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Routes to Market in Austria

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Routes to Market in Austria

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Routes to Market Austria

With its high standard of living and its ideal local, you've decided to expand a business to Austria and researched your market. Now it's time to decide how you will register and establish your business. What is the best, most viable option for your company, your products, and yourself. Which is the path of least resistance? According to Austria law, foreigners can set up almost any type of in business in Austria with few exceptions.

Here are your typical options when expanding a business into Austria:

Sole Proprietorship

Commonly used for small businesses and operations, this type of business is set up and carried out by a sole proprietor. It is the simplest way to set up a new business as there is little formal filling and requirements. Once a sole proprietor has the correct local permits and they continue to maintain proper records, they are able to trade.

The downside to this type of business is that the owner is subject unlimited personal liability, including his personal assets.

Partnerships

Partnerships break down into several sections

 

  • General Partnerships Whether registering a business as two individuals or as legal entities, a general partnership is a contract of association in order to operate a business based on commercial principles. It must be registered in register of commence (Firmenbuch). As part of a general partnership business it can incur liabilities, be sued and take legal action; however it does not have its own legal personality. Each partner is subject to tax, and is personally liable for any business debts. This means if a debt occurs they will be responsible to pay that back with their own assets.
  • A Limited Partnership Once again this type of partnership has two kinds of partner. Each partner is taxable and it must also be registered in register of commence. However in this case only one partner is will be personally liable for the business debts, and without limitation. The other partner will only be liable for to the extent of their capital contribution i.e. the amount of money they have invested in the business.
  • GmbH und Co KG a unique case of limited partnership found in Austria and Germany. To break it down into simple terms there is the limited liability corporation (GmbH), which is the partner with unlimited personal liability. It provides an administrative role and generally does not provide capital. The limited partnership (KG) owns the assets and runs the business.
  • The Civil Law Partnership this is a partnership of two or more partners who combined their funds for a common purpose. This is not entered in the register of commence, however partners are still liable for taxation and are also liable with their own personal assets if any business debts should occur. This type of partnership is commonly used by businesses such as law firms as the partners of the civil law partnership represent themselves to third parties.

 

Corporations

A corporation is a business enterprise that is distinct from its owners. The assets of the owners are protected through a limited liability of shareholders and offer investors financial opportunities. The costs of registering and setting up a corporation are higher than that of a partnership and there is more government legislation to consider. Austrian corporations are either privately or publicly owned. The general public cannot buy shares in a privately owner corporation. While the publicly owned corporation must fulfil numerous disclosure and reporting requirements before being able to offer shares in its business to the general public.

 

  • Privately owned corporation, also known as a limited liability company the liability of its shareholders is limited and is an incorporated enterprise. There is a minimum level of capital needed by law to start up this type of corporation (35,000 Euros), half of which must be contributed in cash to the company. An Article of Association, which is concluded in the notarial deed, and the paid in cash are required when setting up a privately owned corporation. It must be registered in the register of commence and can be set up by a single person or enterprise.

 

The bodies of this type of corporation are broken down into three sections.

 

  • A general body of shareholders
  • A manager director, of which there can be one or more
  • A supervisory board (Normally for large enterprises)

 

It is important to remember that at least one business manager should have their residency in Austria and the managing directors have authority to represent the company to a third party. The corporation is taxable and any transfer of shares must be noted in the register of commence.

 

  • Publicly owned corporations are similar to a public owned corporation but does not need a notarial deed when transferring shares. It does not have to be noted in the register of commence. The share capital of this type of corporation must be at least 70,000 Euros, with at least 35,000 Euros must be paid in cash. The publicly owned corporation is taxable.

 

The corporate bodies of this type of corporation are broken down into three sectors:

 

  • The general body of shareholders
  • The supervisory board appoint the executive board
  • The executive board responsible for running the business

 

Licensing

Licensing in Austria is the permission for someone else to use your intellectual property rights: either a patent, trademark, trade secret, or copyright. Different types of license include:

 

  • Non-Exclusive License - A non-exclusive license implies that your intellectual property rights can be awarded to more than one licensee.
  • Exclusive License - A little more complex because, although the license may not be exclusive to one licensee, it may be exclusive to a geographic location, a certain product, or limited area of use. For instance, you may grant a licensee exclusive use of the rights in France, yet grant another licensee its use in Germany.
  • Patent License - The allowance of another party to use your patented product, design or process.
  • Trademark License - Trademark licensing means permission is awarded to a licensee to sell a product or service. However, the licensor retains more control in order to ensure that quality is maintained. Quality control is in place to uphold the image of the brand / product / service / licensor, and therefore sustain customer confidence and satisfaction.

 

Franchising In Austria

Franchising is the licensing out of a business name, product, technique, philosophy, trademark, etc, for a percentage of the income. Instead of setting up new outlets as part of your expansion, you license your existing business blueprint out to franchisees who then set up and manage it for you.

The benefits of franchising your business in Austria include: more freedom, as the franchisee takes on major responsibilities; minimal expense; lower cost and higher profits; potential for fast growth; brand building.

Disadvantages of franchising a business in Austria: although few, rely predominantly on your franchisees. They include: poor quality franchisees; franchisees not declaring all income; poor performance.

The Austrian market seems to be especially attractive for foreign franchise systems, having established itself by the mid-1980s. In 2006, the franchising business in Austria reached a six-digit volume of 100,000 jobholders. No franchising specific legislation exists in Austria. As Austria is an EU member, the EU regulation applies here.

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