company can also benefit from the EU Parent-Subsidiary Directive;
- – it will operate as a fully independent business form.
The main trait of the subsidiary is that it does not depend on the foreign mother company. Compared to the branch office, it has full decision capabilities. It will also have an independent management, and most importantly, it can adjust its services and goods to the Austrian market.
Being treated as a domestic firm will enable it to gain access to incentives offered by the Austrian government.
Should you want to expand your company through a subsidiary in Austria in 2023, you can obtain the support of our specialists.
Hiring employees through a subsidiary in Austria
Running a business in Austria implies respecting the Employment Law here. However, the parent company can apply for work permits on behalf of the employees it wants to transfer in Austria. This requirement applies only to non-EU citizens, as the rules are more flexible for EU ones.
In 2021, there were more than 1.5 million expats living in Austria, their number representing 16.7% of the population. While some of them worked for local companies, other had their own businesses here. This is a good indicator for those interested in a multicultural workforce who want to enjoy hard and soft skill of their employees.
According to the country’s statistical office, the number of employed individuals in the 4th quarter of 2022 was 4,465,800, with 79,000 more employed individuals compared to the same fourth quarter in 2021.
Hiring employees in Austria also implies registering them for social security purposes here, situation with which our local consultants can help you.
It is also possible to open a subsidiary by purchasing a shelf company in Austria. The advantage of choosing this option is skipping the incorporation procedure that can span over 5 weeks. No matte your option, you can count on our officers for support.
Licensing is also one of the phases to go through when opening a subsidiary. All foreign companies are required to register with the industry representing body, as well as with the municipal authorities before starting operating.
Management requirements for company formation in Austria
Setting up a subsidiary in Austria implies respecting local regulations that stipulate the requirement of having at least one director. The advantage lies in the fact that the person appointed can have any nationality and must not be an Austrian resident. In practice, foreign companies appoint directors from the headquarters who move to Austria and manage subsidiaries from here.
The same management requirements apply to private and public companies, no matter the selected legal entity. You can obtain more information on this requirement from our local advisors.
Why set up a subsidiary in Austria?
The subsidiary company is an independent company which can complete a wide range of activities which are not limited to those of the parent company. Also, from a taxation point of view, the subsidiary is considered a tax resident company, therefore will benefit from the same tax treatment as local companies.
This means that the subsidiary will be subject to the corporate income tax, the value added tax (with its standard rate and its reduced rates), social security contributions, payroll tax (at a municipality level), real property tax, transfer tax or stamp duty.
If you want to set up a subsidiary in Austria, our team can give you complete information about the current tax incentive programs (if applicable in your case), as well as other advantages for subsidiary creation.
Why invest in Austria in 2023?
With an economy that relies mostly on exports that represent more than 50% of its GDP, Austria has important trading relations with two of the largest states in the world: its neighbor Germany and the United States.
Most foreign direct investments are attracted by the research and development (R&D) and technology sectors. In terms of foreign companies operating here, the USA alone had around 300 subsidiaries of 200 US-based enterprises at the end of 2019.
According to Statistics Austria, the country’s GDP increased by 2.6% in the fourth quarter of 2022, compared to the same fourth quarter in 2021.
Political stability, good managerial culture, high productivity, and openness to international competitiveness are only a few of the qualities foreign companies consider for expanding their operations here.
If you decide to set up a subsidiary in Austria in 2023, you can ask our agents about the latest conditions to respect.
If you want to open a subsidiary of your foreign company and need help, please contact our Austrian company formation advisors.