Austria

Company formation in brief

Austria is not a tax haven or offshore jurisdiction, and of the diversity of organisational and legal forms of Austrian enterprises, a prospective non-resident investor could be interested in setting up one of the following:

  • Offene Handelsgesellschaft (OHG) and Offene Erwerbsgesellschaft (OEG) - Partnership with unlimited liability;
  • Kommanditgesellschaft (KG) and Kommanditerwerbsgesellschaft (KEG) - Limited liability partnership;
  • Gesellschaft mit beschrankter Haftung (GmbH) - Private limited liability company;
  • Aktiengesellschaft (AG) - Joint stock company with limited liability;
  • Stiftung - private non-commercial foundation;
  • Zweigniederlassungen - Branch of a foreign company.

Partnerships

There is no fundamental difference between limited and unlimited liability partnerships, except that:

  • Offene Handelsgesellschaft (OHG) and Offene Erwerbsgesellschaft (OEG) - a partnership with unlimited liability consists of two or more equal partners (individuals and / or legal entities, residents and/or non-residents of Austria) who have unlimited liability for debts and obligations of partnership in Austria;
  • Kommanditgesellschaft (KG) and Kommanditerwerbsgesellschaft (KEG) - a limited liability partnership implies the existence of at least one general partner with unlimited liability and at least one limited partner, who is liable for debts and obligations of the partnership only within a predetermined amount between partners. A general partner, in turn, may be a limited liability company.

In case a partnership's annual turnover will be less than € 400,000 or the intended type of activity is not directly related to trade, production or provision of professional services such as medical or lawyers, then a partnership with unlimited liability will be registered in the form of OEG, and a limited liability partnership in the form of KEG.

If partnership conducts actual activities in Austria, it must have at least one Austrian resident among its managers who could also be a resident of one of the neighboring countries of Austria. Depending on specifics of the proposed partnership's activity, the resident manager must obtain in his name either a formal permit or a license.

There are more than 80 types of activities which are prohibited without an appropriate license in Austria. Licensing as such is rather long process which requires confirmation of the manager’s professional compliance, verification of his/her non-criminal past, availability of reference letters, etc. The manager is also required to be registered in Austria for social security purposes.

Gesellschaft mit beschrankter Haftung (GmbH)

Gesellschaft mit beschrankter Haftung (GmbH) is a private limited company that has specifics as follows:

  • a minimum number of shareholders (individuals and/or legal entities, residents and non-residents of Austria) - 1, and its maximum number is not limited;
  • all capital must be subscribed by shareholders, and half paid in cash at the time of the company incorporation;
  • if second half of the capital is not contributed by cash assets, then an assessment of such property by an independent expert in Austria is necessary;
  • company shares can only be issued as registered shares;
  • shareholders are generally free to transfer their shares to third parties with appropriate notarization, but the company's articles of association may also stipulate a need for an appropriate decision of the general meeting of shareholders;
  • all shareholders are limited in liability within their share in the authorized capital of the company;
  • a company can be managed either by a single director or a board of directors;
  • a company has rights to conduct any legal activity, with an exception of banking, insurance, reinsurance, political and trade union;
  • a company must have a legal address in Austria, which, at the time of registration, could be an address of a lawyer or notary. Starting a commercial activity, the company should acquire its office, where the Austrian authorities could send information, regulations and other documents.

By analogy with partnerships, to operate in Austria, a GmbH will have to obtain a license.

In some cases, when, for example, a capital of GmbH exceeds €70,000 and when it has more than 50 shareholders, such company will be obliged to form a supervisory board to control activities of  directors, even if this was not initially provided for by the company' s Memorandum of Association.

Aktiengesellschaft (AG)

Aktiengesellschaft (AG) is a joint stock company that has specifics as follows:

  • a minimum number of shareholders (individuals and legal entities, residents and non-residents of Austria) is 2, and its maximum is not limited. A company can have a sole shareholder if it holds shares of other shareholders in trust;
  • all capital must be subscribed by  shareholders, and half must be paid in cash at the time of incorporation;
  • if a second half of the capital is not contributed by cash assets, then an assessment of such property by an independent expert in Austria is necessary;
  • shareholders are free to transfer their shares to third parties;
  • all shareholders are limited in liability within their share in the authorized capital of the company;
  • the company can be managed either by a single director or a board of directors;
  • a company is obliged to form a supervisory board to monitor  activities of its directors;
  • shareholders have rights to appoint and dismiss directors at any time, as well as impose any restrictions on their rights;
  • annual general meetings must be recorded by a notary.

Stiftung

Stiftung, being a specific form of a private foundation, is a legal entity designed for management of its founder's assets and property.

A capital of Stiftung is formed by contributions of its founder in cash and other kind, for example, real estate, antiques, jewelry, patents, copyrights, etc.

An agreed amount of the authorized capital is fixed by the founder upon registration, regardless to the actual size of Stiftung' funds. This guarantees anonymity of the actual Stiftung assets, since the founder has rights to add any contributions to it after registration.

After the founder transfers his/her property to Stiftung, legally it no longer belongs to the founder and no legal claims can be made against this property, even if the founder is prosecuted (except in proven cases of fraud). In practice, the founder remains an actual owner of his/her property and controls it through authorized lawyers during his/her lifetime in the same way as in a classic trust. Any individuals and legal entities can be beneficiaries of Stiftung, as well as the founder him/herself, who remains practically anonymous.

Stiftung is managed and controlled by a board consisting of at least three members, two of whom are required to be residents of Austria. The founder and beneficiaries are not entitled to be members of the board, whose members have the right to delegate their authority to third parties, regardless of their place of residence. The founder may limit  rights of members of the board and has a right of veto on any decisions. The board meets once a year to approve an annual report, which is not available for public in Austria.

Zweigniederlassungen

Zweigniederlassungen (branch of a foreign company) is an economically and geographically separate division of a foreign legal entity in Austria.

A branch is not a legal entity independent of the parent company, but its activities must be organized in such a way as to ensure further financial and administratively independent “existence” in Austria. A branch is endowed with a property of the parent company and acts on the basis of provisions approved by the parent company which also decides on the appointment of a head of the branch, who in turn works based on a power of attorney issued by the parent company.

The Austrian branch' name must match the name of the parent company.

A branch, like any other Austrian company or partnership, is required to obtain a license to conduct business activities in Austria.

Membership in the Chamber of Commerce of Austria is mandatory for all enterprises registered or incorporated in Austrian.

Austrian Tax Information Exchange Agreements:

Andorra, Gibraltar, Guernsey, Jersey, Mauritius, Monaco, St. Vincent & the Grenadines.

Austrian Double Taxation Agreements:

Albania, Algeria, Argentina, Armenia, Australia, Azerbaijan, Bahrain, Barbados, Belarus, Belgium, Belize, Bosnia and Herzegovina, Brazil, Bulgaria, Canada, Chile, China, Croatia, Cuba, Cyprus, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Hong Kong, Hungary, India, Indonesia, Iran, Ireland, Israel, Italy, Japan, Kazakhstan, Korea, Kosovo, Kuwait, Kyrgyzstan, Latvia, Lithuania, Luxembourg, Libya, Macedonia, Malaysia, Malta, Mexico, Moldova, Mongolia, Montenegro, Morocco, Nepal, Netherlands, New Zealand, Norway, Pakistan, Philippines, Poland, Portugal, Qatar, Romania, Russia, San Marino, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Syria, Taiwan, Tajikistan, Thailand, Tunisia, Turkey, Turkmenistan, Ukraine, United Arab Emirates, United Kingdom, USA, Uzbekistan, Venezuela, Vietnam.

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