Austria in Offshore
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Austria Company Formation
Austrian company formation is an 8-stage process, which takes the following procedures:
- Receive confirmation from the Economic Chamber to prove that the company is a new business. This procedure is optional, but it can mean exemption from paying certain taxes. This takes 1 day to complete.
- Have the articles of association notarised. This takes from 2 to 5 days, and costs approximately EUR1000 to 1500.
- Deposit the minimum amount of capital required into the bank, a process taking 1 day.
- Registration of the company at the local court, and the publication of a formation announcement. This takes around 2 weeks, and costs approximately EUR210.
- Register with the trade authority, a process which takes a day. This has no charge if exemption has been granted under stage 1, in other cases stamp duties vary dependent on the type of trade.
- Registration with the tax office, and obtain a VAT number. This takes around 12 days.
- Register the employees with social security, which takes one day.
- Register with the municipality, who levy community taxes on all businesses. This process takes a day.
OG's are not subject to income taxation, but the shareholders are required to declare their share of profits. They must pay VAT. Until annual sales reach EUR 400,000.00, accounting is not required.
Limited commercial partnership (Kommanditgesellschaft - KG)
KG's are made up of one unrestrictedly liable shareholder, known as a general partner, and at least one restrictedly liable shareholder, known as a limited partner. Whereas a general partner is wholly and personally liable, a limited partner is only liable for the amount stated as the liability deposit (Hafteinlage) in the Company Register.
Articles of association between at least one general partner and one limited partner are necessary to establish a KG. Once the articles of association have been finalised, it is imperative to register the partnership with the Company Register.
The name of a KG must be followed by "Kommanditgesellschaft" or an abbreviation such as "KG". The company is required to apply for a trade licence in the company's name if it intends to run a trade business. All personally liable shareholders in a KG who belong to the Chamber of Commerce must take out social insurance in accordance with the GSVG. Limited partners may also be covered under the insurance policy if they are employees of the company. If they only hold capital and are not employed by the company then the limited partner is usually exempt from insurance.
KG's aren't liable to income taxation, but again, is it essential that the shareholders declare their share of the profits. The company is required to pay VAT. Accounting is required, once annual sales have reached EUR 400,000.00.
Limited-liability company (GmbH = Gesellschaft mit beschrnkter Haftung)
This is the most common legal form, after a sole proprietorship. This is primarily because liability is limited to the company; therefore, it is appropriate for those who wish to reduce capital investment risks.
A GmbH must have a minimum equity capital of EUR 35,000.00. It is required that each shareholder invest at least EUR 70.00 original capital. To establish a GmbH, you need articles of association which must be finalised in the form of a notarial deed. To legalise the establishment of a GmbH, as with all the other legal forms, you are required to enter the company in the Company Register.
The name of the company must include the designation, "Gesellschaft mit beschrnkter Haftung", which can be abbreviated, (for example, to GmbH).
Although GmbHs are legal entities, they must be publicly represented by one or more managing directors under trade law who are then wholly liable for losses in the circumstance of debt. If a GmbH wishes to run a trade business, it needs to have a trade licence which is issued in the company's name. In order for the company to obtain a trade licence, a managing director under trade law must be named. If you are only a shareholder in a GmbH, you are not subject to a mandatory insurance policy. If you are a shareholder and also a managing director under business law, you must be covered by social insurance according to the provisions set out in the GSVG.
The company profits are subject to corporation tax at a rate of 25%. If a company does not generate profits or reports a loss for a fiscal year, an annual minimum corporation tax of 5% of the equity capital must be paid. Any wage that a shareholder earns from their work for the company is subject to income tax or wage tax.
Companies constituted under civil law (Gesellschaft Rechts - GesbR)
A GesbR is made up of at least two countries. It is designed to unite money and workers in order to benefit them and make profits. It has no legal personality; thus it has no Land Register capacity, may not litigate or be sued as a company, has no company name and has no qualification under trade law.
To establish a GesbR, you will need articles of association between at least two shareholders. It is advisable to put them in writing. GesbRs are not entered in the Company Register. All the shareholders must register all trades since they will not have a trade licence. If they are conducting trade activities, shareholders need to be covered under the compulsory social insurance policy, as stipulated in the GSVG. Contributions towards accident insurance are also necessary.
GesbRs are not subject to income tax. Any profit shares earned by the shareholders are taxable however. The company is also required to pay sales tax.
Other legal forms include:
- Cooperatives and Industrial Societies
By choosing to incorporate an offshore company in Austria, business owners and investors can set-up a business outside the jurisdiction of its operations. Offshore companies are traditionally, but not exclusively, incorporated for lower fees and taxes. Business owners must abide the regulations of the offshore jurisdiction, and must not trade within the jurisdiction.
The benefits are vast. As aforesaid, reduced tax and fees are often big factors when considering offshore incorporation. A company may also choose and offshore location to:
- Simplify set-up and maintenance - entrepreneurs may find bureaucracy and red tape less of an obstacle in offshore jurisdictions
- Assume anonymity - the names of owners and directors are not for public record, and references to the company may only be made in its registered agent
- Ensure legal protection - for instance, some jurisdictions favour corporate governance, meaning a company is only liable to offshore laws as opposed to those in its areas of operation
- Protect assets - business owners may opt to arrange their assets and transactions in such a way that protects them from liability
Characteristics of an offshore company:
- Memorandum and Articles of Association
- Certificate of Incorporation
- Registered Office/Agent
- Shareholders / Members
- Directors / Managers
- Company secretary
- Statutory Register
Traditional locations for offshore incorporation are tax havens, such as the British Virgin Islands, Panama and Monaco. Other favoured areas include India, the Bahamas, Dubai, the Cayman Islands, Cyprus, Seychelles, Marshall islands, Delaware, Turks & Caicos Islands, Hong Kong, Jersey, Guernsey and the Isle of Man.
Business Premises Permit
It is advisable to check as soon as possible whether you need authorisation or a permit for your business premises. You must not sign any property agreements or leases before you have received authorisation for your business premises.
Austria is generally one of the most expensive countries in which to buy property. The rate of capital gains tax on the sale of real estate in Austria is taxed as regular income at the high rate of 34%. Property used as a primary place of residence is exempt from this tax, as is all real estate held for more than ten years. Many people thus retain a property for more than ten years in order to make a profit when they sell the property.
Since Austria joined the EU, the process for any EU citizen purchasing real estate in Austria is fairly simple and straightforward. EU citizens essentially retain the same rights as Austrian citizens in terms of the purchase and ownership of real estate.
Organisations that can assist with Austria
Need to register a company or setting up a company?
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