Steps to set up a Limited Liability Company in Austria
The following regulations must be complied with if one wants to establish a GmbH in Austria:
Articles of association Shareholders' Agreement
Drawing up and signing of the articles of association or shareholders' agreement, called the "declaration of establishment" in the case of single founders (notarial deed)
- Minimum share capital for the LLC or "privileged formation" of a LLC
Cash/contributions in kind of at least € 35,000, of which at least € 17,500 has to be paid in cash. Since 1 March 2014, a LLC can be founded with an initial paid-in capital stock of € 10,000 and a cash contribution of at least € 5,000 (= incorporation privileges). This status of a privileged formation ends no later than ten years after the company has been entered into the commercial registry. At that point in time the capital must be increased to € 17,500.
Opening of a business bank account and payment of the cash contribution into the account
- Appointment of the managing directors based on a shareholders' resolution and including a notarised signature (in contrast to Germany, it is required for a company to have a managing director under commercial law).
Application according to the Business Startup Promotion Act (“Neugründungs-Förderungsgesetz”), if applicable
Entry in the Companies' Register
Application submittet to the Commercial Court
Commercial Register entry, signed by all managing directors with certified signatures, including the following:
Articles of association/shareholders' agreement (notarized copy)
Shareholders’ resolution on the appointment of the managing director(s), attested by a notary public (unless the appointment was made in the shareholders’ agreement)
Specimen signature statement(s) by the managing director(s), attested by a notary public
Evidence of payment of the cash contribution (declaration by the managing directors pursuant to Section 10 Limited Liabilities Companies Act and bank certificate)
Evidence on the payment of the capital transfer tax
Registration of the trade and announcement of the appointment of the managing director under the Trade Law
In Austria it is required to register the business for the purpose of engaging in a lasting business activity for the purpose of generating a profit. Simply providing notification of the line of business is not sufficient. The following distinction is made:
Notice of business operations to the tax office and registration of employees
A Limited Liability Company is a taxable entity and is subject to the corporate tax and the value added tax. A LLC must apply for a tax identification number after being entered into the Commercial Register.
Corporate income tax applying to the LLC: 25 % of the taxable profit
A minimum corporate income tax of € 500 per quarterly period has to be paid in the first five calendar years after founding a LLC, and € 1,000 per calendar year for the following five-year period (tax foundation privilege).
Subsequently the minimum corporate tax to be paid annually is € 1,750.
Social insurance: registration of employees with the responsible social insurance institution before they begin to work.
Start of business operations.
On a ranking of company-friendly countries, Austria is in the top ranks when it comes to the corporate income tax.
Philip Nierlich from NHP Notare explains how to virtually found a company in Austria.
Assistance provided by ABA - Invest in Austria in setting up a LLC in Austria
If requested, the experts at ABA - Invest in Austria will provide support in handling the processes mentioned above and assist foreign investors and company founders. ABA can also clarify which type of trade is involved for the planned business activity and which prerequisites must be fulfilled. The employees of ABA will be glad to help when it comes to submitting applications for acceptance of a foreign business license or searching for a managing director under commercial law and look forward to hearing from you.
Questions on establishing a Limited Liability Company in Austria?
ABA - Invest in Austria is the first point of contact for foreign companies aiming to set up a limited company in Austria. The services offered by ABA – Invest in Austria are tailor-made and free of charge for international investors and company founders.Get in touch with a business location expert
"Starting Business in Austria" - Download online brochure and checklist
You can find detailed information on setting up a Limited Liability Company in Austria along with related tax and legal aspects in Austria in our online brochure Establishing a Business in Austria.
In addition, you will find basic information required to help you prepare for your discussions with a lawyer or tax consultant, as well as a checklist for establishing a LLC and a list of addresses which could assist you in the process of setting up the LLC.
FAQs: Establishing a limited liability company (GmbH) in Austria
- How much does it cost to establish a LLC in Austria?
- What is a privileged limited liability company?
- How much share capital must a LLC have?
- What is the tax rate applying to a limited liability company?
- What are the advantages of a limited liability company?
- What is a single-member limited liability company?
- What is the difference between a GmbH and a UG (entrepreneurial company)?
- What must be kept in mind when establishing a LLC in Austria?
How much does it cost to establish a GmbH in Austria?
Anyone who wants to set up a limited liability company (Gesellschaft mit beschränkter Haftung, in short: GmbH) must pay the sum of € 35,000 as share capital. When the LLC is in the process of being established, this amount equals € 17,500. It is also possible in Austria to take advantage of the foundation or incorporation privilege, the so-called GmbH Light. As a rule, the costs for establishing a GmbH in this case are between approximately € 3,500 and € 5,000 (lawyer and notary public) and can be even higher in complicated cases. One should obtain a binding offer to precisely clarify the costs.
What is a privileged limited liability company (gründungsprivilegierte GmbH)?
Limited liability companies being established in Austria for the first time can take advantage of the so-called foundation or incorporation privilege and are classified as GmbH Light.
In this case, € 10,000 in seed capital is required. At least half (€ 5,000) of this amount must be paid in immediately, whereas contributions in kind are excluded. However, this amount must be increased to the legally stipulated minimum cash contribution for a GmbH of € 35,000 within a period of ten years. This foundation privilege exists for a maximum of ten years after the company has been entered into the Commercial Register.
How much share capital must a LLC have?
- Legally stipulated minimum share capital: € 35,000, of which € 17,500 has to be paid in.
- Incorporation privilege for the first ten years: € 10,000, of which € 5,000 has to be paid in.
What is the tax rate applying to a limited liability company?
The usual corporate income tax of 25 % applies. A minimum corporate income tax of € 500 per quarterly period has to be paid in the first five calendar years after founding a LLC, and € 1,000 per calendar year for the following five-year period (tax foundation privilege). Subsequently the minimum corporate tax to be paid annually is € 1,750. Losses can be carried forward for an unlimited time and offset against future gains. The offsetting limit is 75 %, so that 25 % of the taxable annual profit remains in spite of high loss carryforwards.
What are advantages of a limited liability company?
- The liability is limited to the assets of the company.
- The LLC is suitable for the retail and service sectors as well as for production operations, but also for freelance, artistic and scientific purposes.
- In most cases, the corporate income tax is lower than the income tax applying to a business partnership.
- Shareholders can work as employees for their own company.
- Staff costs reduce the taxable profits of the LLC.
What is a single-member limited liability company?
What is the difference between a GmbH and a UG (entrepreneurial company)?
The Unternehmergesellschaft (UG, haftungsbeschränkt) - the entrepreneurial company with limited liability - is a stock corporation in accordance with German law. It is considered to be a special form of a limited liability company (GmbH) due to the fact that the shareholders are only held liable for the business assets but not for their own private assets. In contrast to the GmbH, the UG can be founded with a minimum share capital of € 1. For this reason, it is commonly known as the 1 Euro GmbH. A UG does not exist in Austria. However, company founders can apply to take advantage of the so-called incorporation privilege in order to facilitate their start into business life.
What must be kept in mind when establishing a LLC in Austria?
As a rule, a business license is required in Austria to conduct a particular business activity. The LLC is authorised to conduct the business activity once it is entered into the Commercial Register.
Useful links on establishing a LLC in Austria
You will find additional information here on founding a branch office in Austria and our 15 tips for successfully setting up a business in Austria. Here you can find more information about the procedure of the digital LLC founding in Austria.
You will also find further information on the business location Austria in our download area
You can find useful and detailed information on key sectors in the business location of Austria in our online brochures.