Starting a business in Austria: a step-by-step guide

416

Whether it’s a side-hustle or a fully-fledged company, running your own business can be an empowering move. And fortunately for expats thinking about starting a business in Austria, this is a reasonably easy procedure. That said, there are some steps that you can take to make sure you put your best foot forward.

Small and medium-sized enterprises form a vital part of the Austrian economy. In fact, research shows that they made up 99.6% of the Austrian business economy in 2017; thus generating sales of more than €482 billion. Although the same success rate can’t be said for the self-employment rate, you can still use this to your advantage since it’s not a very saturated ecosystem. To help you out, here is an overview of how to start a business in Austria as well as the resources available to entrepreneurs.

How to start a business in Austria

Depending on where you come from, starting a business in Austria can be fairly straightforward. If you are a citizen of an EU country, Switzerland, or the European Economic Area (EEA), all you have to do is register your business. However, if you are an expat from outside the EU, there are additional steps that you need to complete.

1.      Apply for a Red-White-Red Card

The first of these is obtaining a business visa, and there are two ways to go about this. One is to apply for a Red-White-Red Card for Self-employed Key Workers. This requires you to have investment capital of at least €100,000. The other option to apply for a Red-White-Red Card for Start-up Founders. This allows you to apply for a residence permit while creating your own business. For this, you must also have a start-up capital of at least €50,000.

In either case, you need to provide some documents to give legitimacy to your business, and then you can obtain a Red-White-Red Card. This allows you to stay and set up your business in Austria. 

2.      Apply for a trade license

After you have obtained your Red-White-Red Card, you will then need to apply for a trade license from your local district authority. For this, you need to state your business name, designation, location and share some personal data with your local district authority. You also need to pay a fee of €47.30. In addition, you need to register your business with the tax office and get a TAX ID number. Conveniently, you can do both at your local district office. 

3.      Register your company

After getting your license, you should register your company with the Austrian Commercial Register and register for social security. If your documents are in a language other than German, you’ll also need to get notarized translations. Once these are all done, you’re ready to set up shop.

When registering your business in Austria, there are several legal structures to choose from, as follows:

  • Limited Liability Company / Gesellschaft mit beschränkter Haftung (GmbH): This is the most common type of business in Austria. GmbH is legally independent, and the liability doesn’t fall on its owners. The owners of a GmbH are only legally liable for the capital required to set up this type of business; a minimum of €25,000. 
  • Joint-Stock Company / Aktiengesellschaft (AG): Suitable for larger companies, this structure allows companies to offer public shares, and the liability is limited to the investment of shareholders. It requires five or more establishing members and requires €50,000 to register this type of business.
  • European Company / Societas Europaea (SE): This structure is only available for companies or persons with a business already set up in Austria. 
  • General Partnerships or Limited Partnership / Offene Gesellschaft (OG) or Kommanditgesellschaft (KG): There are two types of partnerships offered in Austria. One is a General Partnership (OG), which bears unlimited liability on partners but has fewer formalities. The other one is a Limited Partnership (KG), which offers limited liability to one partner and the other partner bears unlimited liability as a director.
  • Sole Proprietorship / Einzelunternehmen: If you are a freelancer or a one-person operation, this is the business type that applies to you. It gives you a lot of freedom in managing your company, and you are the only person with liability. 

Running your business in Austria

Once you have set up your company and filed all the paperwork, the next step is to keep a good record of your activities. If you own a larger company, you will need to draw up financial statements and get them approved under strict deadlines. Your invoicing also needs to be detailed. If you can’t follow these procedures, however, then you may have to pay some hefty fines. If you’re a small business, though, you don’t need to prepare detailed financial audit documents as long as you keep your records for seven years. Your invoices can also be simpler if they amount to less than €400.

Austrian businesses are responsible for charging VAT and paying this back to the tax authorities. If your business has an annual turnover of less than €35,000, then you don’t need to pay VAT, but you still have to pay income tax. Corporate companies also need to pay an additional 25% corporation tax each quarter. 

If you’re planning to hire employees, then you need to comply with Austria’s robust labor laws. These offer broad protection and rights for workers; including an entitlement to 25 days of paid annual leave per year, sick leave, maternity leave, restrictions on termination, and overtime. Under these labor laws, you must also register all employees with the Austrian Health Insurance Fund and social security.  

Resources available to business owners in Austria

Although starting a business in Austria requires a lot of research and groundwork, it is possible. Furthermore, the country aims to create an ecosystem that supports entrepreneurs. As a result, you will have access to several organizations that can make your journey run smoother. The most notable of these are the Austrian Research Promotion Agency (FFG) and Austria Wirtschaftsservice GmbH (was); these both offer grants and loans to businesses. If you need funding for a start-up business, you can approach Speedinvest and seek advice from Vienna Business Agency on various practical topics.

Meanwhile, women can benefit from organizations that support female entrepreneurs, such as Women’s Business Center, Women & Work in Salzburg, and Women’s Enterprise Service. If you own a foreign company and are looking to establish a presence in Austria, you can also get in touch with the Austrian Business Agency for more information and support. And, if you want to know more about business insurance, corporate social responsibility, and starting an NGO, you can read Expatica’s guide on starting a business in Austria.