Austria-AG


The history of Austria covers the history of Austria and its predecessor states, from the farming communities of the early Stone Age to the present sovereign state. The name Ostarrîchi (Austria) has been in use since 996 CE when it was a margravate of the Duchy of Bavaria and from 1156 an independent duchy (later archduchy) of the Holy Roman Empire of the German Nation (Heiliges Römisches Reich 962–1806). During this time Austria was dominated by the House of Habsburg (Haus Österreich) from 1273 to 1806, when the old empire came to an end. Austria then emerged into the nineteenth century as the Austrian Empire, a part of the German Confederation until the Austro-Prussian War of 1866 excluded her, after which Austria continued as the Austro-Hungarian Empire (1867–1918) as a dual monarchy with Hungary. When this empire collapsed in 1918 after the end of World War I, Austria was reduced to the main German speaking areas of the empire corresponding to its current frontiers and adopted the name German Austria, since it wanted to join the new German Weimar Republic. This union was forbidden by the victorious Allies at the Treaty of Versailles. Following the First Republic (1918–1933) Austrofascism tried to keep Austria independent from the German Reich, but in 1938 it was annexed by Nazi Germany with the support of the majority of the Austrian people. After the Second World War Austria again became an independent republic as the Second Republic in 1955 and joined the European Union in 1995.

Service packages

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Service item Express Standard Optimum
Company registration
Legal address per year
Secretarial services for the first year
Fees and duties for the first year
Apostilled bound set of incorporation documents
Compliance fee
Nominee service per year
Bank Account Pre-approval
Price

13 100 USD

21 900 USD

22 400 USD

I want to order «»

Contact method: and / or

Core Services

13 100 USD

— Incorporation

including incorporation tax, state registry fee, including Compliance fee

Included

— Annual government fees

Stamp Duty and Commercial Register incorporation fee

6 050 USD

— Corporate legal services

including registered address and registered agent, NOT including Compliance fee

150 USD

—Delivery of documents by courier mail

DHL or TNT, at cost of a Courier Service

600 USD

— Apostilled set of Statutory documents

Optional services

6 050 USD

Nominee Director

Paid-up “nominee director” set includes the following documents

2 750 USD

Nominee Shareholder

Paid-up “nominee shareholder” set includes the following documents

Related services

Tax Certificate

Company’s tax residence certificate for access to double tax treaties network

Certificate of Good Standing

Document issued by a state agency in some countries (Registrar of companies) to confirm a current status of a body corporate. A company with such certificate is proved to be active and operating.

Certificate of Incumbency

Compliance fee

Compliance fee is payable in the cases of: renewal of a company, liquidation of a company, transfer out of a company, issue of a power of attorney to a new attorney, change of director / shareholder / BO (except the change to a nominee director / shareholder)

250 USD

Basic

simple company structure with only 1 physical person

50 USD

For legal entity in structure under GSL administration

additional compliance fee for legal entity in structure under GSL administration (per 1 entity)

100 USD

For legal entity in structure not under GSL administration

additional compliance fee for legal entity in structure NOT under GSL administration (per 1 entity)

350 USD

For client with high risk Status

Cost of incorporation, including first year servicing 13100
Cost of nominee director services per year, including an apostilled set of documents 6050
Cost of nominee shareholder services per year, including an apostilled set of documents 2750
Cost of annual service, starting from the second year 6050
Open account in 26796
Incorporation timescale for a turnkey company 1 month
Country 26758

General information shortly

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Total area Population Capital Unemployment Corruption perceptions index rank
83.871 sq. km 8.894.380 (2019) Vienna 5.8% (2020) 16 (2017)
Location Central Europe, north of Italy and Slovenia
National currency Euro
Conditional reduction of currency EUR
Against USD 0.82
Climate, average max and min t° Temperate; continental, cloudy; cold winters with frequent rain and some snow in lowlands and snow in mountains; moderate summers with occasional showers; avg. maximum temperature (July) +30°; avg. minimum temperature (January) 0°
Time difference from Moscow - 2 hours
Dialing code +43
State language German
Ethnic groups 88.6% Austrians, 5.1% ex-Yugoslavs, 2.7% Federal Germans, 2.2% Turks, 1.4% other
Literacy rate 99% (2019)
Credit rating AA+
Government type federal republic
Executive branch Federal government headed by the Federal Chancellor
Legislative branch bicameral Parliament composed of Nationalrat (183 seats) and Bundesrat (62 seats)
Judicial branch district courts; land courts; four courts of appeal; supreme court
GDP per capita rank 13 (2018)

Corporate info

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Shelf companies permitted Legal system Incorporation timescale for a turnkey company Cyrillic alphabet permitted in company name Local registered office
Yes civil Law 1 month No Yes
Types of entity sole proprietorship; general partnership; limited partnership; limited liability company, gmbh; joint stock company, ag; european company, se; branch of foreign company; private foundation
Incorporation timescale for a new company 7 days
Company suffix Aktiengesellschaft or AG
Sensitive words Austria, Austrian
Local registered agent No
Information to be kept at the registered office company records, shareholders' register
Seal required, type of seal not required
Redomiciliation (to, from) permitted permitted

Director and secretary

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Minimum number of directors Residency requirements for directors Corporate directors permitted Disclosure to local agent Disclosure to public
1 No No Yes Yes
Directors’ meetings/frequency/location Yes / 4 times a year / Austria
Company secretary required No
Residency requirements for a secretary No
Qualified secretary required No
Corporate secretary permitted No

Shareholder and beneficiary

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Minimum number of shareholders Residency requirements for shareholders Corporate shareholder permitted Disclosure to local agent Disclosure to public
1 No Yes Yes No
Meetings/frequency/location Yes / annually / EU
Beneficiary info disclosure to Yes

Shares and share capital

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Minimum authorized share capital Minimum issued share capital Minimum paid share capital Authorized capital payment deadlines Bearer shares permitted
70000 70000 17500 Upon registration Yes
Issued capital payment deadlines Upon registration
Standard currency Euro
Standard authorized share capital 70000
Standard par value of shares 1
Shares with no par value permitted Yes

Taxes

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Min. rate for corporate tax Capital gains tax VAT Withholding tax Exchange control
25% Regular rate 20% 25%/0%/20% No
Personal tax 25-55%
Corporate tax (in detail) The corporate tax rate in Austria is 25%. Even if the company does not receive income, there is a minimum tax of € 3.500 for joint-stock companies and € 1.750 for limited liability companies (for newly created - € 500 for the first five years and € 1,000 for the next five years). The minimum tax is credited against future income tax for an indefinite period.
Capital gains tax. Details Capital gains are usually taxed as part of the gains at the standard rate of 25%.
VAT. Details The standard VAT rate is 20%. A reduced rate of 10% applies to foodstuffs, pharmaceuticals, agricultural products, rent, tourist services, public utilities (except electricity) and entertainment. Professional services (such as lawyers and architects) are subject to 20% VAT. Certain supplies are zero-rated and some are exempt.
Other taxes real estate tax, transfer tax, social security contribution
Stamp duty Yes

Accounts

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Requirement to file accounts Publicly accessible accounts Audit required Requirement to file Annual Return Publicly accessible Annual Return
Yes Yes Yes Yes Yes
Requirement to prepare accounts Yes
Double tax treaties network 91
Tax Exchange Information Agreement network 6
OECD member Yes
Offshore/onshore status according to the RF laws No

GENERAL INFORMATION

General Info

Austria is a landlocked country in Central Europe. It is bordered by the Czech Republic and Germany to the north, Hungary and Slovakia to the east, Slovenia and Italy to the south, and Switzerland and Liechtenstein to the west.
Total area of Austria is 83.871 sq. km. Population of Austria is 8.504.850 (2014). Ethnic groups include 81.1% Austrians, 5.1% ex-Yugoslavs, 2.7% Federal Germans, 2.2% Turks, 8.9% other.
The capital of Austria is Vienna.
The official language of Austria is German.
The official currency is Euro (EUR). 1 USD is equal to 0.73 EUR.
The climate of Austria is temperate; continental, cloudy; cold winters with frequent rain and some snow in lowlands and snow in mountains; moderate summers with occasional showers; avg. maximum temperature (July) +30°; avg. minimum temperature (January) 0°.
Time difference with Moscow is - 2 hours.
Literacy rate is 98%.
Calling code of Austria is +43.

History

The history of Austria covers the history of Austria and its predecessor states, from the farming communities of the early Stone Age to the present sovereign state. The name Ostarrîchi (Austria) has been in use since 996 CE when it was a margravate of the Duchy of Bavaria and from 1156 an independent duchy (later archduchy) of the Holy Roman Empire of the German Nation (Heiliges Römisches Reich 962–1806). During this time Austria was dominated by the House of Habsburg (Haus Österreich) from 1273 to 1806, when the old empire came to an end.
Austria then emerged into the nineteenth century as the Austrian Empire, a part of the German Confederation until the Austro-Prussian War of 1866 excluded her, after which Austria continued as the Austro-Hungarian Empire (1867–1918) as a dual monarchy with Hungary.
When this empire collapsed in 1918 after the end of World War I, Austria was reduced to the main German speaking areas of the empire corresponding to its current frontiers and adopted the name German Austria, since it wanted to join the new German Weimar Republic. This union was forbidden by the victorious Allies at the Treaty of Versailles.
Following the First Republic (1918–1933) Austrofascism tried to keep Austria independent from the German Reich, but in 1938 it was annexed by Nazi Germany with the support of the majority of the Austrian people. After the Second World War Austria again became an independent republic as the Second Republic in 1955 and joined the European Union in 1995.

Government Type

Austria is a federal, parliamentary, democratic republic.
The head of state is the Federal President, who is directly elected by popular vote for a 6-year term.
Executive power is vested in the Federal government headed by the Federal Chancellor, who is appointed by the President.
Legislative power is vested in the Parliament which consists of two chambers. The composition of the Nationalrat (183 seats) is determined every five years by a general election. The Nationalrat is the dominant chamber in the formation of legislation in Austria. However, the upper house of parliament, the Bundesrat (62 seats), has a limited right of veto.
Judiciary power is vested in the 4 levels of courts: 1) district courts; 2) land courts; 3) four courts of appeal; 4) supreme court. There are also courts of public law including high administrative court and constitutional court.

Economy

Austria is the 12th richest country in the world in terms of GDP (Gross domestic product) per capita, has a well-developed social market economy, and a high standard of living. Next to a highly developed industry, international tourism is the most important part of the national economy.
Germany has historically been the main trading partner of Austria, making it vulnerable to rapid changes in the German economy. Since Austria became a member state of the European Union it has gained closer ties to other EU economies, reducing its economic dependence on Germany. In addition, membership of the EU has drawn an influx of foreign investors attracted by Austria's access to the single European market and proximity to the aspiring economies of the European Union. Growth in GDP reached 3.3% in 2006.
Since the fall of communism, Austrian companies have been quite active players and consolidators in Eastern Europe. Between 1995 and 2010, 4,868 mergers and acquisitions with a total known value of 163 bil. EUR with the involvement of Austrian firms have been announced.
Tourism accounts for almost 9% of the Austrian gross domestic product. In 2007, Austria ranked 9th worldwide in international tourism receipts, with 18.9 billion US$. In international tourist arrivals, Austria ranked 12th with 20.8 million tourists.

CORPORATE INFORMATION

Legal System

The Austrian legal system is based on the civil law tradition and has its origin in Roman law.

Types of Entity

The principal forms of business organization in Austria are:
  • Sole proprietorship;
  • General Partnership;
  • Limited Partnership;
  • Limited Liability Company, GmbH;
  • Joint Stock Company, AG;
  • European Company, SE;
  • Branch of Foreign Company;
  • Private Foundation.

Except GmbH another common structure is the joint stock company, AG.

INCORPORATION

Company Name

Every company in Austria must have a name. Company name requirements for AG are as follows:
  • A company name should not be similar to the existing company names.
  • It should contain a mandatory legal element: "Aktiengesellschaft" or AG.
  • It should not be obscene.
  • It should not be misleading.
  • A company name should not contain any prohibited words or phrases, such as Austria, Austrian, etc.
  • The name needs to be pronounceable.

Incorporation

To incorporate an Austrian company, the following steps are required:
  1. Obtain the confirmation from the Economic Chamber that the start-up company is really a new enterprise: A form (Neufö 1 or NeuFö 3), which is available electronically on the homepage of the Austrian Ministry of Finance must be filled in and be confirmed by the Economic Chamber. Procedure 1 is optional but it can lead to exemption from paying certain publicly levied fees and taxes. 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.
  2. Notarize the statutes/articles of association or the declaration of establishment: The articles of association (Gesellschaftsvertrag), which must be executed before a notary by notary deed (Notariatsakt), must include the following: name, seat, scope of activities, capital and initial contribution by each shareholder.
  3. Deposit the minimum capital requirement in the bank.
  4. Register the company at the local court (Handelsgericht) and publish an announcement of formation in the Wiener Zeitung: The application for registering an Austrian AG must be accompanied by the following documents: declaration of establishment notarized; 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; and 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.
  5. Tax Office registration (obtain a VAT number): The commercial register automatically informs tax authorities of the registration of new companies. In turn, tax authorities usually respond by requesting that the company file for tax registration. One of the following forms must be filed with the tax authority: Form 15, or 24 (available at www.bmf.gv.at/), and the articles of association, the opening balance sheet, an excerpt of the company register, an identification card of a managing director, a specimen signature sheet of the representatives must be filed as attachments. The authority issues the tax number within 10 to 14 days. The VAT number is usually issued simultaneously with the tax identification number.
  6. Register trade (Gewerbeanmeldung) with the trade authority (Bezirksverwaltungsbehörde) (simultaneous with previous procedure).
  7. Register employees for social security (simultaneous with previous procedure).
  8. Register with the municipality for tax purposes (simultaneous with previous procedure).

Public Access to Information

The following company information is inter alia listed and published in the commercial registry:
  • corporate name,
  • registered office and address,
  • name and the date of birth of the company´s representatives and shareholders,
  • nominal capital.

Local Registered Office

All Austrian companies must have a registered office. The registered office is where documents may be legally served on the company. The registered office must be a physical address in Austria.
Company records and sharehoders' register should be kept at the registered office.

Seal

An Austrian company is not required to have a seal.

Redomicile

The redomiciliation of companies to or from Austria is permitted.
Redomiciliations within the EU or EEA are possible, however based on particular decisions at the EU level. Under Austrian case law of the supreme court, seat transfer of an EEA company to Austria is possible, provided that the company changes its legal form to a company under Austrian law (and fulfills all conditions as to articles of association, capital resources und statutory representatives under Austrian law), the company transfers both the seat pursuant to the articles of association and the seat of administration to Austria, the seat transfer is allowed under the laws of the previous state and the company fulfills the conditions of the previous state. In contrast, the conditions of a seat transfer from Austria have not been clarified yet, but should be possible correspondingly as well. Irrespective of the general possibility of cross border-redomiciliations, the transfer of the registered office requires a notarized shareholder resolution, as it represents an amendment to the articles of association under Austrian law.
As to non-EU or non EEA-countries, redomiciliation to Austria is not possible. If a company seeks to transfer its registered office to Austria, it has to be founded again under Austrian law.

COMPANY STRUCTURE

Directors

An AG must have at least one managing director. Only natural persons may be appointed as managing directors. The appointed managing director must also be of legal age and possess legal competence. The managing director is likewise not required to have his ordinary residence in Austria. Members of the management board are not required to hold any shares in the AG.

Supervisory Board

In contrast with a GmbH, a supervisory board is compulsory for every AG. The members of the supervisory board (of whom there must be at least three) are elected by the general meeting of shareholders. Elected members of the supervisory board are appointed for a maximum term of approximately five years. It is permissible to appoint members of the supervisory board for a shorter term, and members may be reappointed.
The supervisory board of the AG must meet at least four times a year.

Secretary

Corporate Secretary is not required.

Shareholders

Any natural person or legal entity and comparable foreign entities are eligible to become shareholders of an AG. It is not required for a shareholder to be an Austrian citizen or to have his domicile or place of residence in Austria. Where only a single shareholder is present in the AG, that shareholder must be identified by name in the Commercial Register.
The top-level constitutive body of the AG is the general meeting of shareholders. The shareholders adopt resolutions either at the general meeting of shareholders or by written consent. However, it is also permissible for them to adopt resolutions of the shareholders orally, even tacitly.
General meetings of shareholders must be held at least once per fiscal year, in each case during the first eight months of such year.
The general meeting of shareholders must be held at least once per year, within the first eight months of the year, for the purpose of presenting the annual financial statements, granting a discharge to the management board and the supervisory board, adopting resolutions on appropriation of profits and appointing a chartered accountant to audit the financial statements.

Beneficiary

Despite the fact that many jurisdictions are discussing an issue of introducing an open register of beneficiaries, there is no such a register yet, including Austria. This means that beneficiaries’ details do not appear on a public profile. The identity of the beneficial owner of an Austrian company is treated as strictly confidential and must be disclosed as part of the obligatory due diligence to service providers including firms specializing in company formation, trust managers, lawyers, and accountants, as well as to the auditor. It can only be disclosed by them in the cases stipulated by law and following statutory procedure.

Share Capital and Shares

The statutory minimum share capital of an AG is € 70,000 and at least one quarter of it must be paid in at the time of forming the company. The capital may be provided through contributions in cash or in kind.
Where the AG is formed not exclusively based on paid-in cash contributions, but also by contributions in kind, a court-appointed formation auditor must undertake a formation audit. Just as in the case of a GmbH, cash contributions must be paid into a bank account of the “AG in formation” and a confirmation from the bank must be submitted to the Commercial Register court.

TAXATION

Personal Income Tax

Residents are subject to income tax on their worldwide income, while nonresidents on income from Austrian sources.
Income tax is levied at the following rates:
  • 0% on income up to EUR 11,000
  • 25% on income from EUR 11,001 to 18,000
  • 35% on income from EUR 18,001 to 31,000
  • 42% on income from EUR 31,001 to 60,000
  • 48% on income from EUR 60,001 to 90,000
  • 50% of income from EUR 90,001 to 1,000,000
  • 55% on income over EUR 1,000,000

Corporate Income Tax

A company is considered tax resident in Austria if it has its place of effective management in Austria or is incorporated in Austria.
Resident companies pay tax on their worldwide income. Nonresident companies only pay tax on income derived from sources in Austria.
The Austrian corporate tax rate is 25%.
Even if a company does not receive income, there is a minimum tax of EUR 3,500 for joint-stock companies and EUR 1,750 for limited liability companies (for newly created companies – EUR 500 for the first five years and EUR 1,000 for the next five years). The minimum tax is credited against future corporate tax without any time restrictions.
Capital gains are usually taxed as part of profit at the standard corporate tax rate of 25%. Profits from the sale of foreign company shares are exempt from tax if the shareholding is not less than 10% and the ownership period is not less than a year. There are also exemptions for dividends.

Social Security Contributions

Social security contributions in relation to the employee’s remuneration are paid at the following rates:
Employer’s contribution Employee’s contribution Total
Sickness 3.78% 3.87% 7.65%
Unemployment 3% 3% 6%
Pension 12.55% 10.25% 22.8%
Accident 1.2% - 1.2%
Miscellaneous 0.7% 1% 1.7%
Total 21.23% 18.12% 39.35%

Contributions are paid on a maximum salary of 5,370 per month.
In addition, employers pay a Family Burdens Equalisation Levy of 3.9%, a municipal payroll tax at a rate of 3%, a mandatory pension fund contribution at a rate of 1.53%, and a number of others.

Withholding Tax

Dividends paid to foreign companies are subject to withholding tax at the rate of 25%.
Interest paid to foreign companies is not subject to withholding tax unless the loans are secured by Austrian real estate.
Royalties paid to foreign companies are subject to withholding tax at the rate of 20%.
The tax may be withheld on certain other income payments.
Withholding taxes may be reduced under the relevant double tax treaties and EU Directives.

VAT

The standard VAT rate is 20%. The reduced rates of 10% and 13% apply to certain goods and services.

Property Tax

Local authorities have the right to levy tax on Austrian real estate. The tax base is determined by special rules, the effective tax rates are determined depending on the purpose of use and several other factors.

Property Transfer Tax

This tax is usually levied at the rate of 3.5% on the transfer of ownership of Austrian real estate.
There are exemptions and reliefs.
When registering ownership of real estate, a fee of 1.1% is charged.
Transfer of shares in companies and partnerships owning Austrian real estate may attract a 0.5% tax.

Stamp Duty

Stamp duty applies to a number of transactions for which contracts are signed. The rates vary depending on the transaction.
Capital tax is levied at a rate of 1% on mandatory contributions from shareholders and on voluntary or hidden capital contributions to Austrian companies.

CFC Rules

A controlled foreign company is a foreign company taxed at a low tax rate (less than 50% of Austrian tax), in which an Austrian company owns, directly or indirectly, individually or together with related parties, more than 50% of the capital.
CFC rules have a number of exemptions.
The undistributed profit of a CFC is included in the tax base of the Austrian parent company if this profit arises from tax evasion transactions. The analysis of transactions for these purposes takes into account the functions performed in Austria for the controlled company.

Double Tax Agreements

Austria has exchange of information relationships with 97 jurisdictions through:
  • 91: Albania, Algeria, Argentina, Armenia, Australia, Azerbaijan, Bahrain, Barbados, Belarus, Belgium, Belize, Bosnia and Herzegovina, Brazil, Bulgaria, Canada, Chile, China, Croatia, Cuba, Cyprus, Сzech Republic, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Hong Kong, Hungary, Iceland, India, Indonesia, Iran, Ireland, Israel, Italy, Japan, Kazakhstan, Korea, Kosovo, Kuwait, Kyrgyzstan, Latvia, Libya, Liechtenstein, Lithuania, Luxembourg, Macedonia, Malaysia, Malta, Mauritius, Mexico, Moldova, Mongolia, Montenegro, Morocco, Nepal, Netherlands, New Zealand, Norway, Pakistan, Philippines, Poland, Portugal, Qatar, Romania, Russian Federation, San Marino, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Syrian Arab Republic, Taiwan, Tajikistan, Thailand, Tunisia, Turkey, Turkmenistan, Ukraine, United Arab Emirates, UK, USA, Uzbekistan, Venezuela, Vietnam.
  • 4: Andorra, Gibraltar, Monaco, Saint Vincent and the Grenadines.

Foreign exchange control

There are no foreign exchange controls in Austria.

ACCOUNTS

Financial Statements

Every Austrian AG must keep complete books and accounting records and prepare financial statements. The managing directors are obliged to maintain a financial accounting system and internal system of controls in line with the requirements of the business. Within five months of the end of each fiscal year, they must prepare annual financial statements and a management report.
Where the AG is a “parent company”, the AG will, as a rule, also be required to prepare consolidated financial statements and a consolidated management report.
As with all other incorporated entities, a AG must file its annual financial statements and management report (together with the proposal of the managing directors on appropriation of profits) with the Commercial Register no later than nine months from the end of the fiscal year. The documents so submitted are available for public inspection. The filing must be done electronically.
In the case of a “large AG”, annual financial statements must also be published in the official gazette of Wiener Zeitung.

Audit

The annual financial statements and management report (and, where applicable, the consolidated financial statements and consolidated management report) for every AG must be audited by an independent chartered accountant.

Annual Return

Generally speaking, Annual Return is a short review on the current state of the company, which is prepared by the company secretary annually. As a rule it includes the following information:
  • Incorporation information (registration date, registered address);
  • Information about directors and their resignation;
  • Information about secretaries and their resignation;
  • Information about registered capital, nominal value of shares and amount of issued shares;
  • Information about shareholders and share transfer.

Austrian companies are required to prepare and file annual return. Annual return is publicly accessible.

Tax Returns

A standard tax year is a calendar year.
Corporate tax returns are normally filed electronically before 30 June of the year following the reporting year.
Provisional corporate tax payments are made quarterly, with the final payment at the end of the year.

AUSTRIAN PRIVATE FOUNDATIONS

What is a Privatstiftung?

The legal framework of the private foundation is regulated in the Private Foundation Act “Privatstiftungsgesetz” (PSG) 1993.
A Privatstiftung (a private foundation) is a legal entity formed under civil law that has no owners or members. The foundation uses assets donated by the grantor for achieving its object. The purpose of the Privatstiftung is to carry out the intentions of the grantor in accordance with the foundation deed.
A Privatstiftung is a legal person. Its structure largely resembles that of a limited company, but it has beneficiaries instead of proprietors. It must be domiciled in Austria and entered in the Commercial Register.
The private foundation may be established for any purpose, like the provisioning of the family (“family foundation”), the support of one or more enterprises or the support of art.
However, according to the Austrian Private Foundation Act, the private foundation is not allowed
  • to engage in commercial activities other than of a purely incidental character
  • to be a personally liable partner of a general or limited partnership
  • to have management functions of a commercial company.

What are the types of Privatstiftung?

A distinction is made between public-interest, private-interest and business foundations.
Public-interest foundations are exempt as far as possible from corporation tax. They are subject only to unlimited corporation tax liability on any businesses held, and limited corporation tax liability on investment income. Rental income, lease income and income from participations, on the other hand, are tax-exempt. Distributions received from a public-interest foundation are not taxed as investment income for the beneficiary.
Private-interest foundations are required to make extensive disclosures to the tax authorities (foundation charter, supplementary charters). If they fail to do so, their favourable tax conditions lapse and the tax authorities notify the Austrian Money Laundering Unit (Geldwäschemeldestelle).
Business foundations receive special tax treatment, as they are also exempt as far as possible from corporation tax. Such foundations are foundations formed under private law that serve solely to fulfil the business object of the founding entrepreneur. Business object foundations (Unternehmenszweckförderungsstiftung), employee development foundations (Arbeitnehmerförderungsstiftung) and employee share ownership foundations (Belegschaftsbeteiligungsstiftung) are business foundations.

Why create a Privatstiftung?

First and foremost reason for creating the foundation is usually the wish of the grantor to protect and maintain assets, followed by the desire to support family members and other persons close to the grantor.
A further reason may be the risk of fragmentation and splitting up of family wealth due to succession, or the wish to have one’s name linked to a specific charity or scientific or social institution and achievement.
A major advantage of the Austrian Private Foundation Act (Privatstiftungsgesetz) is the flexibility offered by this particular legal form in terms of civil law. The Privatstiftung can largely be tailored to the grantor’s specific requirements.

Grantor

The grantor of a Privatstiftung may be one or more natural or legal persons. Such person or persons are vested with the status of grantor only when they create a Privatstiftung, and not by any subsequent legal acts. A (co-)grantor who is not yet of age may establish a Privatstiftung with the approval of a guardian appointed by a court and, if a parent is a co-grantor, a request must be submitted for a court to appoint a collision guardian.
A grantor may create a Privatstiftung during his lifetime (inter vivos) or by testament (mortis causa). If created by a will, a Privatstiftung may have only one grantor.
A grantor creates a Privatstiftung when he/she submits a declaration of establishment, in which he/she can make arrangements that give him/her the possibility to exert influence over the Privatstiftung. In practice, an arrangement of considerable importance is the right to amend the declaration of establishment after the Privatstiftung has been entered in the Commercial Register, and the right to revoke the Privatstiftung. If the latter is exercised, this leads to the dissolution of the Privatstiftung. A grantor’s right to structure the Privatstiftung may not be transferred and it does not pass to his legal successors (e.g. the heirs). Only natural persons may revoke a Privatstiftung.

Establishment

A Privatstiftung is founded by a declaration of establishment that is subject to certain rules and procedures. The declarations of establishment consists of the foundation deed (“Stiftungsurkunde”) and the appendix (“Stiftungszusatzurkunde”). The Privatstiftung comes into legal existence when it is entered in the Commercial Register.
In the declaration of establishment the grantor declares that he/ she wants to withdraw specific assets from his/her own assets, transfer those assets to a Privatstiftung as a legally independent entity, and earmark them for a special purpose. The declaration of establishment can define the purpose of the foundation in either general or precise terms. With a precise definition of the purpose of the foundation the grantor can determine the fortunes of the Privatstiftung long after his death.
The grantor must endow the Privatstiftung with assets of at least EUR 70,000 when he/she creates the foundation. In addition to cash, contributions to a Privatstiftung may take the form of securities, equity interests, real estate, art collections, etc. Additional assets may be contributed to the Privatstiftung after it has been created.
Practice has shown that a Privatstiftung is created with assets of about three million euros or more.

Beneficiaries

Beneficiaries may be specifically named in the foundation deed (and may be further specified in the appendix), or they may be defined in general terms. If a group of beneficiaries is defined so generally as to require persons to be named in specific cases, the grantor must appoint a body for this particular purpose (e.g. the grantor himself/herself or an advisory board). If no such body is named, this responsibility is exercised by the board of directors, although if appropriate arrangements have been made in the declaration of establishment, the board of directors may be bound by proposals made by other bodies (e.g. a family advisory board).
A Privatstiftung is required to promptly inform the competent tax office of the beneficiaries specified by the board of directors.
Under the Austrian Banking Act, banks are required to determine the identity of the beneficial owner(s) of a Privatstiftung. In this context, a beneficial owner within the meaning of the Austrian Banking Act is the beneficiary or beneficiaries of the distribution of assets out of the Privatstiftung and/or natural persons who control 25 per cent or more of the Privatstiftung’s assets. If the individual persons who are beneficiaries of the Privatstiftung have not yet been named, “beneficial owner” shall be deemed to apply to the group of persons in whose interest the Privatstiftung is active or was originally created.

Board of Directors

The board of directors must comprise at least three members, of which two must have their habitual domicile in an EEA country (EU member states including Iceland, Liechtenstein and Norway). The board of directors manages and represents the Privatstiftung, while ensuring that it fulfils the purpose for which it was created. The activities of the board of directors are guided by the intentions of the grantor as specified in the declaration of establishment.
The first board of directors is named by the grantor or, under certain circumstances, by the curator (in the case of a testamentary foundation). New members of the board of trustees are subsequently appointed by the competent court unless other arrangements have been made in the declaration of establishment. The declaration of establishment may also contain provisions governing the appointment of persons to the board of directors (e.g. members are appointed by the grantor, by an advisory board or by a co-opting procedure).
Beneficiaries, their spouses or partners, next of kin of beneficiaries and relatives as distant as third cousins, as well as legal persons are excluded from serving on the board of directors.
The grantor is not excluded from membership of the board of trustees, unless he or she is a beneficiary.

Supervisory Board and Advisory Board

The grantor can however establish an advisory body, of which beneficiaries may be members, with supervisory functions and certain powers to issue instructions.
The requirement of appointing a supervisory board is prescribed by precisely defined criteria of size, in particular the number of persons employed by the private foundation itself and corporations in which it holds an interest. The declaration of establishment may, however, make provision for other bodies with supervisory or advisory functions. An advisory board is the type of body that is usually considered the most appropriate for the exercise of such functions.

Auditor of the Foundation

It is regulated by law that each foundation has to be audited by a certified chartered accentual yearly. The auditor will be appointed by the court or by the supervisory board.
Moreover, any member of the body of an Austrian private foundation may request the court to order an extraordinary audit to examine whether it is fulfilling its purpose.
A beneficiary is entitled to request and receive information from the private foundation on measures taken to fulfil its purpose, and may also inspect its annual financial statements, books of account and declaration of establishments, etc.

Revocation and Amendment

An Austrian private foundation may be revoked by the grantor, if the latter is a person and if the right of revocation to the grantor has been included in the declaration of establishment. Similarly, express provision is required for the right to amend the foundation deed and appendix. A legal person as grantor may retain the right to amend the foundation deed and appendix, but not to revoke the private foundation entirely.

Term

The declaration of establishment may stipulate a term after which the foundation is to be dissolved. This need not be a calendar day, but may be made dependent on the fulfilment of certain conditions. A foundation may also be established for an indefinite term.
A maintenance-type of private foundation, which does not serve public-interest aims, is automatically dissolved after a period of 100 years, unless the final beneficiary, or all final beneficiaries, decide upon its extension (for a maximum term of 100 years).

Dissolution

A private foundation is dissolved:
  • upon expiration of its term,
  • if bankruptcy is adjudged,
  • by unanimous decision of the board of directors,
  • by decision that bankruptcy is rejected due to lack of capital,
  • by decision of the Court.

Dissolution takes effect upon being entered in the Commercial register. In the case of revo- cation, the grantor is the final beneficiary, unless the declaration of establishment stipulates otherwise.

International law relations

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Party to the Hague Convention (Apostille) Legal system Double tax treaties network OECD member Offshore/onshore status according to the RF laws
Yes civil Law 91 Yes No

Public authorities and legal acts

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List of laws and regulations
Act name Scope of law
Company Law companies
Code of Corporate Governance corporate governance
Federal Act against Unfair Competition competition
Banking Act banking
Private Foundation Act “Privatstiftungsgesetz” (PSG) 1993 private foundation
Tax treaties entered Albania, Algeria, Argentina, Armenia, Australia, Azerbaijan, Bahrain, Barbados, Belarus, Belgium, Belize, Bosnia and Herzegovina, Brazil, Bulgaria, Canada, Chile, China, Croatia, Cuba, Cyprus, Сzech Republic, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Hong Kong, Hungary, Iceland, India, Indonesia, Iran, Ireland, Israel, Italy, Japan, Kazakhstan, Korea, Kosovo, Kuwait, Kyrgyzstan, Latvia, Libya, Liechtenstein, Lithuania, Luxembourg, Macedonia, Malaysia, Malta, Mauritius, Mexico, Moldova, Mongolia, Montenegro, Morocco, Nepal, Netherlands, New Zealand, Norway, Pakistan, Philippines, Poland, Portugal, Qatar, Romania, Russian Federation, San Marino, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Syrian Arab Republic, Taiwan, Tajikistan, Thailand, Tunisia, Turkey, Turkmenistan, Ukraine, United Arab Emirates, UK, USA, Uzbekistan, Venezuela, Vietnam
Tax Exchange Information Agreement (TEIA) Andorra, Gibraltar, Jersy, Guernsey, Monaco, Saint Vincent and the Grenadines
List of state regulatory authorities
Federal Chancellery https://www.bundeskanzleramt.gv.at/en.html
Foreign Ministry https://www.bmeia.gv.at/en/
Ministry of Finance https://www.bmf.gv.at/en
Ministry of Justice https://www.justiz.gv.at/
Competition Authority https://www.bwb.gv.at/en/
Financial Market Authority https://www.fma.gv.at/en/
Official Gazette Wiener Zeitung https://www.digitalegesetze.at/
Österreichische Nationalbank https://www.oenb.at/en/
Invest in Austria https://investinaustria.at/ru/

    Legal Partner of Review:

    Hasberger Seitz & Partner Rechtsanwälte GmbH

    Founded in 1997 and Based in Vienna, HASBERGER_SEITZ & PARTNER Rechtsanwälte GmbH is a leading Austrian law firm with a strong international focus. HSP is a member of Geneva Group International (GGI), a leading international network for independent law, accounting, audit and consulting firms. Our internal team advises and is specialized in the following fields of law: Banking and Finance; Building, Real Estate and Project Development; Civil Law; Competition Law, Competition Protection Act; Contract Law; Copyrights and Trademarks; Corporate Law; Dispute Resolution; IT, Computering and the Internet; Labour Law; Mergers & Acquisitions; Public Law; Residency Law; Tenancy Law

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