There are two variants for establishing a GmbH in Austria. On the one hand, this can be done quite regularly. On the other hand, there is also a foundation-privileged GmbH in Austria, which can also be founded online in a simplified procedure. At the classic GmbH in Austria, the minimum share capital is EUR 35,000. Of these, the establishment of a GmbH in Austria requires the payment of half of the amount. In contrast, the minimum share capital of a foundation-privileged GmbH is only EUR 10,000. Again, the deposit of at least half of the corresponding amount is required. However, it must be noted that the GmbH in Austria is entitled to the regular share capital at the latest after ten years or that it must have a minimum share capital contribution of EUR 17,500.

In Germany, the limited liability company, as the GmbH is called in the actual wording, has a long tradition. In contrast to most partnerships, a GmbH offers significantly improved asset protection. Therefore, there are also many requirements in Germany that you have to consider when establishing a GmbH.

But also in Austria the GmbH is known as a legal form for companies. There, too, it is a widespread society for which many entrepreneurs choose. After all, the GmbH offers the same advantages in Austria as its German twin.

Unlike us, a GmbH in Austria is always considered commercial. So you have to obtain a business license for a GmbH in Austria. In Austria as well as in Germany, the GmbH can actually serve only asset management purposes. This is called a holding company. This has no effect on the taxation of the GmbH in Austria. Nevertheless, in Austria you have to distinguish between a commercial company, i.e. an operative GmbH, and one that only carries out an asset management activity. Because it depends on whether a shareholder has to pay social contributions on the profits distributed by the GmbH. But this takes us away from our actual topic.

The idea that the GmbH in Austria and Germany could be twins is quite useful for an easier understanding. But, to stay with the picture, these are not identical twins. Even with the latter, there is always a difference, namely at the time of birth. So it is also, in the figurative sense, to see in the founding conditions of the GmbH in Austria and in Germany. Because in the founding conditions and even in their name, i.e. in the name – also a parallel to twins – there are some considerable differences between a GmbH in Austria and in Germany. Explaining these to you is the purpose of our article.

Let’s start with the name of this type of company. In Germany, there is the classic GmbH. In addition, however, one also knows an entrepreneurial company (haftungsbeschränkt), called UG (haftungsbeschränkt) for short (which still seems very long). Here the main difference is that you can start with a share capital of only EUR 1. Although there is then the obligation to use a part of the profit annually to increase the share capital until it reaches the level of the legally fixed minimum share capital, there is no need to observe any legal period. In addition, a capital formation in kind for a UG (haftungsbeschränkt) is excluded. And the number of shareholders is also subject to legal restrictions in this special form of GmbH.

A GmbH in Austria can also be founded in two different ways. However, the alternative also uses the same name, namely GmbH. But behind this lies what is also known as the term founding privileged GmbH. Therefore, in Austria one cannot make a distinction between the two alternatives solely on the basis of the name or the company, i.e. the name. In this respect, it is much easier in Germany with the UG (haftungsbeschränkt). But there is also a possibility in Austria to find out whether you are dealing with a classical or a foundation-privileged GmbH. Although this approach, which was chosen in the Austrian GmbH law, contains quite positive characteristics.

What are the privileges of establishing this alternative to the ordinary GmbH and what criteria generally apply when establishing a GmbH in Austria, should, however, be the subject of the next section.

In this interview with Roman Jagersberger we explain what taxes are levied in Austria and compare this with Germany.

Since you now know two ways to start a GmbH in Austria, we want to look at how to start a GmbH in the classical way. Based on this, we investigate the deviations that exist when establishing a foundation-privileged GmbH in Austria.

Just as in Germany, you can found a GmbH in Austria with one or more shareholders. In addition, a social contract is required when establishing a GmbH in Austria. Also in accordance with the German regulations, one must conclude the social contract in Austria with the involvement of a notary; This is called a notarial act. For this purpose, the articles of association must contain at least five points, namely the company as the name of the company, the location, the (legal) purpose of the company, the amount of the share capital and the share which each shareholder assumes.

In order to found a GmbH in Austria, one must first observe the legal requirement for a minimum share capital. The minimum share capital that a GmbH is legally entitled to in Austria amounts to EUR 35,000. Of these, a GmbH in Austria must be free to dispose of at least half of the amount at the time of its establishment. To ensure this, the Austrian legislature has stipulated that the GmbH shareholders must make their share of the capital to be invested available by transferring it to an account of the company or the managing directors. Each shareholder must make a payment of at least 25 % of the ordinary contribution, but not less than EUR 70. Even if this may only be a pure formality – a foundation in other currencies is excluded. However, you can also use tangible assets instead of cash for foundation.

Other amounts relating to the share capital and the cash contribution apply when a foundation-privileged GmbH is founded in Austria. The minimum share capital required by law is only EUR 10,000. The shareholders must transfer at least half of this to their new company when the GmbH is founded. In addition, no material foundation is possible for the establishment of a foundation-privileged GmbH.

But there is another important aspect that you have to consider as a shareholder of a foundation-privileged GmbH. Because the conditions for start-up privileges are limited to ten years. This means that ten years after the registration of gründesprivilegierte GmbH in the company register (this is the company register in Austria), the GmbH must have a share capital of at least EUR 35,000, in which it can freely dispose of at least EUR 17.500. Furthermore, this also includes the conclusion of a social contract with the involvement of a notary. This ultimately results in the founding privileged GmbH becoming a regular GmbH.

In addition, there has also been the possibility of founding a GmbH in Austria online for several years. The establishment of a GmbH in Austria in the online procedure does not require any notarial participation. But there are also some conditions. On the one hand, a GmbH to be founded in this way may have only one shareholder in Austria. Secondly, the GmbH may have only one managing director, namely this shareholder. Of course, due to these restrictions, no social contract is necessary in the simplified founding procedure.

And here, too, it is true that when a founding privileged GmbH is founded in Austria in the online procedure, the formal founding act is basically provided for by law after ten years at the latest.

Thus, the establishment of a GmbH in Austria is very simple and comparatively uncomplicated in this way. But often the shareholders who go this way lack tax advice. This may even have serious consequences in many and very different situations.

3.4.1. Formation of a Supervisory Board

In some cases, the formation of a supervisory board at a GmbH in Austria is mandatory. There are special criteria for this, which must be observed. For example, a GmbH whose share capital is at least EUR 70,000 and in which more than 50 shareholders are involved requires the formation of a supervisory board. Furthermore, the formation of a supervisory board at a GmbH in Austria is required for a workforce of more than 300 employees. However, a Supervisory Board can also be formed on a voluntary basis.

3.4.2. Insight into the company register

If you want to determine whether a certain GmbH in Austria is a regular GmbH or a foundation-privileged GmbH, you can take a look at the company register. Because there is also information about the share capital. If the share capital is less than EUR 35,000, it is a foundation-privileged GmbH. With regard to the date of registration of the GmbH in the company register, it is then also possible to estimate when the shareholders of a foundation-privileged GmbH have to extend them to the regular GmbH at the latest. Of course, all this information is also generally publicly accessible in Austria through access to the company register.

3.4.3. Observance of the minimum KÖST after the establishment of a foundation-privileged GmbH in Austria

Finally, when establishing a start-up privileged GmbH in Austria with half paid-in share capital, you should also consider that you have to pay the minimum corporate tax of EUR 500 of each during the first five years. If the GmbH already makes profits in sufficient amount at the beginning, this may be irrelevant. But with only low or no profits during this time, this can already be decisive for the continued existence of the foundation-privileged GmbH. In addition to the costs of founding the GmbH, which is also paid out of the GmbH’s business assets, half of the cash contribution of EUR 5,000 has already been used up. So the question of a potential insolvency of the GmbH is also obvious. Since this concerns in particular the obligations of the managing director, one should act with caution.

A minimum corporate tax must also be paid in the following years. In fact, from the sixth year of the existence of the GmbH, the annual amounts at the minimum KöSt increase to EUR 1,000. At the latest with the eleventh year, the GmbH must pay the full minimum KöSt of EUR 1,750. But at this time the GmbH should have made the legally prescribed adjustment of the amount of share capital and the cash deposits and thus have sufficient liquidity.