LBG Austria: Simplified (Digital) Formation of a Limited Liability Company (Gmbh) in Austria

Company founders (start-ups) often decide either to set up a sole proprietorship or to set up a limited liability company (GmbH). When choosing the right legal form for a company, business issues, trade law, professional regulations, financing, the clientele, the risks associated with business activity and the associated liabilities, the taxation of both the results generated and the results obtained, questions of social security law, the transfer from private assets to future business assets and the current or future desired group of shareholders play a crucial role. In individual cases, the conclusion of service, rental and lease agreements in the family circle with the GmbH to be set up is important.

Since 1.1.2018, a simplified (digital) formation without a notarial act or notarial certification is possible if a GmbH is set up by a natural person who is also the sole shareholder. The articles of association replace the declaration of establishment of the company. However, the following additional requirements are mandatory.

The share capital is 35,000 euros; on this, if the founding privilege is not used, 17,500 euros are to be paid in cash. If the founding privilege is claimed, the initial contribution with the privilege of founding is 10,000 euros; then 5,000 euros are to be paid in cash.

• The declaration on the establishment of the company is limited to the minimum content (company name, head office, object of the company, amount of the share capital, amount of the contribution to be made by the shareholder on the share capital) and the appointment of the managing director. If necessary, regulations on the replacement of the formation costs up to a maximum amount of 500 euros, through the formation privilege and through the distribution of the balance sheet profit, if it is reserved for a special resolution from year to year have to be declared as well.

• Identity verification by the credit institution: The credit institution selected for the initial deposit in the course of the establishment of the GmbH has to determine and verify the identity of the future shareholder and managing director when opening the bank account. This also applies if the shareholder and managing director is already a customer of the credit institution. Moreover, the shareholder and managing director has to provide the bank with a sample drawing.

• Submission of confirmation to the commercial register: After obtaining a corresponding release from banking secrecy, the bank must electronically send the bank confirmation, a copy of the photo ID of the future shareholder and managing director and the sample drawing directly to the commercial register.

• No notarial act, no certification: If all of these prerequisites are met, the declaration of the establishment of the company does not need to be in the form of a notarial act, but has to be made in electronic form in such a way that the identity of the partner can be unequivocally established. Likewise, the registration of the company for entry in the commercial register does not require the certified form, but has to be done in electronic form in a way in which the identity of the shareholder can be ascertained beyond doubt.

LBG recommendation: Whether you want to forego legal advice from a notary or a lawyer if all of these requirements are met depends entirely on the specific individual case and your wishes.

Our many years of experience in advising a wide range of industries, legal forms and company sizes shows that it is important to contact us before (!) founding a company or setting up a GmbH. We will expertly discuss the economic planning for your business, customers, suppliers, investments, the financially required financing (own and borrowed funds) of investments and the ongoing business development in the course of the year, expected sales and results, questions about taxes, social security and the optimal selection among various legal forms (e.g. sole proprietorship, GmbH, OG, KG, GesbR, Verein, AG, Cooperative, private foundation, GmbH & CoKG) with a focus on the current status and future development as well as any employment relationships and rental and lease agreements from an economic and tax point of view. We are happy to take on many topics relating to the registration of the company, carry out the ongoing finance and accounting including monthly business evaluations, the ongoing payroll accounting including an overview and development of employee costs and prepare the annual financial statements, tax returns and necessary evaluations for banks. We are happy to advise you in all important economic questions.

May 10th, 2021 I 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.