Business Formation by Foreigners Becomes More Attractive in Austria: Reduced Capital Requirements for GmbH Founders Since 2024
Opportunities and Requirements for EU Citizens and Third-Country Nationals
Starting a business in Austria offers numerous opportunities, whether for EU citizens or third-country nationals. Austria stands out due to its stable economic environment, central location in Europe, and entrepreneur-friendly infrastructure.
Since the beginning of 2024, founding a GmbH (limited liability company) has become easier. The required share capital, for which the GmbH is liable, has been reduced from EUR 35,000 to EUR 10,000 (at least EUR 5,000 of which must be deposited into a corporate bank account).
However, the legal and administrative requirements for business formation differ depending on the founder’s nationality (EU citizen vs. third-country national).
Business Formation for EU Citizens
EU citizens benefit from the freedom of movement within the EU, which provides several advantages in Austria. While they do not need a residence or work permit to start a business, they must officially register their residence in Austria within four months of entering the country (via a so-called registration certificate). In theory, EU citizens can also start a business in Austria without residing in the country—a privilege not extended to third-country nationals. Nonetheless, EU citizens must fulfill certain legal and administrative requirements:
1. Trade License: Depending on the type of business activity, a trade license is required. For regulated trades, proof of qualifications (e.g., a master craftsman’s certificate) is also necessary.
2. Company Formation: EU citizens can choose from various legal forms, including sole proprietorship, limited liability company (GmbH), or general partnership (OG). The GmbH is particularly popular because it limits liability. Starting in 2024, the minimum share capital required for a GmbH has been reduced to EUR 10,000.
3. Mandatory Registrations: Entrepreneurs must register with the tax office, social insurance agency, and the Chamber of Commerce.
4. Bank Account and Financing: A business bank account in Austria is required, and EU citizens face no restrictions in opening one.
Business Formation for Third-Country Nationals
For third-country nationals (citizens of countries outside the EU, EEA, and Switzerland), the process is more complex due to additional legal requirements:
1. Residence Permit: Third-country nationals must obtain a residence permit that allows self-employment or employment. The “Red-White-Red Card” for self-employed persons is an option if the business idea is of significant economic interest to Austria. This is evaluated by a commission composed of employer and employee representatives. Additionally, residence permits for employees can also be used to establish a GmbH, but this requires combined expertise in corporate law and residency law. ERVICo is happy to assist with this process!
2. Trade License: Third-country nationals are subject to the same requirements for trade registration as EU citizens, but their qualifications or credentials may be scrutinized more rigorously.
3. Capital Requirements: Proof of sufficient financial resources to establish the business and sustain living expenses is mandatory. Essentially, business founders must be able to sustain themselves from their business income from the start.
4. Language and Integration: German language skills can be advantageous, especially when dealing with authorities and customers.
5. Support Programs: Third-country nationals can access specific funding programs targeting innovative business ideas or startups, particularly in technology or environmental sectors (specific residence permits exist for this purpose). ERVICo provides detailed information on these programs!
Similarities and Differences
Both groups must meet the same legal requirements for trade licenses and company formation. However, the key differences lie in access to the Austrian labor market and the need for residence permits for third-country nationals. While EU citizens can engage in business activities without restrictions due to freedom of movement, third-country nationals must prove and register their economic activity within the context of their residence permit.
Conclusion
Austria offers attractive opportunities for business formation to both EU citizens and third-country nationals. While EU citizens enjoy a straightforward legal framework, third-country nationals face additional requirements that necessitate thorough preparation. However, with proper planning and professional advice (such as from ERVICo), both groups can successfully enter the Austrian market and contribute to the country’s dynamic economy.