Establishing a business: Formation of a company or subsidiary in Austria

Any Austrian citizen or foreign national may establish a business in Austria. A business operated subject to the entrepreneur’s full personal liability (i.e. without any further partners or shareholders) is referred to as a “sole proprietorship. As an alternative, there is also the option of forming a partnership or company through which the business can be operated. At least two partners are required to form a partnership entity or Personengesellschaft. By contrast, one individual is sufficient to establish an incorporated entity or Kapitalgesellschaft (GmbH, AG).

Frequently, foreign business owners wish to establish a subsidiary in Austria. This is legally independent from its parent company, meaning the foreign parent company does not bear direct and unlimited liability for the subsidiary’s obligations. The corporate forms typically chosen for such subsidiaries are the Gesellschaft mit beschränkter Haftung or limited liability company (German acronym: GmbH) and the Aktiengesellschaft or joint-stock company (German acronym: AG). An alternative is the “European Company”(also referred to as “Societas Europaea” or SE).

In terms of partnership entities, the Offene Gesellschaft or general partnership (German acronym: OG) and the Kommanditgesellschaft or limited partnership (German acronym: KG) may be used. Alternatively, business owners may establish a GmbH & Co KG (which is a form of partnership entity that combines the characteristics of each of the two aforementioned entity types).

Austria is also popular as a location for holding companies. In practice, holding companies are usually incorporated entities (i.e. a GmbH, AG or an SE) or in certain circumstances maintain a legal form as private foundations. Even though private foundations cannot issue shares, there are legal structures that may nevertheless make it advantageous to form a private foundation in Austria.

Other corporate forms such as the civil-law partnership or Gesellschaft bürgerlichen Rechts, the silent partnership, the co-operative (Genossenschaft) corporate entity and the legal association (Verein), are in general of little practical significance to foreign investors.

July 1st, 2020 | LBG

Contact & Advice: This information naturally shows basic aspects of the topic - for completeness and correctness no guarantee can be given despite careful preparation. LBG will gladly advise you in your individual situation. Please contact one of our 31 Austria-wide locations (www.lbg.at) or welcome@lbg.at - we will gladly bring you together with one of our experts, who is very familiar with your request.