Austria holds the 12th position among the European nations regarding prosperity, and its strategic location in Europe’s heart further attracts foreign business owners. It is a wealthy nation with a GDP per capita of USD 48,586. 

Austria’s location and highly developed transportation services offer most companies easy access to the entire EU market. The affordable tax regime paired with added incentives like group taxation schemes, research incentives, and much more add to the country’s success as a business hotspot.

Setting up a company in Austria is an effortless process for EU citizens holding a resident card for Austria. All you need to do is register your company, and you’re good to go. On the other hand, setting up a venture is complicated for those residing outside the EU. However, once you know the etiquette of Austrian business ventures, the process becomes straightforward.

Starting a business in Austria has ample benefits offered by the country. Some of the significant advantages of doing business in Austria are:

• ~The high purchasing power of the local people because Austria is one of the wealthiest nations in the EU
• ~Convenient location which connects businesses with a more extensive customer base
• ~Robust and efficient public administration
• ~Excellent stability from political, economic, and social aspects
• ~Attractive tax incentives that include tax grouping, R&D tax credit, etc.
• ~Productive and affordable labor segment
• ~No trade or wealth tax

The following requirements are necessary before setting up a business in Austria: 

Work Visa

The Austrian law does not require Swiss and EEA citizens to acquire a special visa to expand their business. But for nationals of other countries, a work visa is a must before setting up a company in Austria. The validity of these visas depends on their type, but they last for 6 to 12 months on average.

The types of work visas in Austria are:

The Red-White-Red card:

‍This program is a high-skilled immigration scheme that allows skilled non-residents of the EU to get a work permit. All applicants must acquire a score of 70 points to qualify for this visa, which remains valid for two years. 

EU Blue card:

‍If you don’t require long-term visas and have short-term business plans in Austria, you can opt for a business visa. This visa is valid for 90 days.

Business visa:

‍This card is a substitute for the Red-White-Red Card, and it applies to the same skill-set. It grants equal work rights similar to the Austrian citizens and is valid for four years.

Company name and address

For any business to grow in a foreign market, the company name and address hold utmost importance. When choosing a company name in Austria, mention the partnership type (general or limited partnership type) and the corporation (private or public company). You can also seek guidance from the Austrian Federal Economic Chamber for your company name. 

Similarly, the company registration process in Austria would remain incomplete without a proper address. Various institutions will deliver every official correspondence (like insurances, taxes, social security, etc.) to this registered address.

Taxation

The Austrian government provides affordable taxation regimes for foreign companies operating in the country. Your tax requirements to do business in Austria will encompass the following:

• ~A 25% corporate tax is levied on a company’s total income and net profit. EUR 3,500 is the minimum amount for limited liability legal structures, while this amount reduces to EUR 1,750 for joint-stock ventures.
• ~A 20% VAT (Value Added Tax)
• ~The sole traders earning EUR 30,000 or less are eligible to pay 23% to 50% income tax.
• ~A 25% withholding tax is levied on interest earnings. This also includes incomes from security earnings.

Business capital

Business capital is vital to setting up an offshore company in Austria. It refers to the minimum investment you must bear to start a business in Austria. This cost varies with the type of legal business structure. For general or limited partnerships, there isn’t any sanctioned minimum investment. 

However, for the limited liability companies, the amount is EUR 35,000, of which EUR 17,500 (at least) needs to be deposited in the bank in cash. For joint-stock ventures, the minimum investment should be EUR 70,000, and 25% of this amount needs to be paid in cash.

Director/Officer

Stock corporations require a board of management to operate legally. The Austrian laws also mandate a minimum of three supervisory board members. At least one managing director is mandatory for limited liability companies and three supervisory board members.

Shareholders

The Austrian laws do not limit the maximum number of shareholders in a company, but there must be at least one. 

For a joint-stock venture, shareholders do not have any personal liability to the company, and the shares for each member must be registered with the Austrian companies registry. However, for a general partnership, the shareholders are liable for the gains and losses on their assets.

License

To trade commodities in Austria, you need to contact the local authorities and collect a trading license. To register for this license, you must submit your basic credentials like name, contact information, company address, designation, business type, etc.

Bank account

To set up an offshore company in Austria, you must register for a local bank account to deposit the minimum capital investment. You also need to obtain a confirmation of the account opening, as it is mandatory for business registration.

Following are the types of legal entities you can set up in Austria:

Joint-stock company (AG)

A joint-stock corporation or company is limited by share ownership. The shares are eligible for trading in the stock market. The Austrian law mandates one supervisory board for a joint-stock company with a minimum of three members. Joint-stock companies are legal organizations that can be established by either one shareholder or more with a minimum of EUR 70,000 primary investment.  

Private limited liability company (GmbH)

A private limited liability company is one of the most popular types of legal business structures. It is popular owing to its more significant control over corporate law and a provision for lower equity holding. The minimum investment for this business structure is EUR 35,000, 50% of which must be deposited in the local bank before company registration in Austria.

General partnership (OG)

In Austria, open or general partnership occurs when two legal organizations (at least) or individuals partner together and operate as a single organization. In a general partnership, every partner has a total liability, both individually and wholly. A trade license and the Austrian Commercial Register’s registration certificates are the only two formal requirements necessary for setting up a general partnership.

Limited partnership (KG)

The company formation is the same as a general partnership in a limited partnership. However, one distinguishing feature of KG is that at least one partner must be a general partner, taking on full responsibility for the company management, its obligations, and rights. The other partners are limited partners only responsible for their investments. The formal requirements for a limited partnership are the same as a general partnership.

Silent partnership (stGes)

This structure is very similar to a limited partnership, with only one partner taking on the company's entire liability. The main difference is that a silent partnership does not offer any responsibility or managing power to the silent partners. 

Sole proprietorship

It is the second most popular form of legal business structure in Austria, where the entire entity is one person. This type of self-employment ensures the owner’s freedom of investment, simple accounting, and moderate taxation (though taxation might vary with the turnover variation). To begin as a sole proprietor in Austria, you also need a trade license.

The steps to offshore company registration in Austria are as given below:

Pre-registration:

‍The requirements for company registration in Austria are:

• ~Shareholders
• ~Agreement of the shareholders or notarized establishment declaration
• ~Managing directors
• ~Company name
• ~Incorporation certificate
• ~Articles of memorandum
• ~Minimum capital shares
• ~Local bank account
• ~Financial statements of the company

Registration process:

‍After you’ve collected all the relevant documents, you can begin the company registration process. 

• ~The first step is to get your company’s name and its activity approved by the Commercial Registry (HRA). For approval, you might also have to provide specific personal credentials.
• ~The second step is drafting statutory documents of your company, followed by notarizing them. 
• ~The final step is to submit the documents to the Trade Register to get sanctioned as a business organization in Austria.

Post-registration:

‍After registering your company, certain post-registration compliances are to be followed. These are:

• ~Filing for tax registration.
• ~Extending share certificates to the company’s shareholders.
• ~Registering employees for social security.
• ~Displaying company seal.

The cost of incorporating a company in Austria is about EUR 7400 for the first year. This covers the cost of:

• ~Preparing legal documents in Austria
• ~Registration of your company, tax payment
• ~Registration fees

The annual cost of your company in the next year can reach around EUR 3500. In addition, to acquire the trade license in Austria, you have to bear a charge of EUR 47.30.

For offshore company registration in Austria, you’d be required to apply for visas and work permits if you’re not an EEA or EU national. You need to reach out to the Austrian embassy to apply for a Red-White-Red Card, a Business Visa, or an EU Blue Card.

The Austrian government places immense importance on the growth of foreign companies in the country. The Austrian government provides attractive tax incentives to attract foreign businesses into the nation. Here are the details of government assistance for starting a business in Austria:

Group corporate taxation

The Austrian government provides two or more business entities to form a tax group to reduce their net worth eligible for taxation. This group can also include foreign members. However, the pre-requisite for group formation is that the parent company must hold beyond 50% of its subsidiary’s shares, either directly or indirectly. The domestic group’s profits and losses, including the foreign subsidiary’s losses, are offset. Offset taxation is a technique that significantly drops down the eligible amount for tax calculation.

Research & development (R&D) incentives

Austrian companies offering research premiums are eligible for attractive tax incentives. Austrian R&D tax credit was initially 12%, revised to 14% in 2018. This credit is also availed by companies engaged in contract R&D.

Double tax treaties

Austria has signed double tax treaties with over 70 nations to ensure that none of the companies in its jurisdiction has to bear the burden of double taxation. You can opt for this provision in two ways:

• ~By the relief at source method: You can opt for relief at the source by filing the payment receipts.
• ~By a tax refund: If your paying agent has already deducted the tax amount, you can opt for a tax refund.

Being an ambitious entrepreneur, you might already have a lot on your plate while expanding your overseas business. If you’re an HR professional, you might be loaded with responsibilities like training the new hires, directing the administrative functions, etc. So why take the extra burden of employee hiring, tax implications, or payroll management? You can trust Multiplier to take care of these troublesome issues for you. 

At Multiplier, we offer SaaS-based PEO and EOR services to help you draft locally compliant employment contracts, hire global talent, manage their payroll, and much more. You will not even have to establish any local entity with us while onboarding employees. Multiplier lets you access a global talent pool and ensures that all your fresh hires are local law compliant.