Incorporation in Austria or how to create a successful business in the Austrian jurisdiction?

Company registration is the process of formalizing the status of a legal entity in accordance with the laws of a certain country. During this process, the company is officially recognized as a legal entity with its own legal capacity.

To receive this status, it is necessary to provide certain documentation and fulfill the requirements established by the state authorities. Due to registration, the entity is able to conduct commercial activities, conclude contracts, participate in court proceedings and perform other legally significant actions.

If you are planning to develop your business in an advanced Western European country, you should consider setting up a company in Austria. A country with a stable and powerful economic and political system, a high standard of living, and a comfortable taxation system is worthy of attention not only from big business representatives but also from a large number of investors. The Manimama team has conducted in-depth research, analyzed the main subtleties of registering a company in Austria, and is ready to share its results and help you choose the right jurisdiction.

What are the main advantages of incorporating a company (business) in Austria?

1. Promising location:

Austria enjoys a unique geographical location in the heart of Europe, which gives it several strategic advantages for doing business. As the country is a convenient point of access to the European Union and Eastern European markets, it provides an easy flow of a large number of customers and partners. In addition, Austria has a rich history of cultural and economic ties with neighboring countries, which fosters mutual understanding and eases business.?

In general, this location opens up great opportunities for business development, searching for new markets, and establishing partnerships with companies from different countries.

2. Stable economic situation:

Austria has one of the most stable economies in Europe with a high standard of living and strong macroeconomic indicators. It is one of the top thirty countries in the world in terms of GDP per capita, which in turn has a positive impact on the development of infrastructure, the increase in living standards and wealth in the country, the improvement of the quality of education and the increase in the number of highly qualified employees. All this provides a favorable and stable environment for doing business and increases the chances of its success.

3. Highly developed infrastructure:

The country has a well-developed infrastructure, including transportation networks, telecommunications, and energy resources. Vienna-Schwechat International Airport is the country’s main aviation hub, providing direct flights to most major cities in the world. In addition, the country has several regional airports that facilitate domestic and international transportation. Austria has numerous technology parks and business incubators that support the development of start-ups and innovative companies by providing them with access to modern infrastructure and resources. All aspects are aimed at maintaining the reliable and efficient functioning of businesses in the country.?

4. Good quality of education and availability of highly skilled workers:

Austria has a well-deserved reputation for a high level of education, which affects the level of professionalism of its employees. This is a key aspect for companies that require highly qualified personnel to run their operations.

5. High living standards:?

The country is known for its high standard of living, which includes quality healthcare, education, and social services. This attracts foreign workers and investors, as it helps to create a safe and comfortable environment for living and working. In addition, such a standard of living affects the high purchasing power of the population.

6. Favorable tax system:

Austria has a competitive tax system and offers preferential regimes for new companies, various incentives for foreign investors, and numerous double taxation treaties, which minimizes tax liabilities for international companies.

7. Stable and transparent legal system:

The Austrian legal system is stable and transparent, promotes business support through various mechanisms, and provides a high level of protection of property rights and business interests. The process of company incorporation in Austria is relatively simple and fast. There are electronic registration systems that reduce bureaucratic obstacles and shorten the time for registration, where it is possible to register a company completely online.

8. Government support for innovation and startups:

Austria actively supports research and innovation through various government programs and funds, which creates a favorable environment for technology start-ups and innovative companies.?

9. Strong international cooperation:

The country is a member of numerous international organizations, such as the European Union, the United Nations, and the OECD, which provides access to a market with millions of consumers. Freedom of movement of goods, services, capital, and labor, all of which simplify business operations and provide opportunities to enter a market with high potential.

How to register a company in Austria and what are the main requirements for such registration?

Step 1. Initial Setup

• Initiating a preliminary project assessment, assessing risks, choosing the type of company, preparing the necessary documents and obtaining the necessary permits, determining the timeframe, budget, and resources required to complete the process;
• Preparation and filing of the package of documents.

Step 2. Company registration

• Getting your company’s name and its activity approved by the Commercial Register
• Drafting statutory documents of your company (Memorandum and Articles of Association) followed by notarizing them
• Depositing the statutory capital in the local bank for the future company as a bank certificate verifying this status is required at incorporation
• Submitting the necessary documents to the Commercial Register
• Filing for tax registration
• Registering employees for social security
• Acquiring the corporate seal
• Filing for the necessary business permits and licenses, where applicable

Requirements for registering a company in Austria on the example of a Limited Liability Company (LLC) / Gesellschaft mit beschr?nkter Haftung (GmbH):

• Shareholders: the company must have at least 1 natural or legal person. There are no residency requirements.
• Director: GmbH is required to have at least one director and it can only be a natural person. Residency is not considered.
• Company Secretary: there is no requirement.
• Minimum Share Capital: €35,000, 50% of which must be deposited in the local bank in cash before company registration in Austria.
• Legal address: the company is obliged to have its address in Austria.
• Liability: enables to limit the liability of participants for the company’s debt obligations only to the amount of their investment in the company’s capital.
• Accounting: the company must prepare annual financial statements. It must be filed with the Commercial Register no later than 9 months after the end of the financial year. In addition, VAT-paying companies submit VAT returns.

What do you have to know about taxes when registering a company in Austria?

Austria has a fairly favorable and convenient tax system when it comes to the business sector, which includes various tax benefits and incentives for foreign investors.?

Corporate income tax (CIT):

• The standard rate of corporate income tax is 23% of taxable income, irrespective of the level of income.
• The minimum CIT rate for a GmbH is €500 for the first 5 years of the company’s existence and €1,000 per year for the following 5 years.
• Corporations with management or a registered office in Austria are taxed with unlimited CIT.
• Corporations whose management and registered office are not located in Austria are subject to a limited income tax. The limited tax liability applies only to certain domestic income.
• CIT returns must be filed by 30 April of the following year or sent electronically via FinanzOnline by 30 June of the following year.

Personal income tax (PIT):

• All natural persons who are domiciled in Austria or for whom Austria is a regular place of residence are taxed with unlimited income tax (“unlimited” meaning that basically all their Austrian and foreign income is subject to income tax). Furthermore, even persons who are not domiciled in Austria can be taxed on certain income generated in Austria.
• EU/EEA citizens who are not domiciled in Austria may be subject to unlimited income tax if their main source of income is in Austria.
• The PIT rates are as follows:
• €12,816 and below – 0%
• above €12,816 up to €20,818 – 20%
• above €20,818 up to €34,513 – 30%
• above €34,513 up to €66,612 – 40%
• above €66,612 up to €99,266 – 48%
• above €99,266 up to €1,000,000 – 50%
• above €1,000,000 – 55%

Value-added tax (VAT):

• The standard tax rate of 20%.
• The reduced tax rates are 10% (renting for residential purposes, accommodation in furnished living rooms and bedrooms and the ancillary services often associated therewith (including heating), rental (provision for use) of land for camping purposes, rubbish collection, delivery of books / newspapers / magazines / foodstuffs) and 13% (the delivery of living animals / plants / firewood, turnover from the activity of an artist, film or circus performances, admission fees for sporting events).
• Enterprises that make VAT-taxable supplies and provide other services to customers and whose annual turnover exceeds €35,000 are generally required to file VAT returns.

For readers:?

Manimama provides services to help you choose the right jurisdiction for your company’s incorporation, as well as to register your business in Austria and create a strategic framework for its successful operation and development in the long term.? We have a good understanding of the tax and legal peculiarities of specific jurisdictions, which helps our clients make an informed choice based on their unique needs and development strategies. In our work, we take into account factors affecting the business environment, such as the level of competition, access to financial and human resources, as well as opportunities for further growth and development in different jurisdictions.?

By choosing our company formation service in Austria, you are working with a law firm that values integrity, competence, and client satisfaction. Let us help you set up a company in Austria and pave the way for your business success!

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The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.