Looking to start a business in Austria? We explain the options, process, and requirements for making your dream venture a reality.
Starting a business in Austria can be quite simple. In fact, if you are an EU citizen and have an Austrian resident card, you really just have to register your business. If, however, you are an expat from outside the EU, the process can be a little trickier. Nevertheless, it is still very possible, especially if you are familiar with the local business etiquette.
To help you get the ball rolling, this guide takes you through everything you need to know about starting a business in Austria, including:
- Business culture in Austria
- Who can start a business in Austria?
- Legal structures for businesses in Austria
- Starting a business in Austria as an expat
- Starting an online business in Austria
- Foreign companies opening a branch of a subsidiary in Austria
- Starting a non-profit company in Austria
- Administering your business in Austria
- Business banking in Austria
- Taxation for businesses in Austria
- Business insurances in Austria
- Employing staff when starting a business in Austria
- Support and advice when starting a business in Austria
- Corporate social responsibility in Austria
- Useful resources
Business culture in Austria
Firstly, Austria takes a very formal approach to business. As such, business culture in the country requires a high level of formality and politesse. For example, meetings are always scheduled in advance and follow a strict agenda. In addition, formal titles are always used when addressing someone, and punctuality is certainly a virtue. Therefore, if you are setting up a business in Austria, you should be aware of all of these cultural norms. Also, it’s important to bear in mind that learning German can really improve your work prospects in Austria.
Small and medium enterprises are the backbone of the Austrian economy. In 2017, these types of companies made up 99.6% of the total business economy. They also employed nearly two million people and generated sales of over €482 billion. However, self-employment is not wildly popular in Austria. In fact, in 2017, the self-employment rate was 10.6%, which was below the EU average of 13.7%. In addition, more men than women are self-employed (12.9% vs 7.9%). Nevertheless, business is booming in Austria, with many new companies registered every year. Indeed, Austria welcomed 41,087 new businesses in 2018.
If you are planning to set up a business in Austria, you should first do some market research to ensure that your plans are viable. Austria’s robust economy houses many different industries, so you should try and find an innovative niche for your brand. However, the most important include construction and building, electronics, tourism, logistics, chemicals, automotive, and steel and mechanical engineering.
Who can start a business in Austria?
Starting a business in Austria can be quite simple. That is, at least as far as requirements go. This is because any citizen of an EU country, Switzerland, or the European Economic Area can open a company without any requirements. However, foreigners from outside these areas must first get a residence permit. In addition, you have to be at least 18 years old and must not have a criminal record. However, even if you meet these conditions, you must apply for a trade license from the local district authority in your area of Austria. After that, you have to register your business with the Austrian Commercial Register.
Business owners must apply for a trade license from the local district authority. You will need to provide personal details, your business location, and the type of business. You must also register your business with the Austrian Commercial Register. They will require personal information, including your passport, the details of the business type, and several registration fees that will need to be paid, including a trade license. All documents will need to be translated into German by an official translation service such as Lingoking, if not already. Official copies must also be certified by a notary. Once all registrations have been approved, and all fees have been paid, the business can legally trade.
Legal structures for businesses in Austria
There are many types of businesses in Austria. However, the most common is a limited liability company or a GmbH. Despite this, the easiest type of company to form is a sole proprietorship because you don’t have to fulfill any share capital requirements.
Limited Liability Company (GmbH)
The most common company type in Austria, the GmbH is a legally independent entity, which means that it is separate from its owners. The biggest advantage of this type of company is that owners are not legally liable for anything except the start-up capital. However, there are many intricacies to deal with when setting up this type of company. For example, it requires a minimum capital of €35,000 and requires a large amount of paperwork, such as Articles of Associations.
Joint-Stock Company (AG)
Operating similarly to a limited-liability company, this type of company is called Aktiengesellschaft (AG) in Austria. The main point of difference is that an AG needs a bigger start-up capital and, therefore, is more appropriate for large firms.
European Company (SE)
These companies are a unique proposition because only companies or persons who already have a business in Austria can set one up.
There are two types of partnerships in Europe, so if you are starting a business in Austria you should be aware of the difference. A General Partnership (OG) is a non-corporate company and doesn’t require many formalities – you just have to register the business. Furthermore, you don’t even have to have start-up capital. That said, all partners will bear unlimited liability. Conversely, a Limited Partnership (KG) offers limited liability to one partner while the other assumes unlimited liability as the director or manager of the company.
If you are starting a business in Austria by yourself, then this is probably the type of company you will register. It also applies if you are a freelancer. This is because sole proprietorships are the smallest type of business that can operate in Austria; they have only one individual owner. While this gives that person the luxury of operating the business single-handedly, they do also have to assume unlimited liability. Additionally, the company must be insured through the Austrian Social Insurance Authority for Business.
Starting a business in Austria as an expat
Starting a business in Austria can be quite easy. And, this is true even if you are an expat in the country. Of course, the process can differ depending on your personal situation and what kind of business you want to start. Nevertheless, here are a few things that any aspiring entrepreneur should be aware of.
How to obtain a business visa in country
Before starting a business in Austria, you should ensure that you have a residence permit or visa. This is because only legal residents with a ‘Red-White-Red Card’ can register a business in the country.
One option is to apply for a Red-White-Red Card for Self-employed Key Workers. Of course, you will have to meet numerous criteria and present several documents to obtain this. For example, you have to have a minimum transfer or investment capital into Austria of at least €100,000. Additionally, your occupation must create or secure jobs in Austria and involve the transfer or introduction of new technologies. In addition, you will have to present certain documents, such as:
- Identity documents (including passport and birth certificate)
- Proof of address (lease agreement or property deeds)
- Evidence of health insurance
- Proof of means of subsistence (payslips, employment contracts, bank accounts, etc.)
However, if you want to create your own business while also applying for a visa, you can get a Red-White-Red Card for Start-up Founders. In fact, this might be an easier option for expats who want to build their own business and be fully self-sufficient. As such, this visa allows you to establish a company to launch innovative products, services, or technologies. To do this, you have to submit a business plan for the company, prove you exert controlling influence, and show €50,000 start-up capital with at least 50% equity share. In addition, you have to score at least 50 points on a system that takes education, language, and other skills into account. Of course, you also have to present documents and evidence of competencies, such as:
- Identity documents
- Proof of address
- Health insurance
- Means of subsistence
- Evidence of vocational training, universities, and/or work experience
- Proof of investment capital
Registering your business in Austria
When starting a business in Austria, the first thing you have to do is get a trade license. You can do this at the local district authority by providing your personal details, business name and location, and the type of business. You will also need to register the business with the Austrian Commercial Register. Additionally, all documents must be translated into German, and a notary must certify official copies. As such, you can only begin trading once all the registrations receive approval.
That said, there are a few other requirements that you must meet very soon after starting a business in Austria. Firstly, you must register for social security (Sozialversicherung der Selbständigen). Secondly, you should register your business with the tax office and get a tax identification number. However, you can handle both of these at the local district office.
Licenses and permits
When starting a business in Austria, you will need to get a trade license. To do so, you will have to apply and state the business name, designation, and location, as well as the owners’ personal data. Additionally, you have to pay a fee of €47.30.
Furthermore, certain occupations and businesses require a specific license. However, these are mainly for trades that have a high level of regulation in Austria. For example, if you are a carpenter, engineer, pharmacist, or work with travel, gas, chemicals, or arms, you will need a specific license. While it can be easy to get one, you will have to show proof of qualifications, professional training, and work experience. However, these licenses are free.
Starting an online business in Austria
If you are starting an online business in Austria, you will still need to go through the normal registration process. However, there are a few other things to take into account that apply just to online companies.
Specifically, you should ensure that the company complies with Austrian laws. As such, you should ensure that you are aware of the E-Commerce Art, the Electronic Signature Law, Contract Law, and Intellectual Property Law. Additionally, if you are running an e-shop, you will need to know the Commercial Code.
Of course, online businesses must also give customers access to any contract terms and comply with local Data Protection Laws regarding personal data. And, if you register your online business with the Trademark Office, your company will have additional protection.
Foreign companies opening a branch or a subsidiary in Austria
A foreign company looking to set up an office in Austria has two options – a branch office or a subsidiary. However, each has quite a different structure so you should make sure to choose the right one for your needs.
A branch office is essentially an extension of a foreign company. As such, it is not an independent legal entity, so the parent company is legally responsible for everything the branch does. Because of this, a branch office must have the same name as the parent company. However, in Austria, tax only applies to local income and any situation where double-tax treaties are in play. Of course, there are many advantages to establishing a branch office. For example, it is easy to register the company and there are few requirements.
To set up a branch office, a foreign company must:
- Apply to the Austrian Companies Register
- Present the Articles of Association
- Provide a resolution for the establishment of the branch
- Show evidence of registration in another country
- Present specimen signature statements by all managing directors and domestic representatives
- Show evidence of regular business activity in the country of origin
A subsidiary operates as a separate legal entity from its foreign parent company. As such, the parent company is not liable for the debts and obligations of its subsidiary in Austria. That said, it also doesn’t have full operational control. Generally, a subsidiary is a limited liability company (GmbH). Thus, it can go through the normal business registration process in Austria. Of course, all the local applicable tax and accounting laws should be followed.
Starting a non-profit company in Austria
In Austria, there are two legal forms of non-profit companies and each one has its own framework. Foundations can be public institutions with permanent assets that pursue a charitable purpose or public benefit. Conversely, they can be private and set up by an individual founder or group of founders who provide operational funds.
As such, private foundations are free to pursue any type of charitable purpose. However, they must register as a business and acquire a legal status. Notably, there is no current procedure for registering for ‘not-for-profit’ tax exemptions in Austria.
Administrating your business in Austria
Of course, setting up a business in Austria is only the first step in legal record-keeping for a company. In fact, Austrian law requires businesses to follow strict accounting and record-keeping procedures. For example, managers must draw up annual financial statements within the first five months of a new financial year. This should also include notes on the accounts status and annual reports. Additionally, all of this should be approved at an annual general meeting within the first eight months of a financial year. Furthermore, all of this must be filed with the commercial register by the ninth month of a financial year. Be warned that there are hefty fines for missing this deadline.
In Austria, small corporations don’t have to be audited if they don’t have an advisory board and have less than 50 employees, €5 million in assets, or €10 million in turnover in two consecutive years. In addition, micro companies don’t have to prepare account notes if they include certain information with the balance sheet, including financial obligations and guarantees. All records must be kept for seven years.
If your business will be issuing invoices, you should also ensure that these meet the local requirements. In Austria, invoices must have the following information:
- Issue date
- Unique, sequential number
- Supplier VAT number
- Customer VAT number (if supply is more than €10,0000)
- Full name and address of supplier and customer
- Full description of goods or services provided
- Date of supply
- Net, taxable value of supply
- VAT rate and amount of VAT in euros
- Total Gross Value
However, if the invoice is for less than €400, you can issue a simplified invoice.
Business banking in Austria
When starting a business in Austria, you will probably need to open a business bank account. Many companies use Bank Austria for this because it offers two types of business bank account – a current account for companies and an Account4Business. While both of these offer a full suite of services, the Account4Business product is better for small businesses and sole traders. However, all types of business bank accounts in Austria will require a host of documents, such as:
- Government identity documents (ID cards, passports, birth certificates)
- Articles of Associations
- Proof of Address
- Evidence of tax compliance (for branch offices or subsidiaries)
- Proof of business operation (registration, invoices, financial accounts)
Taxation for businesses in Austria
All Austrian businesses have to pay value-added tax (VAT). As such, companies should be prepared to pay 20% of their income as VAT. However, partnerships and sole traders who earn less than €30,000 a year don’t have to pay VAT. Instead, you will have to pay income tax, which can range from 23% to 50%.
In addition to this, corporate companies have to pay 25% corporation tax each quarter. The minimum amount is €1,750 for GmbHs or €3,500 for AGs. Furthermore, corporations also have to pay profit tax of 25%.
Business insurances in Austria
If you are running a business, it can be useful to have insurance. This is especially true if you are not running a limited liability company because you could be legally liable for any problems. There are a few different types of insurance you can consider, as follows.
When driving in Austria, all vehicles must have at least third-party liability. However, if your company uses cars a lot or owns a fleet of vehicles, it might make more sense to have comprehensive vehicle insurance.
As an employer in Austria, you must provide accident or sickness cover for your employees. There are various types of personnel insurance, including income protection, life insurance, and disability cover. You can decide which one is best for your employees.
Public Liability Insurance
This type of business insurance is mandatory in Austria. This is because it protects companies against claims of negligence, death, injury, financial loss, and property damage.
Building and Contents Insurance
While not strictly necessary, this insurance can be useful if you have your own office or lots of property that is registered in your company’s name. This is because it protects your property from fire, water, and other damage and theft.
Employing staff when starting a business in Austria
All businesses in Austria must have two types of insurance for all staff. As such, you should register all employees with the Austrian Health Insurance Fund (even sole traders must do this). You must also register yourself and all staff for social security within one month of starting the business.
As an employer, you must follow all of Austria’s labor laws. As such, this includes following all the country’s employment conventions, including:
- Annual leave – employees are entitled to 30 days of annual leave after six months of employment, in addition to public holidays
- Sick leave – in Austria, employees are entitled to sick days
- Maternity leave – women normally get at least 16 weeks of maternity leave, and freelance contractors can also access maternity allowances
- Contracts – all employment must involve a mutual obligation in a written contract
- Working hours – Austrians normally have a 40-hour work-week; overtime pay at time-and-a-half is expected after this
- Legal termination – employment termination in Austria may be unilateral, subject to notice, or by mutual consent; however, employers must comply with the notice period stated in a contract
- Taxation – employers are responsible for withholding income tax for their employees
- Visas – any Austrian company wishing to employ foreign staff must first apply for the appropriate visa or residency pass
Support and advice when starting a business in Austria
Austria strives to support entrepreneurs by offering several options for business support and advice. In terms of funding, the most important organizations are the Austrian Reserch Promotion Agency (FFG) and Austria Wirtschaftsservice GmbH (aws). This is because both agencies offer non-repayable grants, guarantees, and subsidized loans.
Additionally, there are numerous domestic risk capital firms – such as Speedinvest – and angel investors. In fact, these provide millions of euros every year to finance start-up ventures. The City of Vienna government also operates the Vienna Business Agency. As such, aspiring entrepreneurs can use this service for consultations, funding, and affordable office space.
There are also several organizations that have been set up specifically to help female entrepreneurs. If you are a woman starting a business in Austria, you could get in touch with the Women’s Business Center, Women & Work in Salzburg, and Women’s Enterprise Service for support.
In addition, the Federal Ministry for Digital and Economic Affairs has its own support service for starting a business. Meanwhile, the Austrian Business Agency supports foreign companies looking to establish a presence in Austria.
Corporate social responsibility in Austria
Austria is at the forefront of sustainability and green initiatives, and this includes corporate social responsibility for businesses. Notably, respACT is the nationwide initiative for CSR. In fact, the organization has its own CSR guidelines – ‘A Guide to Future-Proofing Your business’ – developed in partnership with the Research Institute for Managing Sustainability at the Vienna Business University. In Austria, CSR is largely built around environmental initiatives, although many companies also organize social activities.
- Invest in Austria – a useful platform about businesses in Austria and how to set one up
- Digital and Economic Affairs, Federal Ministry, Republic of Austria – a government site relating to economic affairs in Austria
- Starting a Business, Osterreich – a government website about what to think about when starting a business in Austria
- Business Registration, City of Vienna – a state government website about where and how to register a business
- resPACT – Austria’s leading platform for corporate social responsibility