Business in Austria: How to Register a Company, Overview of Forms of Ownership, Taxes and Prospects

Austria is a small country in the heart of Europe. It is one of the best EU countries for starting your own business. By registering a company here, you gain the following opportunities:

• Obtain Austrian citizenship and bring your family here;
• Utilize innovative technologies;
• Open a bank account and get a loan from a European bank, etc.

Business in Austria: How to Open a Company?

The World Bank, in its "Doing Business" project, highly rated Austria's openness to foreign entrepreneurs, ranking the country 22nd (out of 190) in its ease of business registration and operation. Foreigners are eager to set up businesses here because the local authorities provide the same business opportunities to foreign entrepreneurs as to residents of the country. Moreover, proximity to leading European states allows businesses to reach an international level.

Entrepreneurs from third countries must first obtain an Austrian residence permit. You can receive this document through family reunification or by securing official employment in the country. Although education here is considered one of the most prestigious in the EU, the cost of studying is quite affordable, and the diploma obtained can also be a basis for getting a residence permit.

Investment programs are widespread in European countries. For instance, if you need to get an Austrian residence permit, it is enough to invest a significant amount into the economy. You can also obtain a residence permit in the UK, Spain, Switzerland, etc., similarly.

Business Culture in Austria

Success in starting a business in another country or expanding an international company largely depends on your negotiation skills. It is essential to understand the key aspects of local business culture:

• Language: It will be much easier to negotiate in the official language of Austria. If your German is not fluent, you can use English or take a language course beforehand.
• Hierarchy: Always remember the chain of command. Orders from higher management are not up for discussion.
• Dress Code: As in any civilized country, it is important to maintain a conservative style and ensure that your clothing is neat.
• Punctuality: Austrians, like Germans, value punctuality. It is better to arrive at a meeting 5–10 minutes early.

Forms of Ownership in Austria

Local legislation offers several forms of ownership, allowing you to choose the one that fits the scope of your business, the number of owners, financing methods, etc. The most popular forms among foreigners are:

• Limited Liability Companies are favored by foreign entrepreneurs conducting business in Austria. The initial share capital requirement is €35,000.
• Joint-stock companies are more suitable for large business projects. The minimum capital required is €70,000.

Additionally, you can establish a sole proprietorship, form a partnership, or open a branch of a foreign company.

Registering a Company in Austria

Registering a foreign company involves providing the entrepreneur's passport details and social security number. The following conditions must be met:

• Minimum age of 18;
• Possession of a residence permit (you can apply for a European residence permit after rejection with the help of specialists);
• Work experience and qualifications in the chosen field;
• No criminal record.

Tax Rates in Austria

In 2018, the tax system included:

• VAT: 20%. Reduced rates apply in certain industries.
• Corporate profit tax: 25%. Even if you are operating at a loss, the minimum tax is €1,750 per year.
• Personal income tax: Ranges from 25% to 55%. Incomes over €1 million are taxed at 55%, while incomes below €11,000 are tax-exempt.

In recent years, some tax rates have slightly changed. For instance, the capital gains tax rate has increased from 25% to 27.5%, and the tax on real estate income has risen from 25% to 30%.

Promising Business Sectors in Austria

The Austrian economy offers opportunities for development in various fields, from winemaking to real estate. Among foreigners, tourism remains the most popular sector, contributing 10% of the state's budget revenue. However, the competition in tourism is fierce, so it is important to thoroughly study the local market before starting your business.

Important Changes in the Double Taxation Agreement Between Ukraine and Austria

A notable piece of news for Ukrainian citizens residing in Austria: on June 15, an intergovernmental agreement was signed between Ukraine and the Republic of Austria, leading to increased tax rates on dividends and other income sources.

Here are the details.

Amendments have been made to the Double Taxation Agreement between Ukraine and Austria to align its provisions with the OECD Model Tax Convention.

The changes include:

• Increasing the tax rate on dividend income from 10% to 15%;
• Increasing the interest tax rate from 2% to 5%;
• Introducing a 5% tax on royalties for scientific works and patents (previously, this tax was not applicable);
• Raising the royalty tax on literature and art from 5% to 10%.

Additionally, the protocol introduces two new provisions:

• “Entitlement to Benefits”: Designed to limit the use of reduced tax rates and exemptions if they are only used for obtaining benefits.
• “Exchange of Information”: Expands the rights of the competent authorities of Ukraine and Austria to exchange tax-related information.

It is noted that the changes will take effect after the mutual ratification of the document.