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The Ultimate Guide To
Employment in Austria

Austria Facts

Population size: 8,569,633
Currency: EURO
Capital city: Vienna
Languages spoken: German, Croatian
Ease of Doing Business: 19

Employing in Austria: What You Need to Know

Various statutes regulate Austrian labor relations and the individual rights and duties of employer and employees. The most important source is the Austrian Constitutional Act on Industrial Relations, which provides a framework regulating the interaction between employees and employers. On top of that, almost all employers and employees are subject to collective bargaining agreements.

Key Factors to Consider When Employing in Austria

There are several key areas to be aware of within the Austrian employment regulatory framework, especially for companies that plan to initiate a full local office and human resources department.  These challenges can be mitigated by use of a locally sourced payroll provider who is familiar with all of the local laws and rules for both local employees as well as foreign nationals.

  1. Contracts

    Contracts of employment in Austria must state a mutual obligation upon employer and employee, which consists not only in providing services once, but implies a conduct which prevails for some time. There is no specific form required for a contract of employment; this means that it can be concluded orally, in writing or through conclusive action. If the employment contract is not put into writing, the newly-hired employee must be given at least information in written form, outlining his most important rights and responsibilities.

Employee Entitlements

Information Explanation
Statutory Working Hours ?

Normal working time amounts to 40 hours per week. In some cases, the collective agreement can include fewer working hours (i.e. 38.5 per week). The standard time spent at work may also be exceeded. In the case of overtime, employees are to be generally reimbursed with 50 percent extra pay, or 100 percent when the work is carried out at night, on Sundays or on holidays. The maximum working hours allowed is 60 hours a week and 12 hours a day.

Medical Leave ?

The principle of continued remuneration ensures that in the event of sickness, industrial accident and occupational illness and during rest cure and convalescence leave, employees’ remuneration will continue to be paid. How long one continues to be paid mainlydepends on the seniority, and different regulations may apply for white-collar workers and manual workers.

After continued remuneration, one receives sick pay from the health insurance provider. The amount of sick pay depends on the earnings in the last month before the illness and the amount of continued remuneration paid. As an employee one is obliged to inform the employer as soon as one becomes incapacitated for work.

 

Annual Leave Accrual Entitlement ?

After six months of employment, every employee is entitled to an annual paid vacation of 30 working days or five weeks respectively (Saturday is considered a working day). This right applies to people who have been employed for less than 25 years. When employees have been working for 26 years, the entitlement to holidays increases to 36 (paid) working days annually.

Maternity Leave in Austria ?

The protection period for pregnant employees normally begins eight weeks before birth and ends eight weeks thereafter. During the protection period the employment relationship continues to exist, and the employee receives a maternity allowance of about the same amount as the average remuneration during the last 13 weeks before the absolute employment prohibition. Since 1st January 2008, also freelance contractors receive maternity allowance.

Parental Leave

Mothers and fathers are entitled to parental leave of until the child reaches the age of 24 months (maximum), provided the parent in parental leave lives in the same household as the child. The minimum period of the parental leave is two months. The dismissal and termination protection ends four weeks after the end of the parental leave.

During the time of parental leave, and provided the conditions are satisfied, childcare allowance may be drawn. From 1 January 2010, parents may choose from five models of childcare allowance. One model is income-based, the others provide a monthly lump sum.

Employment Termination in Austria

Information Explanation
Termination of Employment ?

Individual termination may be unilateral, subject to a notice period or by mutual consent. It usually does not require any cause or any specific form.

According to Austrian labor law, an employer must comply with a scale of notice periods for termination of an employee’s employment, which may be lengthened under the terms of a collective bargaining agreement or individual employment agreement.

For salaried employees, the legal term of notice amounts to:

Year of service and Period of notice

1st and 2nd year = 6 weeks

3rd – 5th year = 2 months

6th – 15th year = 3 months

16th – 25th year = 4 months

after 26th year = 5 months.

An employer can immediately dismiss the employee for reasons of insubordination, disloyalty and other types of gross misconduct, or in case of violation of the duty of good faith. If an employer issues a notice of dismissal, the employment will normally end immediately.

However, the employee will be entitled to either full payment for the notice period applying to ordinary termination, or to have the termination cancelled, if he or she initiates and wins a claim under the rules for protection against termination.

Where an employer wishes to terminate or dismiss a protected class of employee it may normally only do so with good cause and where a labor court has approved the termination. The principal protected groups are: members of and candidates to the Works Council, pregnant employees up to four months after giving birth, employees on maternity leave and working parental part-time, employees doing their prescribed military service and disabled employees.

Probation

Information Explanation
Probation Period ?

A one month probation period can be arranged. During this time, both the employer and the employee can terminate the contract of employment without explanation.

Pension

Information Explanation
Pension Requirements ?

The main element of the Act on the Harmonization of Austrian Pension Systems (2005) represented the introduction of a uniform pension system for all employed under 50 years. As a consequence, this new pension system will gradually take the place of many different pension schemes for private sector employees, self-employed, farmers and civil servants.

Pension entitlements are subject to individual life-time earnings, reaping the maximum benefits of 80% of average earnings in the case of 45 insurance years 1 at the statutory retirement age of 65 years. The annual accrual rate will be continuously lowered from 2 to 1.78 percentage points until 2009. The basis of average individual earnings will be extended gradually from the best 15 to 40 income years until 2028.

A benefit will be granted provided that 7 years of pension contributions in a working life have been established. Pension benefits are adjusted every year by inflation and past contributions and maximum contribution levels are indexed by net wage growth.

The statutory retirement age is 65 years for men and women. Early retirement will be fully eliminated by 2017. A pension corridor was introduced between 62 and 68 years, but with an actuarially fair discount/bonus of 4.2 % per year before/after 65 years and at minimum when 450 insurance months have been acquired. Pension benefits are subject to personal income taxation and to social security contributions, above all on health care.

Concrete arrangements for private pension plans (third pillar) are made by the individual. Traditionally, life insurance has already played a major role, and life insurance contracts have continued to show a significant upward trend over the past years.

Using Shield GEO EOR Services: How We Can Help You

Compliance with local employment requirements is just one of the issues foreign companies face when employing staff in Austria. For companies, which intend to employ their staff directly through their incorporated Austrian entity, professional legal advice is recommended. Shield GEO provides an alternative path for companies to outsource the employment of their staff in Austria.

As a Global Employer Organization (GEO), Shield GEO acts as the Employer of Record and ensures the employment is compliant with host country regulations regarding employment. In addition Shield GEO will handle payroll processing, tax and immigration. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Austria.

The Shield GEO solution is an attractive alternative where

– the company is looking to employ staff quickly

– the company doesn’t have an appropriately incorporated entity in Austria

– the company wants to work within a defined budget

– the company wants to limit its initial commitment in Austria

– the company needs help with tax, employment, immigration and payroll compliance in Austria

Shield GEO can contract directly with the company to employ and payroll their staff in Austria. Shield GEO supplies local employment contracts for the staff which ensure that local statutory requirements are met covering issues such as termination, probation periods, leave entitlements and statutory benefits.  Shield GEO is able to advise companies how to cover local employment regulations whilst still providing consistent global employment policies. Understand more about outsourced employment through Shield GEO.

A GEO EOR Solution vs DIY Employment in Austria

GEO Solutions or DIY Employment

Companies entering Austria must make a decision whether to use their own resources for a Do-It-Yourself (DIY) approach, or to use a Global Employment Organization to handle payroll and employment responsibilities.  A GEO or Austria Employer of Record solution makes it faster, easier and cheaper to deploy staff if they don’t have an Austrian entity established that can run payroll.

A DIY approach will typically take 6-9 months until there is a properly incorporated WFOE ready to run payroll and cost up to 6 figures if registered capital is required. Shield GEO can deploy foreign staff in 4-6 weeks and local staff in 48 hours. Additionally, Shield GEO is responsible for all compliance issues related to the employment.

Using Shield GEO Employer of Record Services in Austria

Payroll

Payroll Austria
Management Fee for Employer of Record Services / Monthly Payroll Costs

Please contact us for a quote

Notes

Shield GEO pays the employee on a monthly basis, typically on the last working day of the month although we can adapt to your preferred schedule. Income tax and social security (where applicable) are deducted at source and paid to the local tax authorities.

Currency ?

EURO

Tax Amount
Grossed income Tax Rate (%)
1-11,000 0
11,001-25,000 36.5
25,001-60,000 43.21
60,001 and over 50

Income tax is charged at progressive rates and entitles to a basic tax-free allowance and deductions (which may vary depending on personal circumstances).

The employer deducts tax from your salary and remits it to the tax authorities on behalf of employees.

Tax returns are due by 30 April — but you only need to file one if you earn over a minimum amount from sources other than your employment or you are employed by 2 or more employers at once.

Tax Returns Supplied

Yes

Employers Social Security and statutory contributions

21.76% calculated on gross salary

Payroll and Tax in Austria

In 2015, the Austrian Council of Ministers announced few key elements of the upcoming tax reform. In particular, the progressive income tax scale shall lead to overall tax relief of approximately €5 billion. Moreover, the reform will increase the withholding tax on capital income, including dividends and capital gains, from 25% to 27.5%. An exception to this increase applies to interest income from bank deposits.

Your Payroll Options in Austria

Information Explanation
Remote Payroll ?

A remote payroll system is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Austria. Under Austrian Law, companies registered in other countries are allowed to obtain a license to do business and have employees in the country.

Local Payroll Administration ?

In some cases, a company will register their business in Austria under one of the forms available: Limited liability companies; Public Companies; Partnerships; Foreign branches

but prefer to have another company administering its payroll.  This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.

Internal Payroll ?

Larger companies with a commitment to Austria may wish to run their own local payroll for all employees, foreign and local.  In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff.  There will be a need for in country human resources personnel who have the background needed to manage an Austrian payroll, and can fulfil all tax, withholding, and payroll requirements.

This approach carries significant cost and requires some knowledge of local employment and payroll regulations.  The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Austrian employment laws.

Fully Outsourced Payroll & Employment ?

Companies can outsource the employment and payroll of their staff in Austrian to a GEO, like Shield GEO. This is possible for both foreign workers and Austrian nationals. This is the easiest, fastest and safest way to payroll staff in Austria.

Shield GEO manages all aspects of payroll for workers in Austria, including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client.

Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips.

Read more about outsourced payroll and employment through Shield GEO.

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Setting up payroll in Austria

Information Explanation
National Currency ?

EURO

Tax Figures

Information Explanation
Corporate Income Tax ?

25% on taxable profits

Income Tax Rate ?
Grossed income Tax Rate (%)
1-11,000 0
11,001-25,000 36.5
25,001-60,000 43.21
60,001 and over 50

Income tax is charged at progressive rates and entitles to a basic tax-free allowance and deductions (which may vary depending on personal circumstances).

The employer deducts tax from your salary and remits it to the tax authorities on behalf of employees.

Tax returns are due by 30 April — but you only need to file one if you earn over a minimum amount from sources other than your employment or you are employed by 2 or more employers at once.

Sales Tax ?

VAT: 20%

Withholding Tax ?

Dividends 25%;

Interests 0%/25%;

Royalties 20%.

Other Tax ?

Municipal Employees Tax: 3% calculated on gross salaries;

Contribution to Pension Fund: 1.53% calculated on gross salaries;

Contribution to the Chamber of Commerce: 0.44% calculated on gross salaries;

Tax on insurance contracts: 1% & 11% calculated on insurance premium.

Time to prepare and Pay Taxes ?

131 Hours

Time required to start a Business ?

21 Days

Austria Immigration and Work Permits

Foreign workers are required to have the proper visas and work permits in Austria, as established by immigration laws.  Work permits must be secured for employees, and sponsored by a locally licensed and incorporated entity, which can be a problem for companies just entering the Austrian market.  If you have yet to complete the incorporation process you can use an outsourced management company or GEO Employer of Record to sponsor the employee for the necessary permits.

Your Options

Use the Shield Geo Solution?

Once you get in touch with us, one of our consultants will take all the work off your hands, coordinate with our local partners to get all the required permits organised, provide the processing time, costs, document-checklist and keep you informed through the process. Contact us to know more.

Have Your Own Business?

Citizens of non-EU countries require work permits for all types of employment. Exemptions apply to scientists and researchers with assignments at universities and certified research institutions.

Work permits have to be applied for by the prospective employer in Austria at Public Employment Service Austria (“AMS – Arbeitsmarktservice”). Work permits are not granted while on a visit to Austria.

Prior to the applicant’s departure for Austria a residence permit is to be obtained.

Employment in Austria is subject to both, work permit and residence permit.

Process of sponsoring a non-EEA worker

The supporting documentation needed in order to bring non-EEA nationals into Austria is quite extensive and can take some time since its translation in German is required for submission. Once the application has been lodged, processing usually takes about 6-7 weeks.

There are two possible ways for a non-EEA national to be employed with a work permit:

– As the direct employee of an Austrian company, through a Sicherungsbescheinigung (Secured work certificate) application.

– As the employee of a foreign company, providing services to an Austrian company. This is an Entsendebewilligung (Assignment permit) application.

Once the application is assembled, the application can be lodged at the local AMS (Arbeitsmarktservice), where it will be processed.

Once the work permit application is approved, the candidate will need to make a residence visa application in their usual country of residence.

It is advisable to ask employees to prepare the following documentation with the application form for a residence permit (in original and copy), as early as possible upon arrival in Austria to allow sufficient time for the process:

  • Valid travel document (e.g. passport)
  • Birth certificate (Japanese family register, with apostille) or equivalent document
  • Photograph (dimensions: 45x35mm) which is not older than six months
  • Proof of locally customary accommodation (e.g. tenancy agreement or proof of freehold property purchase)
  • Proof of health insurance covering all risks (compulsory health insurance or equivalent insurance policy)
  • Proof of adequate means of subsistence (payslips, pay certificates, employment contracts, evidence of retirement or other pension or insurance benefits, investment capital or sufficient own assets)
  • a no criminal record certificate (with apostille), not older than three months

All applications must be submitted abroad through an Austrian Embassy or Consulate prior to departure for Austria.

Documents in languages other than German or English are to be submitted along with a certified translation into German.

For more details and additional requirements with regards to your specific purpose of residence in Austria and application forms it is advisable to visit the website of the Ministry of Interior.

Types of visas in Austria

Category Description of Visa
The EU Blue Card

This residence and work permit entitles highly qualified non-EU citizens to live and work in Austria for two years or less. It is tied to a confirmed job offer and will only be granted if the AMS (the Austrian Labor Market Service) is acknowledged that no Austrian or EU citizen is available to do the work specified in the contract.

Only applicants who have completed a university degree course of at least three years are eligible for a Blue Card. Their qualifications must match the job profile, and the salary specified in the work contract must be 1.5 times higher than the average yearly income of full-time employees in Austria.

The following documents, in particular, should be submitted for the issuance of a residence title:

•  application form;
• a valid travel document (e.g. passport);
• a birth certificate or a similar document recognised by Austria;
• a photo (dimensions: 45x35mm) of the applicant, taken recently (six months ago or less);
• if applicable:

o marriage certificate;
o divorce certificate;
o certificate of registered partnership;
o certificate of the dissolution of the registered partnership;
o adoption papers;
o evidence or certificate of the family relationship;
o death certificate.

• evidence of health insurance (compulsory insurance or a corresponding insurance policy);
• evidence of completion of a course of study at a university or other tertiary educational institution with a minimum duration of three years:

o certificate of successful graduation;
o proof of the status of the university or other tertiary educational institution.

• employer’s declaration pursuant to the Act Governing the Employment of Foreign Nationals (AuslBG)

Processing Time: Approx. 8 weeks.

Cost: € 100 + € 20 of personalization cost

The Red-White-Red Card

Non-EU citizens who qualify as “key workers” can apply for a Red-White-Red Card, which allows them to work at a specified employer and live in Austria for a period of 12 months. In order to qualify as a key worker, you must be especially high qualified, a skilled worker in a shortage occupation, a self-employed key worker or a graduate of an Austrian university.

The Red-White-Red Card is a points-based immigration system. Depending on which of the above categories you belong to, you must fulfill certain criteria before you can apply. Please consult the Austrian Migration Portal for more information and a points calculator to help you determine your eligibility.  

After ten months of working and living in Austria, Red-White-Red Card holders may apply for a Red-White-Red Card plus, which entitles them to free access to the Austrian labor market. Family members of Red-White-Red or of Blue Card holders are also eligible to apply for a Red-White-Red Card plus.

The following document are required for this permit:

• application form
• a valid travel document (e.g. passport)
• a birth certificate or a similar document
• a photo (dimensions: 45x35mm) of the applicant, taken recently (six months ago or less)
• if applicable:
o marriage certificate or certificate of registered same-sex partnership
o adoption papers
o evidence or certificate of the family relationship
• evidence of a legal title to locally customary accommodation (e.g. a lease contract, preliminary agreement on tenancy rights or evidence of ownership)
• evidence of health insurance covering all risks (compulsory health insurance or equivalent insurance policy)
• evidence of adequate means of subsistence (particularly pay slips, proof of earnings, an employment contract, evidence of retirement or other pension or insurance benefits, proof of investment capital or sufficient own assets)
Evidence of social security benefits that may only be claimed after issuance of the residence title, in particular welfare benefits or equalisation supplements, is not suitable.

Processing Time: Approx. 8 weeks.

Cost: € 100 + € 20 of personalization cost

Self-employed key workers

Third-country citizens can apply for a Red-White-Red Card for self-employed key workers, if their self-employed occupation in Austria creates macroeconomic benefit going beyond its own operational benefit.

This may be the case if:
• the intended occupation involves a sustained transfer of investment capital to Austria;
• the intended occupation creates new jobs or secures existing jobs in Austria; or
• the settlement of the key worker involves the transfer of know-how respectively the introduction of new technologies; or
• the key worker’s company is of considerable significance for the entire region.

For self-employed key workers, there is no points system.

The following document are required for this permit:
• application form;
• Valid travel document (e.g. passport);
• Birth certificate or similar document acknowledged by the Austrian authorities;
• Photo (dimensions: 45x35mm) not older than six months;
• Evidence of locally customary accommodation (e.g. lease contracts, preliminary agreement on tenancy rights or ownership evidence);
• Evidence of health insurance covering all risks (compulsory health insurance or equivalent insurance policy);
• Evidence of adequate means of subsistence (payslips, pay certificates, employment contracts, insurance benefit certificates, evidence of retirement or other pension or insurance benefits, investment capital or sufficient own assets).

In addition to the general requirements (see above), for the evaluation of the macroeconomic benefit, the following documents must be submitted:
• Documents which allow an analysis and evaluation of the market and competitive situation and the headquarter location, including a detailed description and the objectives of the intended professional undertaking (“business plan“);
• Evidence of the transfer of investment capital to Austria and of the intended creation of new jobs or securing of existing jobs in Austria;
• Evidence of the qualification necessary for the self-employed professional activity;
• Possibly company agreements; and/or
• Craft authorisations (Gewerbeberechtigungen), where necessary.

Processing Time: Approx. 3 weeks.

Cost: € 100 + € 20 of personalization cost.

Very highly qualified workers

Third-country citizens with a very high level of qualifications may apply for a six-month visa for the purpose of job search if they reach a minimum of 70 points according certain criteria.

The following document are required for this permit:
• Valid travel document (e.g. passport);
• Birth certificate or similar document;
• Photo (dimensions: 45x35mm) which is not older than six months;
• Evidence of locally customary accommodation (e.g. lease contracts, preliminary agreement on tenancy rights or ownership evidence);
• Evidence of health insurance covering all risks (compulsory health insurance or equivalent insurance policy);
• Evidence of adequate means of subsistence (payslips, pay certificates, employment contracts, insurance benefit certificates, evidence of retirement or other pension or insurance benefits, investment capital or sufficient own assets).

 Special qualifications and skills
Graduation
• Document furnishing proof of successful completion of a four-year programme at a university or another institution of tertiary education;
• Document reflecting the status of the university or other institution of tertiary education;
• Document furnishing proof of successful completion of a programme in a MINT subject (= mathematics, informatics, natural sciences, technology);
• Document furnishing proof of habilitation

Gross annual salary in a senior management position
• Tax assessment notice or pay certificate;
• Confirmation by the previous employer that the applicant worked in a senior management position;
• Proof that the company is listed on the stock exchange or positive report from the Austrian foreign trade office in charge about its activities or business segment;

Research and innovation activities
• Proof of scientific publications, stating titles and sources;
• Certificate issued by a university or research institution that the applicant worked in R&D or academic scientific teaching;
• Proof of patent application(s) through extracts from national or regional patent registers;

Recognised awards and prizes
• Document proving the conferral of the award or prize

2.    Work experience
• Testimonials and work certificates

3.    Language skills
• Language diploma or language course certificate at the A1 or A2 levels of the Common European Framework of Reference for Languages.
 
German language diplomas and certificates may in particular be obtained from the following institutions: ÖSD, Goethe-Institut, Telc GmbH, Austrian Integration Fund (ÖIF).

The following diplomas and certificates are in particular recognised as evidence of proficiency in English: Cambridge Certificate, TELC, IELTS diploma, TOEIC diploma, TOEFL diploma.

4.    Studies in Austria
• Course record book and related examination certificates
• Document reflecting the successful completion of a programme of studies in Austria

Processing Time: Approx. 8 weeks.

Cost: € 100 + € 20 of personalization cost

Setting up a company in Austria

When setting up a company you may want to consider these factors:

  1. Business Factors

    In 2015 Austria made starting a business easier by reducing the minimum capital requirement, which in turn reduced the paid in minimum capital requirement, and by lowering notary fees.

    Austria’s competitive advantages rely on one hand on its economic, political and labor stability and, on the other hand, on a highly skilled workforce and its well-established business ties to Central and Eastern Europe. Secondly, Austria has a competitive tax system that provides a competitive corporate income tax rate due to several tax reliefs in comparison to other countries. Furthermore, companies with subsidiaries can benefit from the group taxation provisions in relocating operations to Austria (i.e. establishing headquarters).

  2. Cultural Factors

    Austrians do not need a personal relationship in order to do business and their behaviour in public is generally reserved, direct and formal. On a different note, there is small talk in the office as Austrians are serious and focused on accomplishing their business objectives/goals.

Your Options

It is allowed to set up a business in Austria, provided they it is necessary to be citizens of the EU, the EEA, Switzerland, or to hold an Austrian residence permit. In any case, it is mandatory to apply for a trade license. This can be accomplished at the local authority (municipal or district council, Magistrat or Bezirkshauptmannschaft).

A number of different types of legal business structures can be registered in Austria, namely:

  • Limited liability companies
  • Public Companies
  • Partnerships
  • Foreign branches

Each of these business forms has distinct advantages and disadvantages, as well as differing scope of business activities, registration requirements and minimum capital requirements.  In most cases it will depend on the degree of commitment a company has to Austria and the planned business activity.

LIMITED LIABILITY COMPANY (GmbH)

The GmbH is a legal entity and has its own legal personality. The shareholders are not personally responsible for the liabilities connected to the company.

Exceptions, however, exist considering the payment of the shareholders’ own capital contribution and a joint liability for the contribution of the other shareholders, the refund of the contribution and in case of gross undercapitalisation in case of insolvency.

Obtain the confirmation from the Economic Chamber that the start-up company is really a new enterprise

The NeuFö2 form, which is available electronically on the homepage of the Austrian Ministry of Finance, must be filled in and be confirmed by the Economic Chamber. It applies to the company formation and to the transfer of businesses. If certain requirements are met, the following fees and taxes will be waived:

  • Stamp duties and certain administrative fees.
  • Real estate transfer tax.
  • Charges for registration in the commercial register and the cadastral register.
  • Capital transaction tax (1% of nominal capital).
  • For 1 year, certain ancillary wage costs borne by the employer in addition to social security contributions.

Depending on the requested exemptions, companies must obtain confirmation by certain public bodies (Chamber of Commerce or Social Security Organization) that the application form has been completed, after receiving counseling by that body concerning the scope and applicability of the law.

Notarize the statutes/articles of association or the declaration of establishment

The articles of association, executed before a notary by notary deed, must include the following:

  • Name
  • Seat
  • Scope of activities
  • Capital and initial contribution by each shareholder.

Notarization time can vary from 2 to 5 days, but usually takes 2 days. Cost will depend on the authorized share capital and are subject to negotiation with the notary public.

Deposit the minimum capital requirement in the bank.

The confirmation fee depends on the bank, ranging from EUR 0 to about EUR 30.

Register the company at the local court (Handelsgericht).

The application for registering an Austrian limited liability company requires the following documents:

  • declaration of establishment notarised;
  • articles of association;
  • a declaration (accompanied by a banker’s confirmation) that the demanded amount of primary deposit, to be paid in cash, has been paid;
  • evidence that the free disposability of the paid primary deposit by managing directors is not restricted by counterclaims;
  • specimen signatures of the managing directors;
  • confirmation by the tax authorities that the capital transaction tax on the formation has been paid or is guaranteed.

If the court has doubts about the company name, it may request an opinion from the Chamber of Commerce. A GmbH comes into legal existence upon registration in the commercial registry.

The fixed application fee is EUR 32; individual service fees, depending on the information to be registered, apply.

Tax Office registration (obtain a VAT number)

The commercial register automatically notifies tax authorities of the registration of new companies. Consequently, tax authorities respond by requesting that the company file for tax registration, which is not online and several forms must be printed, filled out, and sent by postal mail together with the articles of association, the opening balance sheet, an excerpt of the company register, an identification card of a managing director, and a specimen signature sheet of the representatives.

The VAT number is usually provided simultaneously with the tax identification number. The statutory deadline to obtain a tax number is 1 month. Frequently tax authorities extend an introductory visit to those companies intending to engage in business activities that are eligible for the filing of VAT returns.

Register trade (Gewerbeanmeldung) with the trade authority (Bezirksverwaltungsbehörde)

If permission is mandatory, completion of procedures takes longer, depending on the requirements and authorities involved (e. g., the production of hazardous goods requires proof of special qualifications of management and approval and control of the production site). Companies can register in person, by postal mail, or online.

Register employees for social security

Upon registering in the commercial register, companies with employees are required to apply for an employer’s account number (Dienstgeberkontonummer) electronically using ELDA, the data transmission interface of the statutory health insurance office. In practice, the employer applies for a new account number via ELDA before a new employee is registered with the statutory health insurance office.

Health insurance is obligatory: every new employee must be electronically registered with the statutory health insurance office prior to and no later than the day of employment. Unless the company does not own a computer, the employee must be registered via ELDA. Otherwise, this may be done by mail or by fax. Moreover, the employer must automatically extend obligatory health insurance upon entry. On being registered with the statutory health insurance office, the employee is automatically registered for accident insurance and retirement insurance as provided by law. No further registration is needed.

Register with the municipality

Municipalities levy community taxes on all businesses. In addition, particular activities (e.g., organizing a public event) may trigger municipal stamp duties or other minor duties and taxes.

Costs: € 450 although foundation costs can amount to 10 – 15 % of the share capital.

PUBLIC CORPORATION (AKTIENGESELLSCHAFT – AG)

Like the GmbH, the AG is a legal entity limiting the liability of its shareholders. Unlike the GmbH, the shares of an AG can be transferred without a notarial deed. The transfer of shares is not required to be noted in the register of commerce.

The minimum capital stock is EUR 70,000, at least EUR 35,000 have to be contributed. The structure consists of a supervisory board (Aufsichtsrat) and the executive board (Vorstand).

Pre-clarification to prepare the information and documents required

This pre-clarification process requires to check the availability of the name envisaged for the AG. 

Preparation of commercial register application and incorporation documents

It is possible to prepare the necessary documents yourself or have a fiduciary, lawyer or a bank do it for you. The costs amount to between CHF 2‘000 and CHF 5‘000.

In the first case, it is advisable to submit these for pre-inspection to the Commercial Registry Office (HRA). This usually costs between CHF 200 and CHF 300 and takes about seven work days.

If the share capital is paid in cash, the amount required needs to be deposited in an escrow account at a bank and confirmation provided that the cash deposit has been made.

If the capital of the AG is paid up in the form of contributions in kind a written contribution-in-kind agreement must be drawn up between the transferor (contributor in kind) and the AG in formation.

Notarial certification of the incorporation  

It is advisable to get in touch with the notary public as soon as possible and supply the information and documents required beforehand so that the notary can prepare the deed of incorporation.

All founders, or their legal representatives, are required to be present at the incorporators‘ meeting before the notary public. Legal representatives must also produce appropriate identification, as well as an officially certified power of proxy. The notary public notarizes the deed of incorporation and certifies all signatures.

Registration in the commercial register (HR)

At this stage, it is required to personally submit or send the notarized deed of incorporation, together with the signed commercial register application and the other required documents, to the Commercial Registry Office (HRA).

Provided the documents are complete and in keeping with the law, the business entity will be registered in the commercial register within seven work days (the costs are usually between CHF 800 and CHF 1’000).

Value Added Tax (VAT) registration 

Costs: Approx € 1000

PARTNERSHIP

There are four forms of partnerships available in Austria, namely:

Offene Gesellschaft (OG) – General Partnership

General partnerships are managed under an own name in case of which the partners are jointly and severally liable. The partners are liable, with their entire assets, towards the creditors of the company without restriction. OGs have legal capacity and their purpose can include, among others, freelance and agricultural and forestry activities.

The company name has to be suitable for identifying the partnership and must have a distinctive character and must not contain any information suitable for being misleading regarding business conditions which are material for the relevant public. What is mandatory is the term “Offene Gesellschaft” or a generally understandable abbreviation.

Offene Gesellschaften come into existence upon entry in the company register.

 Kommanditgesellschaft (KG) – Limited commercial partnership

A Kommanditgesellschaft is a company managed under an own name where the liability towards the creditors of the company is limited to a certain amount for a certain part of the partners, but where the liability is unlimited for the other part. The name of a KG has to meet the same prerequisites as the name of an OG with the requirement that the legal form affix “Kommanditgesellschaft” or a generally understandable abbreviation of this term, especially “KG”, is used. Management and representation of the company are incumbent on the general partners.

Stille Gesellschaft [silent partnership]

A silent partner participates with a capital contribution in a company operated by another person. The silent partnership neither has a legal personality nor a company name and does not appear as a company towards third parties. The management and the representation are solely incumbent on the owner of the company. The silent partner has a share in the profit and loss of the company. The loss sharing may be excluded.

FOREIGN BRANCHES

GmbHs and AGs with the registered office abroad may establish branches in Austria.

Few rules apply to the establishment of a foreign branch and in particular:

  • The foreign company is entered in the company register, namely in the company register competent for the registered office of the branch.
  • Companies establish under a jurisdiction which is not the jurisdiction of a member state of the European Union or a contracting state of the Treaty on the Creation of the European Economic Area (EEA) have to appoint at least one person for the entire business operation of the branch who is allowed to represent the company permanently in and out of court and has his usual place of abode in Austria.

 

Companies established under the jurisdiction of a Member State of the European Union or the European Economic Area may appoint such permanent representative. A publicly certified copy of the articles of association/memorandum of association in the register´s version and, if the memorandum of association is not drafted in German language, a certified translation into German are to be attached to the application. The duty of separate accounting applies to the branch.

Outsourcing Employment Through a GEO Employer of Record Service

Whether to incorporate in Austria, and what sort of entity to setup are just two of the many choices companies must make when expanding into a new market.

If the company intends to have staff in Austria they must also decide whether they will administer that employment internally or use a Global Employment Organization to handle payroll and Employer of Record responsibilities.  A GEO Employer of Record solution is an attractive alternative where

– the company is looking to setup an office quickly

– the company wants to work within a defined budget

– the company wants to limit its initial commitment in Austria

– the company needs help with tax, employment, immigration and payroll compliance in Austria

The complexity of employment regulations in Austria makes the use of a GEO advisable coupled with local legal counsel to ensure full compliance with employment laws, for example the drafting of local contracts for workers.

Shield GEO provides a comprehensive service in Austria allowing companies to deploy their staff quickly with reasonable, clearly stated costs and timeframes. The company contracts directly with Shield to employ and payroll their staff on their behalf in Austria.

Shield GEO then becomes the Employer of Record. Shield GEO assumes the legal responsibility for these employees, sponsoring them on work permits, complying with local employment law and running their monthly payroll. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Austria. Read more about outsourced employment through Shield GEO.

  • Tax Compliance : What is FATCA and who is affected?

Tax Compliance : What is FATCA and who is affected?

  • Tax Compliance : What is FATCA and who is affected?

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