The minimum share capital necessary to complete the incorporation process has been reduced to € 10.000 in July 2014

Society Constitution
offshore in Austria

Country analysis: legal structures

Everything you need to know to set up an operating company with a bank account.

1. Exchange of banking information

β€’ There are prison terms for disclosing customer bank details to third parties (and possibly fines).

β€’ Banks are fully subject to strict customer due diligence regulations (old FATF recommendation 5 / new FATF recommendation 10).

β€’ Banks are fully obligated to maintain sufficient records of customer and transaction data for law enforcement (old FATF recommendation 10 / new FATF recommendation 11).

β€’ Banks and / or other covered entities are not required to report large transactions in currency or other monetary instruments to designated authorities.

β€’ The national administration has sufficient powers to obtain and provide bank information on request, but with significant problems.

β€’ There are undue notice and appeal rights against the exchange of bank information on demand without qualifications.

2. Legal forms

The Austrian limited liability company (GmbH)

β€’ Austrian LLC (locally known as GmbH) is the type of business entity most commonly chosen by entrepreneurs looking to establish a business in Austria. A director and a shareholder must be appointed, both authorized to be of any nationality and residence. Still, the company must have a legal registered address located in Austria for registration purposes in the Commercial Register of its city of incorporation.

β€’ The minimum share capital necessary to complete the incorporation process has been reduced to € 10.000 in July 2014 for startups, of which half of the amount must be paid in cash before the start of the incorporation. However, the standard share capital requirements of € 35.000 continue to apply from year 11 after the establishment of the Audtria company.

β€’ Austrian companies are subject to value added tax registration if their annual turnover is expected to exceed € 30.000

The Austrian Public Limited Company (AG):

β€’ The Austrian PLC, commonly known as a corporation (AG) is a recommended legal entity when entrepreneurs intend to raise significant amounts of capital and / or list the company on the Vienna stock market. The AG requires a minimum share capital of € 70.000 for incorporation and at least 25% of the capital must be paid up before the company is set up in Austria.

β€’ At least one shareholder and one director must be appointed, who can be of any nationality and do not need to be Austrian residents. The AG must also appoint a statutory auditor. Like an Austrian LLC, the Austrian Public Limited Company must file financial statements with the Austrian Tax Administration.

The Austria branch (Niederlassung):

β€’ Foreign companies can establish branches in Austria. The branch may be 100% foreign owned. Foreign companies established in countries outside the European Economic Area (EEA) must appoint an individual representative, who must be a resident of Austria. This entity can also open and maintain a corporate bank account in Austria.

The Austrian representative office (Representanz):

β€’ The Austrian representative office of a foreign entity can conduct market research and promote the products and services of the parent company. Like the branch, this entity must appoint a representative resident in Austria if the parent company is outside the EEA.

REMEMBER

En Austria a resident director is not required. Holding companies are available in Austria.

OFFICES

Foster Swiss helps our Clients secure offices or we provide an office address. Most emerging markets require our Clients to have a 12-month office lease before company registration is approved.

We help our Clients overcome this challenge in the following ways:

Virtual office service

DDepending on the country and city, the rates range from US $ 900 to US $ 2000 and the annual active virtual office services range from US $ 1500 to US $ 4000).

Shared office space

LThe one-time fee is US $ 850. Thereafter, our Client pays the monthly rent directly to the owner).

Permanent office space

D Depending on the country and the city, the rates range from US $ 5.000 to US $ 8.000).

Accounting and tax

CEach entity must register for corporation tax with the Federal Tax Authority. Corporation tax is applied to local and international income at a standard rate of 25%. Returns must be filed electronically before June 30 of the year following the fiscal year.

VAT registration is mandatory for entities with an annual turnover of more than € 30.000. The rate of value added tax is 20% in Austria. Companies must file their VAT return monthly and pay VAT every year in June.

Monthly, quarterly, and year-end government tax obligations include:

  1. i) monthly payroll reports.
  2. ii) monthly or quarterly declaration of VAT and corporation tax.

Austrian companies are required to pay a minimum annual corporate tax of:

  1. i) € 1.750 for LLCs.
  2. ii) € 3.500 for PLCs.

However, companies incorporated since June 2013 benefit from a reduced corporate tax of:

  1. i) € 500 / year for 5 years after incorporation.
  2. ii) € 1.000 / year in the following five years.

Dividends and capital gains between parent companies and subsidiaries, both based in the EU, are exempt from corporation tax.

A 25% withholding tax applies to dividend payments to non-resident companies, unless reduced by tax treaty or EU parent and subsidiary directive.

Royalty payments to non-EU companies are subject to a 20% withholding, unless reduced by a tax treaty.

Interest payments to both Austrian and foreign companies will be 100% tax-exempt at source, unless the beneficiary is a non-resident dormant partner.

Employers in Austria must pay social security contributions at the rate of 22% of their employees' gross salary.

Other taxes applied to legal persons in Austria include:

  1. i) 1% capital transfer tax.
  2. ii) 3,5% real estate transfer tax.
  3. iii) stamp duty ranging from 0,8% to 2%.
  4. iv) 2% payroll tax.

Austria has signed an impressive 92 double tax treaties with different international jurisdictions, including the UK, UAE, US, Switzerland, Singapore, Sweden, among others.

Country problems

SEven though there is no minimum wage in Austria, average wages are still high compared to other European countries. Eurostat estimates them at € 34 per hour, the XNUMXth highest level in the EU.

The corporate tax rate applicable to companies established in Austria is considerably high, 25%, compared to its regional neighbors.

In addition to corporation tax, employers are also subject to a social security contribution that represents an average of 22% of their employees' gross earnings.

Given the nature of a federal state in Austria, the regulatory requirements when investing in some sectors of the economy, including construction and healthcare, may differ between the 9 provinces.

In the case of a bankrupt company that does not have a legal representative, the majority shareholders must file an insolvency proceeding.

German is the preferred business language in Austria and as a result a foreign investor generally needs to engage a local provider to act on their behalf. Furthermore, this makes it a difficult task for the entrepreneur to adapt to the Austrian business environment.

MORE CONFIGURATION SERVICES SOLUTIONS

  • Shareholders and Agents
  • Office permits
  • Protection of trademarks and copyrights. - Market study.
  • Legal support
  • Proportion of details of temporary unions or associations
  • Fusions and acquisitions.
  • Internal control.
  • Group restructuring.
  • Financial management consulting.
  • Buy a business.
  • Valuation of companies.
  • Credit recovery
  • Job solutions
  • Due diligence search on existing companies and individuals

3. Commercial register

β€’ The national business registry includes the identity information of the legal owner.

β€’ Information on legal owners is not always available online (up to 10 EUR / GBP / USD).

4. Transparency of society

β€’ Companies available without registered legal property information.

β€’ Updating the information on the identity of the legal owners is not mandatory.

5. Shareholders

β€’ All companies require the registration of all final beneficiaries at a threshold of more than 25% (FATF).

β€’ All names plus countries of residence plus addresses or NITs or dates of birth, passport or personal identifications are always recorded.

β€’ Updating the information on the identity of the final beneficiaries is not mandatory.

β€’ Real property is not always available online (up to 10 EUR / GBP / USD).

6. Company accounting

β€’ It is mandatory to keep accounting data.

β€’ It is not always necessary to present the annual accounts to a public authority.

β€’ Business accounts are not always online (up to € 10 / US $).

7. Country-by-country financial reports

β€’ Partial disclosure for both the extractive and banking sectors.

8. Corporate tax return

β€’ The secondary mechanism is subject to the restrictions imposed by the OECD model legislation; or no secondary mechanism (only the ultimate national parent entity has to present the CbCR).

β€’ Unilateral cross-border tax rulings (eg advance tax rulings, advance tax rulings) are available in laws or regulations, or administrative practice.

9. Identifier of legal entities

β€’ The use of an annually updated Legal Entity Identifier (LEI), developed under the guidance of the Financial Stability Board, FSB, is not mandatory.

β€’ The use of a Legal Entity Identifier (LEI) updated annually, developed under the guidance of the Financial Stability Board, FSB, is mandatory only for derivatives trading (OTC).

β€’ The use of an annually updated LEI for the identification of reporting financial institutions (in accordance with the Common Reporting Standard (CRS) is not mandatory.

10. Measures to avoid tax evasion

β€’ Dividend payments: Unilateral relief for double taxation through a tax credit system for a payment scenario (if the recipient is an independent or related legal person, or a natural person).

β€’ Interest payments: Unilateral relief for double taxation through a tax credit system for both payment scenarios (recipients always receive a unilateral tax credit, regardless of whether it is a legal person or a natural person).

11. Tax matters judicial secrecy

β€’ None or restricted access to both criminal and civil tax procedures.

β€’ None or restricted access to both criminal and civil tax judgments / verdicts.

12. Opaque structures

β€’ The jurisdiction issues or accepts the circulation of large bills / cash notes of your own currency (value over 200 EUR / GBP / USD).

β€’ Unregistered bearer shares are available / outstanding or registered by a private custodian.

β€’ Series LLC / Shielded Cell Companies are not available.

β€’ Trusts with escape clauses are not prohibited.

13. Anti-money laundering legislation

Austria is not on the FATF List of countries that have been identified with strategic AML deficiencies.

The latest Technical Compliance Monitoring and Re-rating Report was completed in November 2018. Based on that assessment, Austria was deemed to be 18 in compliance and largely in compliance with 18 out of 40 FATF recommendations. It was considered Highly Effective for 0 and Substantially Effective for 3 of the Effectiveness and Technical Compliance ratings.

Overall Non-Compliance Score for FATF Standards in percentage: 30,7%.

(100% = all indicators rated as not met / low level of effectiveness; 0% = all indicators rated as completed or highly effective).

14. Automatic exchange of information

β€’ Signed the MCAA and committed to sharing information on or before 2019.

β€’ Number of significant activated AEOI relationships (under the MCAA) published by the OECD as of October 2019: 95.

What type of private banking exists in Austria?

International Banking
Local banking

Central bank security ⭐⭐⭐

Each filtering bag international and digital banks They're available.

CRS: YES.

Real bank operations: 90%.

Visa type: €, $.

Joint accounts.

Remote management account: To consult.

Asset management Depending on the rating of the company.

Rates: Depends on the type of account.

Credit / debit cards in local currency.

Why with Foster Swiss?

Foster Swiss is an international company registered in Switzerland aimed at providing financial and compliance advice on a variety of topics related to company formation
and commercial banking internationally. We are specialized in the implementation of businesses in different jurisdictions, which means that we offer value-added services helping our clients in their expansion abroad.

Some of these services include:
Advice and consultancy,
visas, offices, nominated director / shareholder / secretary,
accommodation if necessary… to name a few.
Check with your assigned consultant for more information.