How to set up a company in 奥地利

Establishment of a limited liability company (Gesellschaft mit beschränkter Haftung - GmbH) & FlexCo (Flexible Kapitalgesellschaft)

For the establishment of a subsidiary in Austria the corporate form of a limited liability company (GmbH) or a so called FlexCo, a special form of a limited liability company (see further below), is recommended.

The GmbH has so far been the most frequently chosen legal form in Austria for the establishment of a company. The shareholder(s) of the subsidiary (= Austrian limited liability) company may be a natural person(s) and/or a legal entity or legal entities. The shareholders may be non-Austrian citizens or legal entities established under the law of another country.

• Liability and the principle of separation

One of the greatest advantages of a limited liability company in Austria is the principle of separation: that means that the shareholders are not liable for the company's debts with their personal assets, but only the company's assets are liable (no personal liability of the shareholders).

The liability of the shareholders is limited by the amount of the shareholders' contributions.

• Establishment

A limited liability company (GmbH or FlexCo) is established by concluding a company agreement in the form of a notarial act, but it does not come into existence (acquire legal capacity) until it is entered in the Company Register.

In the case of the formation of a one-person limited liability company, “Ein-Personen GmbH”, the limited liability company is formed by a declaration of formation.

The GmbH may be established for any purpose, but it must not be established for political activities or for an insurance activity.

The limited liability company must have its own share capital, management and accounting system, and is subject to Austrian law (= the country of incorporation), even if the shareholder(s) are foreign natural persons or foreign legal entities of their Austrian subsidiary company.

• The NEW FlexCo in Austria

Since 1^st January 2024 there is the possibility to set up a new form of a corporate legal entity, the FlexCo, also called FlexKapG, Flexible Kapitalgesellschaft, Flexible Company.

Advantages

The FlexCo is conceived with a very similar structure to that of the GmbH: every unruled condition in the Austrian Law for FlexCo must be ruled as if it was a GmbH. Naturally, in the company name "FlexKapG”, “FlexCo” or “Flexible Capital Company" must be included.

A FlexCo is a special form of an Austrian limited liability company. One of the main advantages is the simplified participation of employees in such a company: for this purpose, so called "enterprise- value-shares" (in German: Unternehmenswertanteile) can be issued, which are particularly easy to transfer. Only less than 25% of a FlexCo’s shares may be “enterprise-value-shares”, a completely new feature of Austrian company law.

Enterprise-value-shares allow shareholders to participate in the net profit and liquidation proceeds, even if they are not allowed to participate in the decision-making process of the company, since the enterprise value shares are non-voting shares.

For the transfer of such enterprise value shares (share deal) a simple document drawn up by a lawyer is sufficient, and no Austrian notary public (Notar) is required for that purpose. So, there is no necessity to appoint a lawyer or notary, thereby enabling the parties to economize the transfer in terms of time and costs.

Moreover, new forms of financing a FlexCo are available, such as conditional capital increases or issuance of authorized capital which allows the company to raise capital faster.

In a GmbH shareholders can make decisions only in writing and only if all shareholders agree, whereas FlexCo offers simpler forms: The articles of association of a FlexCo may foresee that consent from all shareholders is not required for a written (circular) resolution. If the majority agrees, the decisions can also be taken via simple e-mail.

A FlexCo can be chosen for any legally permissible purpose, without any specific restrictions. Existing GmbH companies can be transformed into a FlexCo and vice versa. From a tax perspective this will be a tax-neutral conversion.

Yet, the respective contract for constituting the company must be in the form of a notarial deed.

Share capital

• Minimum share capital

Since 1^st January 2024 the minimum nominal capital of a GmbH and a FlexCo in Austria is EUR 10.000,00, (until then it was EUR 35.000,00 and EUR 10.000,00 for the formerly called “GmbH light”). For a FlexCo at least a ¼ thereof must be paid in cash, with a minimum nominal capital of at least EUR 2.500,00 to be paid in cash. For the GmbH at least half of the chosen nominal capital (= EUR 5.000,00) must be transferred in cash before the company is registered in the Company register.

Until 31^st December 2023 shareholders who wanted to benefit from the privilege of the reduced nominal capital of EUR 10.000,00 had to state this in the company contract and on all business papers (“gründungsprivelegiert”). The foundation privilege could not be claimed after the company’s constitution.

Austrian GmbHs that still have a share capital of EUR 35.000,00 (or more) are now allowed to reduce their capital to EUR 10.000,00 (and register it with the Company register). For creditors this means less share capital available in case of liability.

The FlexCo

As mentioned, the FlexCo offers the possibility to raise a minimum share capital of at least EUR 10,000,00, too. At least ¼ must be paid in cash (hence a minimum of EUR 2.500,00) and a bank confirmation from an Austrian bank institute serves as its proof. The only difference to the GmbH is that the share capital is divided into shares with and shares of enterprise value without voting rights.

Simple written form suffices for the transfer of enterprise value shares (without voting rights). Neither a formal Austrian notarial deed nor a private deed executed by an attorney or notary are required.

For shares with voting rights (= conventional shares), in contrast to a GmbH, no Austrian notarial deed is required. Yet, a private deed executed by an attorney at law (Austrian Rechtsanwalt) or a notary public is necessary, but no notarial deed. Especially for shareholders from abroad this means a quicker and cheaper, hence a more flexible way to buy and sell shares.

Enterprise value shares may be issued up to a maximum of 24.99% of the share capital, but do not entitle the holder to vote at the general meeting. The issuance of enterprise value shares must be expressly provided for in the articles of association.

Minimum number of shareholders

The establishment of a limited liability company does not require a minimum number of persons: One person alone can also establish a limited liability company (,,One-Person-GmbH”-,,Ein-Personen-GmbH").

The principle of separation also applies to a One-Person-GmbH.

Minimum share capital

See answer #1

Shareholders

It is not necessary for the shareholders to be Austrian citizens: Any domestic or foreign natural person or legal entity may be a shareholder of an Austrian limited liability company.

Foreign companies/legal entities that participate in the formation in Austria must prove their legal existence by a confirmation from the competent court or chamber of commerce - if this is not issued in German (=the official language in Austria), a certified translation into the German language by a certified translator enrolled in the list of Austrian court interpreters must be provided.

FlexCo

In the shareholders meeting decisions can be taken in a simplified form. Whereas in a GmbH all shareholders must express their votes in written form (mandatory), in the FlexCo this is not required. The articles of association of a FlexCo may foresee that consent from all shareholders is not required for a written (circular) resolution. Moreover, if the majority agrees, the decisions can also be taken via simple e-mail.

-        Number of managing directors

Each limited liability company must have at least one managing director. This (it is a mandatory body. The managing director manages and represents the limited liability company. Several managing directors may be appointed.

-        Who can be a managing director

Only physical (natural) persons can be appointed as managing directors, but not legal entities. A limited liability company cannot be a managing director. The managing director does not have to be a shareholder of the limited liability company; hence, an external managing director can also be appointed.

-        Other requirements

The managing director does not have to be an Austrian citizen, nor does he have to have a domicile or residence in Austria.

However, in urgent cases, if the managing director(s) required to represent the limited liability company is/are absent or cannot be reached in Austria, the court may, at the request of a party involved – e.g. a business partner of the GmbH, a creditor, an employee or a public authority – appoint a so-called “emergency managing director”, the so called Notgeschäftsführer. If you want to avoid this, it is advisable to appoint either a managing director or at least an authorized signatory [a so called “Prokurist”] with ordinary residence in Austria.

-        Appointment

The managing director is appointed by shareholders' resolution.

The appointment is to be registered by the managing directors in the company register without delay.

-        GmbH & FlexCo: appointment of a supervisory board

 Both in a GmbH and a FlexCo a supervisory board (the so called “Aufsichtsrat”) is facultative. A legal obligation to appoint a supervisory board exists in the case of a GmbH if either the share capital exceeds € 70,000 and the number of shareholders exceeds fifty (rarely in practice) or the GmbH has more than 300 employees.

Only in case of a “medium-sized” FlexCo a supervisory board is mandatory, which it is when at least two of the following three characteristics are met:

1. total assets exceeding 5 million euros and/or
2. turnover exceeding 10 million euros and/or
3. the average number of employees is over 50.

-        Same requirements for domestic and foreign companies

There are no specific legal requirements for foreign companies or natural persons coming from abroad to establish a company with limited liability in Austria.

However, it is essential to consult a lawyer qualified in Austria (Rechtsanwalt) and a tax advisor (Steuerberater) before founding the limited liability company to obtain knowledge of the legal and tax provisions.

-        documents required for the constitution

All documents required for the constitution of the limited liability company must be translated into German (=the official language in Austria) by a certified translator enrolled in the list of Austrian court interpreters.

In case the shareholder of the Austrian limited liability company is a foreign company, the individuals who will sign the Articles of Association must provide an officially translated power of attorney (Spezialvollmacht) granting them the right to represent the founder and the shareholder company. 

For both a GmbH and a FlexCo the form of a notarial deed is required. But if the company assumes the form of a one-person-FlexCo, the notary act is not necessary.

The partnership agreement is therefore the most important prerequisite for the formation of the company. It forms the contractual basis for the cooperation within the company and regulates the relationship between the partners.

The declarations and provisions of the partnership agreement bind the partners for their subsequent business activities. Since FlexKapG is largely subject to GmbH law, the framework conditions of a partnership agreement with the GmbH are also important.

The formation of a GmbH and a FlexCo in Austria takes place in the following steps:

-        pre-founding company (,,Vorgründungsgesellschaft”)

Prior to the conclusion of the company’s agreement, the limited liability company is in the pre-founding company stage.

In this stage the law assumes that a "pre-founding agreement" exists.

Such a pre-founding company is qualified as a civil law company (Gesellschaft bürgerlichen Rechts) - however, it has no legal personality.

At this stage the founders of the company are personally and unlimitedly liable for the liabilities of the pre-founding company.

Once the limited liability company is founded there is no automatic transfer of legal rights and obligations to the limited liability company.

-        establishing the contract or statutes

The contract establishing the limited liability company requires the form of a notarial deed and must have the following content:

- company name and registered office

- object of the company

- amount of the share capital

- amount of individual contributions

-        preliminary company (,,Vorgesellschaft”)

Between the establishment of the company’s agreement (the signing) and the registration in the commercial register the company is in the stage of a preliminary company.

If in this phase the company acts in the name of the future limited liability company, the persons acting (usually the managing directors) are personally liable for the liabilities.

For the constitutional act of the company (the signing) the shareholders either must present themselves in Austria for signing the documents or they appoint somebody, preferably the managing director, to sign in their names. For this it is required that the shareholders produce a special power of attorney that must be signed at any Austrian consulate/embassy abroad and then handed over to the director.

At this stage, all business papers must bear the designation: ,,in incorporation" must be indicated.

Once the company is registered in the commercial register the contracts concluded and their respective rights and obligations (= legal relationships) are automatically transferred to the "finished" GmbH.

-        registration of the company in the Company register

# deposit of the capital contributions

Before the company is registered in the Company Register, the share capital must be paid into the account of a bank with an Austrian banking license. The account holder must be the newly founded company or the managing director(s). The nominal capital must be at the free disposal of the managing directors.

The managing director must prove this when registering the company in the commercial register.

For that purpose, the banks issue a written confirmation.

# registration in the Company register

The application to have the company registered must be signed by all the managing directors. Furthermore, the company’s agreement and the documents whereby the managing directors are being appointed as well as the bank confirmation must be attached to the application,

With the registration in the company register the limited liability company comes into existence. This is called the principle of publicity (Grundsatz der Publizität).

-        Trade-license (Gewerbeberechtigung) in GmbH and FlexCo

To be operative the company needs to have a trade license for the object for which it was established. The Austrian trade law (Gewerbeordnung) contains the relevant activities for which a trade license is required. If the company is engaged in one of the activities for which a trade license is required, an application for a trade license must be filed with the competent authority (not the court). Furthermore, a commercial director (,,gewerberechtlicher Geschäftsführer”) must be appointed who has the personal qualifications or the required certificate of competence for the activities for which the company was set up.

The biggest challenges for foreign companies are issues of legal compliance, tax regulations and employment law.

It is therefore essential to consult an Austrian lawyer qualified in Austria (Rechtsanwalt) and a tax advisor (Steuerberater) before founding the GmbH.

-        issues of social insurance

If a person is shareholder of a GmbH or FlexCo and at the same time its managing director, he will be compulsorily insured according to the Austrian social insurance law (GSVG = Pflichtversicherung nach dem Gewerblichen Sozialversicherungsgesetz).

There is one exception: if the shareholder/managing director cannot exercise a controlling influence on the company (so at least with shares of up to 25% or between 25.01% and 49.99% and/or not being subject to instructions), then compulsory insurance is not required.

-        taxes for GmbH & FlexCo

The company is subject to corporate income tax of 23% on profits. If there is no profit or loss in a financial year, an annual minimum corporate tax of 5% (of the legal minimum share capital) is due. For this reason, the minimum corporate tax is EUR 500 per year (EUR 125 per quarter). Profit distributions are subject to capital gains tax (27.5%). Salaries that shareholders receive in addition to their services to the company are subject to payroll tax or income tax. Remuneration is subject to income tax. Income from the sale of company shares owned by employees is subject to its own tax rules.

-        Money laundering

Strict European and Austrian money laundering rules require that the company give to the Austrian bank clear information about the origin of the money transferred to the Austrian bank account and the purpose of your business.

-        Register of Economic Owners (Register wirtschaftlicher Eigentümer)

After the company has been registered in the commercial register, a notification must be made in the Register of Economic Owners.

To combat money laundering and terrorist financing, the Economic Owners Register Act (WiEReG) established the "Economic Owners Register". This enables those obliged by the money laundering regulations (such as banks and real estate agents), but also the authorities, to more easily determine the beneficial owners of legal entities.

All newly established legal entities must submit a report within four weeks of entry in the respective Company Register. Limited liability companies (GmbH) are exempt if all shareholders are natural persons (the data from the commercial register is used).

If no report is made, there is the threat of a compulsory penalty and subsequently also a financial penalty of up to EUR 200,000 in the case of intent and up to EUR 100,000 in the case of gross negligence.

Beneficial owners are always one or more natural persons. Anyone who holds more than 25% of an entity is the beneficial owner. If another entity has a shareholding of more than 25%, the beneficial owner is the natural person who exercises control over that entity. In the case of a chain of ownership, the beneficial owner must be determined at the end of the chain of ownership. Only if this is not possible, the top management level shall be indicated as the beneficial owner.

-        Labour Law

Should the GmbH hire employees, it is highly advisable to be informed about the applicable labor law and social law regulations as well as about the tax law regulations.

-        Trademark protection

Trademark protection regulations must also be observed: A limited liability company that wants to identify its goods and services with trademarks to distinguish itself from competitors and their goods or services must register the trademark with the competent authority.