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Executive Summary
The Republic of Austria is a landlocked country located in the Central Europe. It borders with Switzerland, Liechtenstein, Slovakia, Hungary, Italy, Slovenia, Germany and Czech Republic.  Austria covers a total area of 83,872 sq km. Vienna is the capital of Austria, German is its official language, however Slovene, Croatian and Hungarian are recognized regional languages.

Austria is a parliamentary representative democratic federation. The head of the state is the President elected by the population. The Federal Chancellor is the head of the government, to which executive power belongs. Legislative rights belong to the parliament which consists of two chambers.

Austria has a developed social market economy with strong labour movements which play an important role in determining labour policy. Austria has highly developed and diversified industrial sector, which together with international tourism brings the biggest part of the state income. Traditionally, Germany has always been the main trading partner of Austria, but since 1995, when it became the EU member state, Austria has significantly enlarged and improved its trading network also with other European countries.

Austria has declared its neutrality, and this concept is stated in the Austrian Constitution.  The country has one of highest GDP per capita in the world with one of the highest levels of life. It is a member of the UNO, EU and OECD.

The Euro is used on the territory of Austria.

Geography
Austria is a mountainous country, only 32% of its territory has the altitude below 500 metres above the sea level. The highest point of Austria rises at 3,797 metres above the sea level.

It has a temperate and alpine climate with frequent humid westerly winds. Winters are usually cold, while summers are relatively hot in Austria.

Map, Flag and Coat of Arms


Types of Company


Limited Liability Company (GMBH)
This legal entity is the most widely used type of business structure in Austria. A minimum share capital is EUR 35,000, and at least a half of it must be paid. Shareholders’ liability is limited up to the amount invested in the company. A company must have at least one shareholder, and at least one director has to be appointed, who can be a citizen and resident of any country. Audited reports and shareholders’ disclosure may be requested.

Stock Company (AG)
A stock corporation should have a minimum share capital of EUR 70,000. Such a company must have at least two shareholders at all times.

General Partnership (OG)
Every partner of this partnership is fully liable to a partnership’s debts and obligations.

Limited Partnership (KG)
In order to establish and conduct activities as a limited partnership, at least one general partner with unlimited liability and one limited partner with liability limited up to the capital invested should cooperate under a single name.

Cooperative
This type of company is usually set for non-for-profit purposes. It has flexible membership, and does not have a fixed capital requirement.

Holding Company
It is advantageous to establish a holding company in Austria, as it is exempted from withholding taxes on various occasions.

Branch of a Foreign Company
A foreign company which wishes to establish a local presence in Austria, may accomplish this goal by submitting all the requested documentation to the local authorities.

Private Foundation
This structure benefits from a number of fiscal advantages and can be roughly defined as a civil law equivalent of a common law trust.

Taxation
The calendar year coincides with the tax year, which starts on 1st January and ends on 31st December.

Personal
Residents of Austria are taxed on their world-wide income, while non-residents are liable to pay income tax only on their gains derived within the territory of Austria. Income tax is payable on employment, self-employment, agricultural and forestry activities, trade and business, profits from investments and real estate as well as other types of income. Personal income tax has a scalable nature starting at 0% and reaching 50%, depending on the total amount of the annual income. Social security contributions are payable by employers and employees.

Capital gains may be tax free if certain conditions are satisfied. Wealth tax is applied to real estate properties, generally at a rate of 0.2% of the valuation price, which usually is lower than the market price. Agricultural and forestry properties, as well as certain other buildings are charged at a discount rate for this tax purposes. A standard rate of a withholding tax is 20%.

Corporate
Companies are considered to be residents in Austria if they are incorporated in the jurisdiction or conduct a company’s management from the country. They are liable to pay corporation tax on their world-wide income while non-resident companies are liable to corporation tax only on income generated in Austria.

Partnerships are not liable to corporation tax, but each partner pays personal income tax on his own part derived as a partnership. Corporation tax is levied at a fixed rate of 25%. A certain amount for the corporation tax purposes should be paid by each company regardless the total amount of its annual gains.

Income of a resident company derived from participation (owning shares) in other local companies is generally free from withholding tax, which makes it attractive to establish holding companies in Austria.

A standard rate of the VAT is 20%, a reduced rate of 10% is applicable to several goods and services.
Certain activities which favour local and national development can be granted significant tax incentives and other benefits.
 
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