Business presence

According to § 1 of the Austrian Code of Commerce (UGB) anybody who runs a company is doing business. A company is defined as an organisation of independent economic activity which is meant to exist for a longer period of time while not necessarily being focused on profit.

A company can be run by a corporation, a partnership or even by an individual person:

Austrian corporations include the GmbH which is short for Gesellschaft mit beschränkter Haftung (a form of limited liability company) and the AG which is short for Aktiengesellschaft (a form of joint stock company). The main advantage of the corporations is the limited liability: Both the GmbH and the AG are liable only up to their share capital (which starts at EUR 35.000,00 and EUR 70.000,00 respectively). In addition, corporations are generally taxed lower than partnerships. On the other hand, the expenses necessary for founding and maintaining a corporation are higher (mainly because of the tight obligations regarding accounting and balancing).

Partnerships as – for example – the OG (Offene Gesellschaft) or the GesbR (Gesellschaft bürgerlichen Rechts) and one-man-enterprises are much more flexible and inexpensive than corporations but it is important to note that each and every member of a partnership is absolutely liable with his or her entire fortune.

Setting up a company

  • First of all the founders of a company have to conclude a contract, the Gesellschaftsvertrag, regulating such things as the purpose of the company, its representation, internal liability, profit distribution and other rights and duties of the co-owners.
  • Then, at least one person active in the company needs to have a Gewerbe- or Berufsberechtigung, which is a governmental authorisation certifying that its holder has got the necessary skills and abilities to do a specific kind of business.
  • Corporations and some kinds of partnerships have to register a name (Firma) at the regional court in order to do business.
  • Having employees means having to abide to a specific collective contract (Kollektivvertrag) which grants employees certain rights such as minimum wages, leave and limited working hours.


Selling services and goods as a company of a certain size is subject to the Austrian VAT (Umsatzsteuer). The VAT rate for most services and goods is 20% (with the ex- ception of 10% regarding most notably foods and drinks, books, medications, leases and 13% regarding among other things living plants and animals, sales of artists, wine, accommodation establishments).

The profit of a corporation is subject to the corporation income tax (Körperschaftssteuer) which is a flat 25%. If a corporation distributes its profit to its owners, a flat rate of 27,5% gains tax (Kapitalertragsteuer) will have to be paid.

On the other hand the profit of a partnership or a single businessman or -woman is subject to the income tax (Einkommensteuer) of each individual person. Depending of the amount of income, a person pays either 0% (up to EUR 11.000,00), 55% (over EUR 1.000.000,00) or something in between (25%, 35%, 42%, 48%, 50%).

It is worth noting though that there are numerous double taxation agreements between Austria and other countries of the world.

Governmental influences

It has to be taken into account that Austria, being a Social Market Economy, is a place where the public sector (still) has got a lot of power to indirectly determine the way a business is run.

Oftentimes cases of over-regulation and/or over-supervision can be viewed as infringements of rights and/or liberties. Sometimes such policies are unconstitutional or not in accordance with either the law of the EU or the ECHR and therefore can and should be contested in a court of law.

B2B and B2C relations

The way goods and services are sold in Austria should depend on whether the target group are other businesses or consumers. While the B2B private law is to a large extent very liberal (the only limit being immoral business practices), B2C relations are always affected by the strict Austrian (and European) consumer protection laws.

Publisher: DDr. Fürst Rechtsanwalts – GmbH