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THE MAIN CHARACTERISTICS OF AUSTRIA COMPANY

FORMATION
Legal form
Joint stock company (AG)
Private Limited company (GmbH)
Minimum Subscribed Capital
EUR 70 000
EUR 35 000
Minimum Paid-up Capital
EUR 70 000
EUR 17 500
Number of Shareholders
1
1
Type of Shares
Registered
Registered
TAXATION
Capital duty
1%
Net Worth Tax
0%
Corporate Income Tax
25%
Double Tax Treaties
Yes
Dividends Exemption
100%
Holding Requirements
10% and 1 year 15% corporate tax
Capital Gains Exemption
Yes
Tax Credit
Yes
Relief of Losses
Carry forward indefinitely
CFC Rules
No
Debt-to-Equity Ratio
No
WITHHOLDING TAXES
Dividends
EU Parent Co – 0%
Treaty countries – 0% – 10%
Others – 25%
Interest
EU Parent Co – 0%
Treaty countries – 0% – 10%
Others – 25%
Royalties
EU Parent Co – 0%
Treaty countries – 0% – 10%
Others – 25%
Liquidation
Nil
Location of meetings
Anywhere

INTEREST OF THE JURISDICTION OF AUSTRIA

Advantages of a company in Austria

  • No withholding tax on dividends paid to foreign parent company.
  • Tax on dividends is not applicable when income comes from a foreign subsidiary.
  • The jurisdiction is a member state of the European Union.
  • Accessibility for a large network of double taxation treaties.

Disadvantages of a company in Austria

  • High Corporate Tax of 25%.
  • A minimum share capital of EUR 35,000 is required to be paid up.

Main info

Located in the heart of Western Europe, Austria is a prosperous and sophisticated business center and it has acted for centuries as a European commercial gateway. The strong Austrian economy relies on international trade and the country’s GDP continues to increase, reaching to be one of the highest in the region.

Austria borders on Germany, Switzerland, Czech Republic, Hungary, Italy, Liechtenstein, Slovakia and Slovenia. Its area is about 84 thousand km², and the population is about 8.7 million inhabitants.

Austria may be characterized as a country with a stable economic, political and social sphere. The country has a highly skilled workforce, a safe environment and stable business ties with countries around the world.

Austria is a democratic federal republic with a separation of powers into three branches. Legislative power is concentrated in a bicameral parliament. The first chamber is the National Council, whose members are elected by the population in general elections. The second chamber is called the Federal Council, it includes representatives of nine federal provinces of the country. The country is headed by a president elected by the population for a period of 6 years. The executive power is exercised by the federal government, which is headed by the prime minister. Federal lands have a number of local bodies, including land assemblies, land governments, community councils.

The legal system refers to the continental type of law, the main sources of law are the Constitution and legislation. The judicial system consists of several levels: district courts, land courts, appellate courts and the Supreme Court. In addition, the Supreme Administrative Court and the Constitutional Court are also functioning in Austria. Judges are appointed by the President or by the government after the submission of the Ministry of Justice.

Types of companies and incorporation procedure

Austrian corporate law provides for the possibility of creation different types of companies, for instance, AG (Aktiengesellschaft – joint stock company), SE (Societas Europea) and GmbH (Gesellschaft mit beschränkter Haftung – or limited liability company). Each type of company has its advantages, for example, SE is one of the most convenient form for business and entrepreneurship in terms of the location of the company and its relocation to other EU countries.

01. GmbH (Gesellschaft mit beschränkter Haftung)

To create a limited liability company (GmbH), the authorized capital is required in the amount of EUR 35,000. However, it is possible to take advantage of the privileges to create a new company with a capital of only 10 000 EUR. To create a GmbH requires a charter, certified by a notary, which indicates the name of the company, the registration office, the company’s object, the size of the authorized capital, specifying the shares of shareholders. Management requires at least 1 director. Audit is required only for medium and large companies.

02. AG (Aktiengesellschaft)

Joint stock company is subject to more strict statutory supervision than GmbH. This is manifested in the fact that an supervisory board is appointed for the AG, an independent auditor conducts an annual audit of the financial statements. Meetings of shareholders should be held at least once a year. The authorized capital of AG is 70 000 EUR. Shares must have a nominal value of at least 1 EUR. Joint stock company shares may be sold on the stock exchange.

03. Holding Company

The Austrian Holding Company is an ordinary company which falls within the scope of general tax law and may benefit from the double taxation treaties concluded by Austria and the EU tax directives.

The Austrian Holding Company offers numerous benefits for different financial and commercial activities. Bellow you can find one who can immediately benefit and profit from the services of Austrian Holding Company and which activities will optimize taxes to a major degree.

Taxation

  • Legal entities in Austria are subject to corporate taxation at a standard rate of 25%. The definition of taxable income is calculated on the basis of annual financial statements. The profit shown in the reporting is adjusted taking into account deductions for losses and capital gains. Tax losses can be offset by trade income, or through capital gains. Expenses that are deductible can include employee benefits, insurance, cars and others.

  • It should be noted, that the residence of the company is important for taxation. A resident of Austria is considered to be a company if its legal location or management office is located on the territory of the country. Corporate tax is levied on the worldwide income of residents.

  • The minimum amount of tax is 1750 EUR (for GmbH), however only the established companies can take advantage of the benefits and pay 500 EUR for the first five years, and the next 5 years – 1000 EUR.

  • Dividends paid to shareholders are subject to a withholding tax and cannot be deducted. Dividends paid to a company that owns at least 10% of a distributing company are not subject to withholding tax.

    In Austria, as in other EU member states, VAT rules apply. The VAT rate is 20% and is levied on the supply of goods and services in Austria, as well as the import of goods from non-EU countries. Also, reduced VAT rates can be applied to certain types of goods and services.

Bank system and economy overview

Austria is among the richest countries, not only in Europe, but all over the world. Almost all branches of the economy are well developed here. There is a low level of inflation and unemployment. Among the main industries in Austria, mention should be made of engineering, equipment, metallurgy, textile, clothing, woodworking, and electrical engineering. In Austria, many minerals, timber, minerals, and energy are concentrated, so the mining industry is well developed. Tourism, agriculture and trade are actively expanded. At the same time, the main sector of the economy is the service sector.

The capital of Vienna is a major financial center. The banking system of Austria is one of the oldest and most reliable banking systems in Europe. Banking activity is regulated by the law on banks and EU legislation. Large Austrian banks have a high credit rating and are known all over the world for their reliability, stability, high-quality customer service and a high level of confidentiality of data. Each bank has a wide network of branches in various European countries, creating an effective banking system for the provision of financial services.

HOW TO
PROCEED

To incorporate or purchase a company the following documentation should be provided:

01

A completed application form signed by the company or by the representative

03

A personal bill, which is less than 3 months old from the date of the application

02

Copy of valid passport

04

Payment of our fees

Note: additional documents may be required depending on the certain offshore bank.

Set-up time: From the moment, we are in possession of all required documents:

3 days

Incorporation of
a company or purchase
of an existing company

15 days

Delivery of the original
company documents

3 weeks

Offshore Bank: offshore
bank account opening