Gianmauro Sherman Nigretti - Austria - corporate and tax highlights 2016

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AUSTRIA 2016

2. CAPITAL: WIEN
POPULATION: 8,22 MILLION
POLITICAL SYSTEM: FEDERAL REPUBLIC
GEOGRAPHY AND POPULATION

3. Sole Proprietorship
This is the simplest method of setting up a company. The business is carried out by a sole owner.
The sole proprietorship is not a legal entity apart from its owner. The owner is both the owner and
manager of the company. He/she is also subject to unlimited personal liability with all his/her
personal assets.
Partnerships
General Partnership (OG) – In order to form a general partnership, the partners enter into a
contract of association in order to operate an enterprise based on commercial principles. Each
partner is individually subject to taxation and each partner is personally liable, with his own private
assets, for all the business debts. Partners can be individuals and legal entities (eg corporations).
Limited Partnership (KG) - A limited partnership has two kinds of partners. At least one of these
must be personally liable for all business debts without limitation. However, the other partners are
only liable to the extent of their capital contribution. Partners can be individuals and legal entities
(eg corporations).
FORMS OF BUSINESS ORGANIZATIONS

4. GMBH and Co KG : a special case of Limited Partnership - The GmbH & Co KG is a form of
business organisation unique to Austria and Germany. A limited liability corporation (GmbH) is
the partner with unlimited personal liability in the limited partnership (KG). The corporation has
an administrative role and generally provides for no capital. The limited partnership (KG) owns
the company’s assets and runs the business.
The civil law Partneship - The civil law Partnership is defined as an agreement between two or
more partners putting together their funds for a common purpose. The civil law Partnership will
have internal effect only between the Partners.
Corporations
A corporation is a legal entity distinct from the individuals who own it.
 The privately owned corporation is a limited liability company (GmbH).
 The publicly owned corporation is a public corporation (AG).
Limited Liability Company (GMBH) - The limited liability company (GmbH) is an incorporated
enterprise, where the liability of the shareholders is limited.
Public Corporation (AG) - Like the GmbH, the AG is a legal entity limiting the liability of its
shareholders. Unlike the GmbH, the shares of an AG can be transferred without a notarial deed.
Foundation/Trust (PS)
A Foundation can be used for charitable purpose or for private security. The protection (asset
protection vehicle) of a family-owned business is the main application for a private Foundation.

5. Must be provided annually and must disclose all assets, provisions, liabilities, prepayments
accruals, income and expenses. They must give a ‘true and fair’ view of a company’s assets,
its financial condition and earnings. Financial statements include:
• A Balance Sheet with the director’s note
• Profit and Loss
ACCOUNTING

6. A statutory audit is mandatory required for:
• Banks, insurance companies and investment funds
• Every AG (public corporation)
• ‘Large’ and ‘medium-sized’ GmbHs (limited liability companies) or GmbH & Co KGs
(partnerships where the fully liable partner is a GmbH )
AUDITING

7. Public and private limited Companies and some other entities, such as cooperative purchasing
societies and mutual insurance companies, are subject to corporate income tax at 25%.
There is a general withholding tax of 25% on domestic dividends. Withholding tax does not apply
to dividends received by:
• An Austrian company having an interest of at least 10% in the distributing company;
• A foreign resident company having an interest of at least 10% in the distributing company for a
minimum period of one year.
CORPORATE TAXATION

8. Austrian resident individual persons are subject to taxation on their worldwide income.
Nonresident individuals are only required to pay tax on Austrian-sourced income.
The current average tax rates are as follows:
Income exceeding EUR 60,000 per annum is taxed at 50%.
INDIVIDUAL TAXATION
TAXABLE INCOME
EURO
RATE
%
0 – 11.000 0
11.001 – 25.000 0 – 20.4
25.001 – 60.000 20.4 – 33.70

9. The standard VAT rate is 20%. A reduced rate of 10% applies to some basic goods such as food.
Austria imposes a number of other taxes such as:
• A 1% capital transfer tax on contributions to company capital (will be abolished by Jan 1, 2016).
• A real estate transfer tax of 2% to 3.5% of the real estate value or, alternatively, based upon a
deemed tax value for some transactions.
• Insurance tax on insurance premiums, ranging from 1% to 11%.
• Social security is payable both by employers and employees. The employee rate ranges from
15.1% to 18.9% depending upon the employee’s status, age and type of income. The employer
rate ranges roughly from 16.8 to 25.9%.
• Stamp duties are due on certain transactions and documents.
• Austria does not levy any tax on inheritance or gifts. No tax is imposed on gratuitous transfers
(except for land transfer tax) but mandatory reporting on such transfers exceeding certain limits
has been implemented.
VAT AND INDIRECT RATES

10. Local Taxes
• A municipal tax of 3% is levied on the gross payroll of enterprises. In addition,
municipalities levy land and property taxes.

11. This publication must not be regarded as offering a complete explanation of the taxation and
corporate matters that are contained within this publication.
This publication has been prepared on the express terms and understanding that the publishers are
not responsible for the results of any actions which are undertaken on the basis of the information
which is contained within this publication.
The publishers and the authors expressly disclaim all and any liability and responsability to any person,
entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any
part of the contents of this publication.
Accordingly no person, entity or corporation should act or rely upon any matter or information as
contained or implied within this publication without first obtaining advice from an appropriately
qualified professional person, and ensuring that such edvice specifically relates to their particular
needs.
DISCLAIMER