Austria

Advantages:

1. Austria is one of the richest and stable members of the EU.

2. Austria has made more than 50 Double Taxation Agreements with different countries.

3. There is no monetary control in Austria except obtaining information for statistics.

4. The variety of the company’s forms allows to choose the proper form for own business.

5. Bright-line legislation.

6. In case Austrian company meets some obligations it can be exempt in Austria from the duty to pay taxes on dividends.

Forms of companies:

There are 3 types of companies:

1. A company with limited liability called GmbH (Gesellschaft mit beschränkter Haftung)

The most popular form of business.

GmbH is founded according to the German Limited Liability Companies Act (GmbHG) from 1906 (last amendments were made in 2005). The company begins to exist after incorporation in the Commercial Register of the land where the registered office of the company is situated.

The minimal authorized capital shall be EURO 35 000, 50% of which shall be paid up.

The Members of GmbH can be individuals and/or legal entities, Austrian residents or not. Only one member is necessary to found GmbH. GmbH can be founded by an individual, corporation, trust or association.

The management of the GmbH is exercised by the appointed Director who is fully liable for the activity performed by the GmbH and for non-payment of the taxes.

There are no shares in GmbH, the members have parts in the authorized capital of the company.

2.Company limited by shares (AG – Aktien Gesellschaft)

Company limited by shares (AG) is founded according to Company Limited by Shares Act from1965 (AktG). AG begins to exist from the moment of incorporation. The procedure of incorporation is similar to the procedure of GmbH with exception that all founders of AG should sign the articles of association in front of a notary.

The minimal authorized capital of AG is EURO 70 000, 50% of which shall be paid up. For the incorporation of AG minimum 2 shareholders must be present, however, after incorporation the shares can be transferred to one of them.

AG can issue nominal shares, bearer shares, voting and non-voting shares, preferred shares.

3. Limited liability partnership (KG- Kommanditgesellschaft)

Along with the unlimited members in the Limited liability partnership there are members with limited liability. These members are liable in the amount of their contributions. They have no right to govern the partnership. The capital here consists of the parts and not shares.

Incorporation

The establishment of a GmbH is based on a notarial deed as required by law. By signing these articles of association in front of a notary, the shareholders confirm that they agree upon the regulations laid down in the articles of association. Provided that the shareholders are not in the position to come personally to this notarial deed they can be represented by a power of attorney. The power of attorney has to be authenticated in any case, an apostille can be required, depending on the very country from which the shareholders are from.

Concerning the name of the company the Austrian courts are very restrictive. According to a newly issued regulation, the name of the company may not include a name which can be found in the telephone register of Austria and which is not a name of one of the shareholders. The name of the company must be distinctive and true. It may not include the word “International” unless the shareholders can give proof that they are doing business in four different countries or three different continents and already use this name in these other jurisdictions. The name of the company must truly reflect the purpose of the company as it is laid down in the articles of association. It should include a clear and precise definition of the business of the company.

The articles of association include name, registered office, goals of the company, size of the authorized capital.

The minimal quantity of the directors for GmbH and AG is one. He must be an individual but not obligatory the resident of Austria.

The minimum quantity of the shareholders in AG is one. The shareholder can be individual or legal entity, resident or non-resident of the Austria. The information about the shareholders is not included in the state register.

Taxation

Corporate tax is levied at 25% tax rate.

Income tax is calculated at the progressive scale from 0% to 50% (4 levels).

Capital gains tax is levied at 25%.

VAT is levied at 20%, but can be reduced to10%. This tax rate concerns touristic services, products and some other services. The monetary limit for VAT registration is annual income of 7 500 EUR.

Dividends paid by the Austrian company to its shareholders are taxed at 25% rate. However, the tax rate can be significantly reduced or equal to 0% if the Double Taxation Agreement is applied.

Accounting

The financial statement should be submitted each year and disclose information about all assets, profits and losses.The financial statement should include true information about company’s assets, investment funds and each joint stock company. It’s necessary to mention all big and middle companies with limited liability.

The companies with limited liability (GmbH) and companies limited by shares(AG) shall submit the financial statement (it can be shortened) to the Commercial Register (Firmenbuch). In addition, big companies limited by shares, banks, insurance companies and investment funds shall publish a shortened version of the annual statement in the “Wiener Zeitung”.

Prohibited activity

Banking, insurance or other activity on which the state has monopoly.

Monetary Control

No

Double Taxation Agreement

Austria has made more than 50 Double Taxation Agreements with different countries.