How To Start A Business In Austria In 2024

Austria, known for it’s baroque architecture, folk tunes and coffee culture, is also an attractive destination for entrepreneurs. It’s leading sectors include the hospitality, engineering, chemical and automative industry.

Of course, there are a number of essential factors entrepreneurs should consider before setting up shop in Austria. These include the country’s economic state, the legal and regulatory requirements businesses must adhere to, as well as the taxation policies and labour laws.

Austria can be an exciting location for startups, but thorough preparation is necessary to ensure a successful venture.

 

What Is The Appeal Of Starting A Business In Austria?

 

Being central in Europe, Austria provides easy access to the thriving European market. The advantageous location gives entrepreneurs access to over 45o million EU consumers.

Austria is also rather stable politically and economically, attracting foreign investors and entrepreneurs who look for a reliable and predictable environment to setup their ventures.

Austria also has a skilled workforce to be proud of and offers high quality living for it’s residents. It’s robust infrastructure, pristine landscapes and emphasis of social welfare attracts talented workers and creates an environment where businesses can thrive.

 

Austria’s Economic Overview

 

Austria’s economy has staggered the last year, and after a decade of keeping up a strong performance the European Commission forecasts that Austria’s growth is expected to slow down during 2024. A few factors influence this, such as high inflation and declining investments.

Luckily, it seems as though growth will gradually pick up again late 2024 and after. This will depend on global factors, like the war in Ukraine and inflation.

Austria’s employment rate, despite the economic stressors, remains remarkably low. This is accredited to the limited labour market alongside a decline in the working age population. Thanks to the low employment rate, Austria may avoid detrimental effects.

 

Austria’s Legal And Regulatory Framework

 

Austria has certain legalities that must be dealt with so that entrepreneurs can compliantly establish themselves. Here are a few legal things new entrepreneurs should consider:

 

Choosing An Appropriate Business Structure

Austria has several legal structures businesses can choose from. The most popular structure is the limited liability company, or Gesellschaft mit beschränkter Haftung, that offers businesses the advantage of separating personal assets from liabilities.

 

The Registration Process

To register a limited liability company in Austria, businesses need at least one shareholder and director, an Austrian address and a minimum share capital of €35,000.

There are also documents that must be prepared, such as the Articles of Association and a proof of capital deposit. Most businesses are also require to obtain the trade license, Gewerbeberechtigung.

Tax registration and social security contributions are also part of the registration process, and some industries require proof of qualification for management.

Then, business can finally register by submitting everything to the Commercial Register. Making use of an advisor or lawyer familiar with Austria’s regulations may also help facilitate a smooth launch.

 

Austrian Taxation And Financial Management

 

Austria has a relatively streamlined tax system, even positioning itself as a worthy competitor in contrast with many other European countries. This may be particularly advantageous to both startups and established businesses.

 

Corporate Income Tax And VAT in Austria

Austria has a unique corporate income tax system, with a current flat rate of 23%. While this is relatively average compared to other European countries, what makes Austria’s system unique, is that it is applied to company profits – regardless of whether it is reinvested or distributed. Compared to other countries, this may be favoured by startups.

Austria follows the standard EU VAT system – once annual turnover exceeds €35,000, businesses must register for VAT. However, companies below this threshold may be exempted according to the “small company owner rule”.

Austria also has attractive tax breaks to promote innovation and investment, and includes investment allowances and tax credits for research.

 

How Does Hiring And Managing Employees Work in Austria?

 

Understanding the labour laws and regulations surrounding employees is vital to equip startups with the workforce they need.

It’s highly recommend that written employment contracts are utilised, although it’s not strictly mandatory. This contract must outline working hours, wages, benefits, time off, and termination clauses. Multiplier reports that it is also necessary that employers follow collective agreements that are specific to the industry of the company.

Austria takes care of it’s employees with generous benefits that includes a minimum of 30 days leave annually, in addition to paid sick leave and public holidays. Employees also have strict rights in terms of termination, working hours and the treatment they are entitled to at work.

Employers must also make contributions to social security which covers healthcare, unemployment, and pension funds.

Because of the complex regulations around Austria’s labour laws, it is highly advisable to work with an HR specialist or legal professional to ensure startups can remain compliant.

Furthermore, it is essential that non-EU citizens obtain working permits, which can be done by securing a positive labour market test and sponsoring visa applications for employees.

Austria can be an exciting country to establish a business in, and has many perks for startups such as attractive taxes, whilst prioritising employee satisfaction. The economic conditions, despite challenges, are relatively stable and the registration process simple. Understanding these crucial aspects alongside careful planning will help entrepreneurs set themselves up for success in Austria.