How to start a business in Austria in 2024: all you need to know
Did you know that 34,600 new businesses are founded in Austria each year? Even more impressive: 70% of these businesses survive their first five years—a success rate many countries envy. Austria is home to over 120,000 self-employed individuals under 40, and with its robust infrastructure, business-friendly policies, and access to the broader European market, it’s no wonder the country continues to attract entrepreneurs from all over the world.
But before you jump in, there's more to Austria than just good numbers. Navigating its bureaucracy and understanding the legal, financial, and tax systems are key to success. Whether you're starting a business as a sole proprietorship, limited liability company (GmbH), or even a joint stock company, you must understand the different legal entities available and how they affect corporate tax and liabilities. This guide will walk you through everything you need to know—from choosing the right business form to understanding taxes, with a few insider tips along the way.
WKO: first place you need to go to
Starting a business in Austria means getting acquainted with the Austrian Federal Economic Chamber (WKO). They are the backbone of Austria’s business community, offering resources and support that you won't find anywhere else. Whether you’re looking for help with business registration, tax advice, or just a breakdown of Austrian business laws, WKO has it covered. Their Gründer-Service (Startup Service) provides essential tools, such as templates for business plans, business registration documents, and guides for financing.
Beyond that, WKO offers workshops, mentorship programs, and even networking events that connect you to Austria’s thriving startup scene. They also have regional offices, so no matter where you are in Austria, there’s local help available. Make sure to check out their Junge Wirtschaft platform designed to support young entrepreneurs with grants, training, and much more.
Choosing the right business form
The form your business takes will affect everything from taxes to personal liability, so it's crucial to choose wisely. Here's a quick breakdown of the most common legal entities for setting up a business in Austria:
1. Einzelunternehmen (Sole Proprietorship)
Perfect for solo entrepreneurs. It’s the simplest structure to set up with no minimum share capital requirement. However, you’ll bear full responsibility for any debts or liabilities. Your business income is taxed as personal income, meaning you could face tax rates up to 55% depending on your earnings.
2. Gesellschaft mit beschränkter Haftung (GmbH)
A limited liability company (GmbH) offers protection of your personal assets from business debts but requires at least €35,000 in capital, with €17,500 needed upfront. This is the go-to structure for medium-sized companies or startups looking to grow. Profits are taxed at 25%, plus a 27.5% tax on distributed dividends.
3. Offene Gesellschaft (OG) & Kommanditgesellschaft (KG)
If you're planning to team up with one or more partners, these general partnerships (OG) and limited partnerships (KG) offer flexibility. In an OG, all partners share full liability. In a KG, one partner has unlimited liability while others are only liable for their investment.
4. Aktiengesellschaft (AG)
If you’re aiming for the big leagues—like going public or securing large investments—a joint stock company (AG) is your best bet. You’ll need €70,000 in capital to get started, and you’ll also have shareholders to answer to. Like a GmbH, profits are taxed at 25%, plus 27.5% for dividend distributions.
5. Freiberufler (Freelancer)
Freelancers in Austria often work in creative or technical fields. Setting up as a freelancer means fewer registration requirements and flexibility in tax filings, but you must meet specific professional criteria. You'll still be subject to personal income tax on your earnings, and managing VAT is crucial.
6. Gesellschaft bürgerlichen Rechts (GesbR)
A civil law partnership is usually formed between two or more people and doesn't have the legal standing of a GmbH or AG. It’s often used for smaller ventures and is simpler to set up, but the partners are personally liable for any debts incurred.
Choosing the right structure is essential for foreign companies looking to expand into Austria. Understanding the specific requirements for each business type, such as minimum share capital, is key for successful company registration.
Taxes: the elephant in the room
Austria's tax system is no walk in the park, but understanding the basics will save you a lot of trouble down the line. Here’s what you need to know:
Corporate Tax (Körperschaftssteuer)
If you're running a limited liability company (GmbH), joint stock company (AG), or another corporate structure, your business profits will be taxed at 25%. This applies to retained earnings within the company.
Personal Income Tax (Einkommenssteuer)
For sole proprietorships, freelancers, or individuals in partnerships, your business income will be taxed as personal income with rates scaling up to 55% for high earners. If your taxable income is under €11,693, you won’t owe income tax. But once you surpass €90,000, you’re looking at the highest tax rate.
VAT (Umsatzsteuer)
The standard VAT rate is 20%, which applies to most goods and services. If your business generates over €35,000 in annual revenue, you’ll need to register for VAT. Late or incorrect VAT filings can lead to hefty fines.
Social Insurance (Sozialversicherung)
Austria takes social welfare seriously. As a business owner, you’re responsible for social insurance contributions, covering health, pension, accident, and unemployment insurance. The contributions generally hover between 18-20% of your income. The Sozialversicherungsanstalt (SVA) is the body that handles these payments, and skipping them will land you in hot water.
Want to dig deeper into taxes? The WKO and Austria’s Finanzamt (tax office) both offer guides that break down tax obligations for new businesses. You can also check out BMF.gv.at, the Austrian Federal Ministry of Finance's website, for more detailed tax laws and filing requirements.
Location: beyond Vienna’s glitz
Vienna might be the star of the show, but there’s more to Austria than its capital. Graz, Linz, and Innsbruck all offer unique advantages—from tech hubs to affordable real estate and lower operating costs. Choosing the right city for your Austrian business isn't just about where you want to live; it’s about strategic positioning.
Vienna offers global connections and a bustling international scene, but rent and wages are higher. Graz is known for its tech and startup culture, while Linz is a manufacturing powerhouse. Meanwhile, Innsbruck benefits from its tourism-driven economy. The Austrian Federal Economic Chamber has regional offices that can provide specific guidance based on your chosen location.
Resources for entrepreneurs: help is everywhere
Austria wants your business to succeed—and it backs that up with resources and financial incentives. Here are some you should know about:
- Gründer-Service by WKO: This should be your first stop. They offer step-by-step guidance on starting a business, including workshops, networking opportunities, and legal advice.
- AWS (Austria Wirtschaftsservice): Provides financial support in the form of grants, loans, and guarantees for startups and businesses looking to scale. Their AWS Startup Fund can offer up to €3 million in investment capital for high-growth companies.
- FFG (Austrian Research Promotion Agency): If your business involves innovation or R&D, FFG is your go-to for subsidies and funding opportunities.
EU Funding: Don’t forget that Austria’s membership in the European Union opens up possibilities for EU-wide funding, especially in innovation, sustainability, and tech sectors.
Tips for a successful launch
Opening a business in Austria is more than filling out forms and paying taxes—it’s about long-term vision. Here are a few insider tips:
- Get an Accountant: Austrian tax law is complex. An experienced accountant will save you time, money, and prevent nasty surprises at tax time.
- Plan for the Future: A financial forecast isn’t just for investors—it’s for you. Knowing your projected income, expenses, and tax obligations will keep your business on track.
- Stay Connected: Attend WKO events, join regional business networks, and don’t be shy about asking for advice. Networking is the lifeblood of business in Austria, and a few well-placed contacts can open doors.
Wrapping it up
Austria is a country that loves entrepreneurs—but it also expects them to play by the rules. Whether you're a managing director of a company registered as a GmbH or exploring the possibilities of a joint stock company, careful planning is crucial. With the WKO on your side and a solid understanding of your tax and business obligations, you’re set to thrive. Just remember: planning and preparation are everything, and a bit of bureaucratic patience goes a long way.
With these tools in hand, you’re ready to take the leap. Austria’s thriving business scene is waiting—just make sure you hit the ground running.