The advantages of registering a company in Austria are:
• A company is established in EU
• No currency control
• Wide range of authorized treaties which validate the avoidance of double taxation
• Stability in legislation. Law of Limited Liability Companies was established in 1906, having certain acts amended in different periods since then.
In order to take advantage of the benefits of the tax regime of the Austrian company, there is no obligation to form a special company, it can be obtained by possessing two types of companies: Gesellschaft mit beschrankter Haftung (GmbH) – Limited Liability Company, Aktiengesellschaft (AG) – joint-stock company with limited liability.
Local Holding (Regarding general information)
If dividends are paid by an Austrian company to another Austrian company, recipient’s company is not taxed on dividends. Capital gains of Austrian companies from the sale of shares of another Austrian company is taxed at the standard rate of 25%. If the foreign company has permanent offices and branches in Austria, treaties which validate the avoidance of double taxation do not apply to them. Nevertheless, the loss of external operations can be subtracted from the local tax base.
Foreign Holding
Any dividends received by an Austrian company and any capital gains resulting from the sale of shares of a foreign company, with a condition that an Austrian company owns at least 10% of the shares of foreign company, with a similar organizational structure (GmbH) - Austrian limited liability company, at least for 1 year, is not subjected to taxation in Austria.
Austria does not adopt a law for controlled foreign companies or the rules of low capitalization or debt ratios and therefore Austrian company can leverage the acquisition of shares of foreign companies. Equity (shares) participation is fully liable to tax and can compensate for any income received by the Austrian company.
Gesellschaft mit beschrankter Haftung (GmbH) - Closed Limited Liability Company, which is characterized as follows:
• total capital (minimum € 35 000) to be signed by the shareholders, at least € 17,500 must be paid at the time of registration in cash contribution;
• if the payment of the second half of the capital is in the form of non-monetary assets, there will be an evaluation of this property by an independent expert in Austria;
• Memorandum of Association of the company is recorded by a notary in Austria or in the presence of the our designated lawyer;
• shareholders are free to transfer their shares to third parties with the appropriate notarization, but regarding company's Memorandum of Association, they may require the relevant resolution of the General Meeting of Shareholders;
• all shareholders have limited responsibility within its share in the company;
• There is no limit to the number of shareholders, who may be physical or legal persons, residents and non-residents of Austria (at least - 1 shareholder);
• management of the company may be conducted by the only director as well as the board of directors;
• the company may conduct any legal activity, except banking, insurance, reinsurance, political and trade union;
• the company must have a registered office in Austria and from the moment of registration must allow to use the office address of the lawyer or notary;
• If the company decides to initiate any commercial activity, it should acquire a real physical office, where the Austrian authorities could send the information, regulations and other documents;
In the case when the authorized capital GmbH exceeds € 70 000 and the company has more than 50 shareholders or GmbH is investment company, such a company would be required to form a the supervisory/administering board for monitoring activities of the directors even if it was not initially predetermined in the Memorandum of Association articles.
Austrian GmbH is often used to own domains/royalties (patents and other intellectual property);
Most of the signed treaties on avoidance of double taxation provides zero interest tax rate on royalty payments.
The EU directive on payments of royalties applies if a company owns at least 10% of the shares of the company in the EU for at least one year. In such case there is no withholding tax on payments of royalties to Austrian GmbH. Interest and royalties shall be taxable exclusively in the recipient country (Art. 11 and 12 of the Convention).
