FOUNDING A BRANCH OF A FOREIGN COMPANY

5th edition | March 2013

CONtENts

1. ENtRY IN tHE COMMERCIAl REGIstER .................................................................5

1.1 EEA companies ............................................................................................................ 5

1.1.1 Companies established under Austrian law ........................................................................5

1.1.2 Branchofficeofacompany ........................................................................................... 6

1.1.3 Branchofficeofasoleproprietorship ......................................................................... 7

1.2 Third-countrycompanies ............................................................................................. 7

2. ADMINIstRAtIvE lAw ...........................................................................................8

2.1 Trade regulations ......................................................................................................... 8

2.1.1 Application for a business licence ............................................................................... 9

2.1.2 Responsibilities of the authorised managing director ................................................ 9

2.2 Third-countryshareholders ......................................................................................... 10

3. REsIDENCE .............................................................................................................11

3.1 Citizens of EU member states, EEA contractingstates and Switzerland .............. 11

3.2 Citizens of third countries ............................................................................................ 11

3.3 Residence permit for conducting business activities .................................................. 11

3.4 Special regulations ..................................................................................................... 11

4. FINANCIAl REPORtING REGUlAtIONs ..................................................................12

4.1 Book-keeping obligations ............................................................................................ 12

4.1.1 Regulations under commercial law ............................................................................. 12

4.1.2 Tax regulations ............................................................................................................. 13

4.2 Publication provisions .................................................................................................. 13

4.2.1 Domestic companies .................................................................................................... 13

4.2.2 Branchoffices .............................................................................................................. 13

4.3 Practical implications .................................................................................................. 14

4.3.1 Branchoffices .............................................................................................................. 14

4.3.2 Subsidiaries.................................................................................................................. 14

5. tAx lAw .................................................................................................................15

5.1 Taxes on earnings ........................................................................................................ 15

5.1.1 Income tax — general .................................................................................................. 15

5.1.2 Corporation tax — general ........................................................................................... 17

5.1.3 Taxesonearningsforbranchoffices ........................................................................... 17

5.1.4 Taxes on earnings for subsidiaries .............................................................................. 18

5.2. VAT ................................................................................................................................ 19

5.2.1 General ......................................................................................................................... 19

5.2.2 Movement of goods — third countries ......................................................................... 20

5.2.3 Movement of goods — EU market ............................................................................... 21

5.2.4 Other services .............................................................................................................. 21

5.3 Austrian New Companies Promotion Act .................................................................... 22

5.3.1 General ......................................................................................................................... 22

5.3.2 Branchoffices .............................................................................................................. 22

5.3.3 Subsidiaries.................................................................................................................. 22

6. APPENDIx ...............................................................................................................23

6.1 RegistrationofabranchofficeinAustria .................................................................... 23

6.2 Samplesignaturesoftherepresentative(s)ofthebranchoffice ................................ 25

6.3 Formforfoundingadomesticbranchofaforeignentity ............................................ 26

7. CONtACt ADDREssEs FOR vIENNA ......................................................................27

7.1 List of abbreviations ..................................................................................................... 28

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FOREwORD

This publication has been created to meet the ever-increasing demand for information on this topic. It is de-signed to provide an overview of the most important regulations relating to the establishment of a branch of a foreign company in Austria. Alt-hough there has been a great deal of harmonisation in certain areas at EU level, there remain a plethora of na-tional provisions which must be hee-ded, even if these are themselves of-ten realisations of EU guidelines.

For example, in the area of services — a sector addressed in this publi-cationandoneparticularlyrelevantto the issue of the right of estab-lishment and the free movement of services — an EU directive on e-commerce has been implemented. The most recent developments at EU level are concerned with the planned introduction of the „Societas Privata Europea“ [European Private Compa-ny]legalstructure.Thisstructureisdesigned to facilitate cross-border trade and make it possible to found a limitedliabilitycompanywithlimitedequity.Therearealsoplanstolibe-raliseAustrianlimitedliabilitycom-panylawbyreducingtheregisteredcapital requirement and creating greater flexibility in the provisionsconcerning legal structure.

Under current law, it is possible to facilitate cross-border trade within groupcompaniesbyfoundinga„So-cietas Europea“ (see Austrian Act on the European Company Statute[SE-Gesetz], Federal LawGazette I59/2005asamendedby70/2008).

This publication bears in mind the needsof not only EUandEEAcompanies but also of third-coun-trycompanies,i.e.companiesloca-ted in countries which are neither EU members nor contracting states oftheEEA.Ifyourequiremorein-formation, please do not hesitate to contacttheemployeesoftheViennaEconomic Chamber and in particu-lar the authors of this publication.

The Vienna Economic Chamber also provides general information on legal issues as well as other ser-vices on its website. To access this information, log in to the website of the Vienna Economic Chamber at wko.at/wien

Our members can also access additional information using the extranet services available on the website. There is also a dedica-ted website to serve the needs of start-up entrepreneurs: www.gruenderservice.at

Additional publications produced by the Legal Department of theVienna Economic Chamber, which maybe of interest, canbe orde-red free of charge or accessed directly on the department‘shomepage at wko.at/wien/rp un-der „Publications“.

� The Authorised Managing Di- rector (Der gewerberechtlicher Geschäftsführer) � Basic Information on Limited Li- ability Companies (Grundinfor- mation zur Gesellschaft mit be- schränkter Haftung) � Basic Information on Partner

ships (Grundinformation über Personengesellschaften) � Companies Experiencing Finan- cialDifficulties(Zahlungsschwie- rigkeiten von Unternehmen) � The Authorised Managing Di-

rector (Der gewerberechtlicher Geschäftsführer) � Sample Contract for Company

Acquisitions (Musterkaufvertrag für den Unternehmenserwerb)

Other publications produced bythe Austrian economic chambers are available free of charge or for a modest cost and can be ordered online on at wko.at.

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1. ENtRY IN tHE COMMERCIAl REGIstER Foreign companies wishing to en-gage in trade and commerce in Austria can do so either through the establishmentofacompanyunderAustrian law or through the esta-blishment of a branchofficeof anexistingcompany.

EEA internal market regulations require that a distinction be made between

� EU member states and other contracting states of the EEA (in- cluding Iceland, Liechtenstein andNorway)and � all other countries (known as

third companies).

1.1 EEA COMPANIEs

Ifacommercialactivity isunderta-kenautonomouslybywayofaper-manent establishment and if the company participates in a stableand continuous manner in Austrian business life, then this commercial activityfallsnotundertheprovisionsfor the free movement of services, but rather it is subject to the provi-sions of the right of establishment.

It is fundamentally forbidden toexercise limitations on the free esta-blishment or founding of branch of-

ficesorsubsidiariesbycitizensofanEU member state, citizens of an EEA contracting state or citizens residing in sovereignties within contracting states. Furthermore, theremay beno limitations set on the establish-ment or management of companies, in particular those whose

� statutoryseat � administrative centre or � headquarters

are located within the EEA. Com-panies are defined as companiesundercivilandcompanylaw,inclu-ding cooperatives and other legal entities under public and private law, with the exception of those that do not pursue commercial in-terests. The fact that the administ-rative centre or headquarters is not locatedinthecountryofestablish-ment, but rather in another mem-berstate,doesnotstandinthewayof the recognition of the separate legal existence of the foreign EEA company.

Following the enlargement of the EU, it should be noted that Austria has introduced certain transitional regulations for companies origina-ting in the new EU member states; these regulations are designed to

limit the free movement of services and the temporary deployment ofpersonnel. lawUp until 31 Decem-ber 2013, transitional regulations shall still apply to companies andemployees from Bulgaria and Ro-mania and, following Croatia’s ex-pected accession to the European Union, these transitional regulati-ons shall also apply to companiesandemployees fromCroatia. Spe-cial regulations generally apply toservice users and companies from third countries.

1.1.1 COMPANIEs EstABlIsHED UNDER AUstRIAN lAw

Whenacompanyisestablishedunder Austrian law, the most fre-quentlychosenlegalstructuresforcorporations are the limited liabi-litycompany[Gesellschaftmitbe-schränkteHaftungorGmbH]orthelesspopularincorporatedcompany(Aktiengesellschaft or AG). In addi-tion to the above, there is also the option of choosing a legal structure without a minimum capital requi-rement.Particularlypopulararepartnerships such as the general partnership (Offene Gesellschaft or OG) or the limited partnership (Kommanditgesellschaft or KG). The simplest legal structure is the

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sole proprietorship. In addition to this, there are also companies whicharenotofficiallyregisteredsuch as dormant partnerships [stilleGesellschaften]andcompa-nies under civil law (Gesellschaft nach Bürgerlichem Recht).The free publication „Basic Information on Partnerships“ (Grundinformation über Personen-gesellschaften) offers invaluable basic information on the establish-ment of partnerships including ex-amplesofvariouscompanytypes.

The free publication „Basic infor-mation on Limited Liability Com-panies“ (Grundinformation zur Gesellschaft mit beschränkter Haf-tung) provides an overview of all the essential information about establi-shinga(subsidiary)companyintheformofa limited liability company(GmbH). The founding of a limited liabilitycompany requires a notarial deed.Adeedofpartnershipmustfirstbeprepared. Fifty percent of themandatoryminimumsharecapitalinvestment of EUR 35,000 must be contributed in cash. It might be, that this minimum capital shall be reduced to 10.000 EUR (beginning from 1stJuly2013)Onceataxclea-rance certificate (steuerliche Un-bedenklichkeitsbescheinigung) has beenobtained,thecompanycanbeentered in the commercial register, wherebytheapplication forregist-rationmustbesignedbyandcerti-fiedforeachcompanyshareholder.The following must be included in the registration application:

� deed of partnership � list of shareholders � list of managing directors � list of members of the superviso- ryboard(whereapplicable) � certified sample signatures for

the managing directors � declarationby themanagingdi-

rector that the share capital has been deposited and that the funds are at the disposal of the mana- gingdirectors,aswellasconfir- mation from the relevant finan- cial institution that the deposit has been made

Thecompanymustbeenteredinthecommercial register of the court in whose jurisdiction the branch shall have its seat. In Vienna, this would be the commercial register of the Vienna Commercial Court, Marxer-gasse 1a, 1030 Vienna.

1.1.2 BRANCH OFFICE OF A COM-PANY

Branchofficesdonothavesepa-rate legalpersonalityunderAus-trian law, but are treated by andlargeaslegalentities.Theymustbe registered in the commercial register of the court in whose ju-risdiction the branch office shallhave its seat.

The wording of the name of the Austrian branch must be essenti-allythesameasthatoftheforeigncompany. In accordance with therequirements of the Vienna Com-mercial Register Court, an adden-dum must be added to indicate the

nature of the branch office (e.g.„Vienna branch“, „Austrian bran-ch“or„Viennabranchoffice“).

The following documents must be included in the commercial regis-ter registration application for the Austrian branch:

� Deed of partnership/articles of association in the most recent German version (certified and translatedpreferablybyadome- stic legal translator) � Most recent excerpt from the registry of thehome country as an original or certified copy; should an excerpt not be availa- ble, another form of proof of the legal existence of the entity as well the management structure must be provided � Resolution regarding the estab- lishment of the branch office (unless an explanation is provi- ded in the � registration application) � Proof of the establishment of the branchoffice,e.g.intheformof a certificate from the Vienna Economic Chamber (see Appen- dix 6.3 for form). The establish- mentofthebranchofficeisins- pected on site by employees of the Vienna Economic Chamber. � Sample signatures of those ves-

ted with power of representation as well as their permanent proxies The appointment of a managing director for the Austrian branch of companies whose statutory seat,administrative centre or headquar-

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ters is domiciled in an EU member state or EEA contracting state is possible, but not required.

Normally, proof of the proper es-tablishment of a branch office isprovidedintheformofafinalisedtenancy agreement. In cases ofdoubt, the commercial register may demand confirmation of theestablishmentofthebranchofficefrom the economic chamber of the respective federal province.

1.1.3 BRANCH OFFICE OF A sOlE PROPRIEtORsHIP

The establishment of a branch officeofasoleproprietorshipdo-miciled in the EEA must be en-tered in the commercial register whenthisisprescribedbythena-tionalregulationsofthecountryinwhich the sole proprietorship has its seat.

1.2 tHIRD-COUNtRY COMPANIEs

The fundamental freedoms of the EEAdonotapplytothird-countrycompanies. However, special re-gulations do apply for citizens ofWTO member states. Accordin-gly,individualsactingonbehalfofservice providers with a seat in a WTO member state are entitled to pursue the following in Austria:

� initiate or cultivate business op- portunities — without engaging in direct trading or the provision of services � — as a representative of a ser-

vice provider, � serveinthecapacityof„keyem- ployees“ (such as senior ma- nagement or employees with special skills or expertise) for abranchorsubsidiaryofalegal entity(notanindividual), � make preparatory arrange-

ments as the person responsib- le for the establishment of a branchofalegalentity

The above provisions for compa-nies with their seat in EEA coun-triesalsoapplyforthecreationofacompanyunderAustrianlaworthe foundation of a branch officeofaforeigncompanywithitsseatinathirdcountry.

In addition it must be noted that those companies which are not governed by the law of an EUmember state or a contracting sta-te of the EEA must, for the entire business operations of the branch office,appointatleastonepersonas proxywho is permanently au-thorised to represent the compa-ny and who has his/her habitualabodeinAustria.Anylimitationonthe scope or the extent of the po-wer of proxy is void against thirdparties. Power of representation canhoweverbedividedjointlyandseverally among several persons(„Gesamtvertretung“ (joint repre-sentation)).

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2. ADMINIstRAtIvE

2.1 tRADE REGUlAtIONs

Shouldthebranchorsubsidiarybeengaged in commercial underta-kings, it must be in possession of a business licence. A shareholder with power of representation must apply for the business licence onbehalfofthecompany.Theapplica-tion for the business licence must beinthenameofthecompany.

The prerequisite for the application for a business licence is that the company has been entered in thecommercial register. (An excerpt from the commercial register must be provided as proof.)

In order to obtain a business licence, an authorised managing director [gewerberechtlicher Geschäftsfüh-rer]mustbeappointed.(Thispersonis responsible for the correct con-duct of the business.) To start their business,thispersonmustfulfilallthe relevant personal requirements, have his/her permanent residence in an EEA contracting state and be capable of performing the role in question.

If a certificate of proficiency (Be-fähigungsnachweis) is required for the practice of the business,

the authorised managing director must be either an executive direc-tor („vertretungsbefugtes Organ“) orbeemployedinthecompanyforhalf of the regular working hours of theweek and be fully liable forsocial insurance contributions. The authorised managing director must be named in the application for the business licence. Since the autho-rised managing director is required tobeactivelyinvolvedintherunningofthecompany,itisalsonecessarytoinformtheauthorityofthenum-ber of hours theywillworkwithinthe business whenever a managing director is appointed.

If the business in question is a re-gulated one for which a reliabilitytest (Zuverlässigkeitsprüfung) isrequired, the authorised managing director must be approved by thetrade authorities before the bran-ch or subsidiary may commenceoperations. This is the case for the following:

� Builders, well-drillers � Chemical laboratories � Electrical engineering � Pyrotechnicalcompanies � Gas and plumbing � Manufacture and wholesale of

pharmaceuticals and poisons

� Collection agencies � Travel agencies � Securityservices(privateinvesti- gators,securityguards) � Demolition services („Sprengun-

ternehmer“) � Financialconsultancyservices � Weapons companies (gunsmiths),

including trading in arms � Master carpenter („Holzbau-

meister“)

The conditions for the appointment of the authorised managing direc-tordependontheactivitytobeun-dertakenbythebranchorsubsidia-ryinquestion. If a sole proprietorship wishes to conduct business in Austria, the application for the business licence must be in the name of the sole pro-prietor,wherebythesoleproprietormaymakeuseofanauthorisedma-naging director.

More information is available from the vienna Economic Chamber start-up serviceT 01/ 514 50-1050 oder legal DepartmentT 01/514 50-615 E rechtspolitik@wkw.at.

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2. ADMINIstRAtIvE

2.1.1 APPlICAtION FOR A BUsI-NEss lICENCE

Applications for business licences should be submitted to the trade authorities in the respective opera-ting location. The authorities must enterthebranchorsubsidiaryintothe business licence register within three months of the application; confirmation thereof is suppliedin the form of an excerpt from the business licence register. The for-mer Gewerbeschein trade licence (paper document) no longer exists.

With the exception of businesses requiringareliabilitycertificate(Zu-verlässigkeitsgewerbe), business operationsmay commence on thedayonwhichtheapplicationforthebusiness licence is accepted. This is thedaywhenalldocumentsintheirentiretyhavebeen receivedby thetrade authorities and the individual competenceand/orreliabilityofthelicensee has been established and formal notification provided the-reof. A regulated business requi-ring a reliability examination mayonly commence operations whenthecertificateofreliabilitybecomeseffective.

Theauthorityresponsibleforbusi-ness licence applications is the district administrative authoritywhich governs the location of the business. Depending on the state, thismay be the district authority[Bezirkshauptmannschaft], themunicipal council [Magistrat] or,in Vienna, the Municipal District Office [Magistratische Bezirk-samt]. Applications for businesslicences, including all the requi-

reddocuments,mayalsobesub-mittedtotheauthoritiesbyfaxorelectronically (http://www.wien.gv.at/amtshelfer/wirtschaft/ge-werbe/gewerbeanmeldung.html). Document originals must be pro-videdonlywhenrequestedbythetrade authorities, for example when there is doubt regarding the authenticityofadocument.

Shareholders vested with power of representation must apply forthe business licence on behalf of the company before the com-mencement of operations. The following documents are required for the application:

� Companyentryexcerpt fromthe branch � Personal documents of the au-

thorised managing director: birth- certificate,residenceregistration form (Meldezettel), proof of nati- onality, marriage certificate (where applicable) and proof of academic qualifications (where applicable) � Criminal record sheet [Strafre- gisterbescheinigung] (dated within the previous three months) for � the authorised managing direc-

tor and all other shareholders who exercise significant influ- ence over the management of the business � A statement confirming that the

authorised managing director and all other shareholders who � exercise significant influence

over the management of the business have not had bankrupt- cyproceedingsdeniedinthelast three years due to insufficient

availability of funds, either at home and abroad; the trade au- thorities provide a form for this purposewhichsimplyneedstobe- signed � Documents relevant to the app- raisalofthecertificateofprofici- ency[Befähigungsnachweis],such as school reports, letters of re commendation from employers and master craftsman diplomas

Thosewhodonot fulfil the formalrequirements for the certificate ofproficiencymayapplyforanassess-ment of individual competence. This assessment request can be submit-ted either in the course of the ap-plication for a business licence or independently thereof. The appli-cation should be submitted to the respectiveMunicipalDistrictOfficeor to MA 63 (Municipal Department for Commerce and Trade). A certi-ficate of individual competence isawarded if the applicant can prove that he/she has gained the skills or knowledge required for the practice of the business in question via other means (i.e. practical experience, education abroad, relevant training courses, etc.).

2.1.2 REsPONsIBIlItIEs OF tHE AUtHORIsED MANAGING DIRECtOR

In terms of the authorities, the au-thorised managing director is pri-marily responsible for ensuringcompliance with regulations, in particular trade regulations and the provisions governing their imple-mentation. In addition, the autho-rised managing director is respon-sible for ensuring compliance with

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legal business hours and pricing laws. It is themanagingdirector‘sresponsibility toascertainwhethera permit for the company‘s ope-rating facilities is necessary. Thescope of the authorised managing director‘sresponsibilitydependsonthe business in question.

The Vienna Economic Chamber has produced a free publication entitled „Der gewerberechtliche Geschäftsführer“ (The Authorised Managing Director). To order a copy,contactthelegal Department T 01/514 50-1615E rechtspolitik@wkw.at

2.2 tHIRD-COUNtRY sHAREHOl-DERs

Theregistrationofacompany inthe commercial register solelyfor the purpose of evading the provisions of the Austrian Em-ploymentofForeignersAct(Aus-länderbeschäftigungsgesetzt) is forbidden.

If a person is not a citizen of an EU member state or an EEA con-tracting state, one of the following documentsmaythereforehavetobe produced for the purpose of registeringacompanyinthecom-mercial register:

� a work permit or exemption cer- tificate[Befreiungsschein]or � an assessment certificate from theAustrianEmploymentService (Arbeitsmarktservice or AMS)

If a shareholder exercises signifi-cant influence over the manage-ment of the business, the regional officesoftheAustrianEmploymentService can issue an assessment certificateattestingtothisfact.TheEmployment Service‘s assessmentmustreflecttheactualcontributionof the shareholder to the business, rather than his/her position; the as-sessment does not consider the tax and social insurance status of the shareholder.

If none of the above documents and certificates can be produced, theapplication for registration in the commercial register may be re-jected on the grounds that the re-gistrationwasappliedforsolely toevade the provisions of the Austrian EmploymentofForeignersAct.

2.2.1 RIGHt OF REsIDENCE/RIGHt OF EstABlIsHMENt

Under Austrian immigration law, a residence permit is required for persons who are not citizens of an EU member state or a contracting state of the EEA and who wish to be employedorself-employedinAus-tria. The purpose of the stay andalsothetypeofgainfulemploymentmust be included in the wording on the residence permit, for example:

� „forallpurposesofstay“or � „forallpurposesofstaywiththe exceptionofemployment“

In the federal provinces, residence permitsareissued,asarule,bythedistrict authorities [Bezirkshaupt-mannschaften]ormunicipalcoun-cils [Magistraten] on behalf of therespective provincial governor. (In ViennatheyareissuedbyMunicipalDepartment 35.) Residence permits are initiallygrantedforaperiodofoneyear,andsubsequentlyfortwoyears.Afterthis,anunlimitedresi-dencepermitmaybeissued.

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3. REsIDENCE

3.1 CItIZENs OF EU MEMBER stAtEs, EEA CONtRACtING stA-tEs AND swItZERlAND

Citizens of EU member states and EEA contracting states do notrequirevisas,enjoyfreedomofestablishmentandmay—provi-ded there are no exceptions in place for Austrian nationals — register and conduct business operations under the same conditions as Aus-trian nationals. The latter provision also applies for Swiss nationals. Family members from third coun-tries with (permanent) right of resi-dence in an EU member state/EEA contracting state — e.g. spouse, children or grandchildren under the age of 21, parents and grand-parents—enjoythesamerightsasEU and EEA citizens, provided that they are entitled to maintenance from an EU or EEA citizen.

3.2 CItIZENs OF tHIRD COUNtRIEs

Under the Austrian Immigration Act [Fremdengesetz], citizens ofthird countries require a residence permit in order to conduct business activities. The permit must autho-rise the holder to take up gainful self-employment (i.e. residencepermits„forallpurposesofstay“or„forallpurposesofstaywiththeexceptionofemployment“).Note: the initial residence permit must be applied for from the Aus-

trian representative authorities abroad (embassy or consulate-ge-neral) prior to the applicant‘s arri-val in Austria. Permits are subject to annual quotas set by the Aus-trian government. A permit will not be issued if the relevant quota has already been met or there are grounds for rejecting the applica-tion (e.g. applicant is banned from staying in the country or has in-sufficient financial resources).

3.3 REsIDENCE PERMIt FOR CON-DUCtING BUsINEss ACtIvItIEs

Confirmationmustbeobtainedfromthe responsible trade authorities at the intended place of business that the prerequisites for conducting the business activities in question have been met. (For regulated busines-ses, this means the provision of a certificate of proficiency [Befähi-gungsnachweis], an assessmentcertificate confirming the individualcompetence of the applicant, or con-firmation of the equivalence of for-eigntrainingqualificationsfromtheMunicipal Department 63 („MA63“-address see chapter 7). Proof of right of establishment for gainful self-employment:attestationfromforeign authorities or appropriate vignette in passport. In Vienna, Mu-nicipal Department 35 is responsible for issuing residence permits; in the federal provinces, permits are issued by the district authorities [Bezirks-

hauptmannschaften] or municipalcouncils[Magistraten].

3.4 sPECIAl REGUlAtIONs

� There are some business areas which are reserved for Austrian nationals and/or citizens of EEA contracting countries. � OnlyAustriannationalsresidentin Austriamay engage in the trade ofmilitaryweaponsandammuni- tion. � Only citizens of EEA contracting

states that are resident in said statesmayengageinthetradeof non-military weapons and ammunition. � Only citizens of EEA contracting

states that are resident in said sta- tes or citizens of Switzer- land that are resident in Swit- zerland may engage in business activities in the areas of em ployment and recruitment services.

In order to conduct these business activities, the company‘s seat,headquarters, representatives and/or managing shareholders must all meet the above requirements.

More information www.wien.gv.at/verwaltung/personenwesen/ein-wanderung/aufenthalt/niederlas-sungsbewilligung.html

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4. FINANCIAl REPORtING RE-GUlAtIONs4.1 BOOK-KEEPING OBlIGAtIONs

4.1.1 REGUlAtIONs UNDER COM-MERCIAl lAw

4.1.1.1. DOMEstIC COMPANIEs

Domestic corporations and do-mestic companies, in which no individuals are shareholders withunlimitedliability(e.g.GmbH& CoKG (known as „undisclosed corporations“ [verdeckte Kapital-gesellschaften])) are subject tobook-keeping obligations in ac-cordance with the Austrian Com-mercial Code [Unternehmensge-setzbuchorUGB].Theymustdrawupfinancialstatementseachyearusing the principles of double-entry book-keeping. These mustcomprise a balance sheet, profitand loss account and appendices. Larger companies must also pro-duce an annual report.

The assessment provisions set out in the Austrian Commercial Code must be complied with, as must the detailed requirements concer-ninglayoutandevidence.

All other companies, in particu-lar sole proprietorships and part-nerships, in which at least one individual is a shareholder with fullliability,areonlysubjectto

book-keeping obligations pursu-ant to the Austrian Commercial Code if their annual turnover is more than EUR 400,000.00.

These book-keeping obligations onlycomeintoforcewhentheafo-rementioned turnover threshold is exceeded in two consecutive financial years; in this instance,the book-keeping obligations ap-ply after the second year. The-re is therefore a buffer year. Ifthe aforementioned annual tur-nover threshold is exceeded bymore than EUR 300,000.00 — i.e. the turnover is more than EUR 1,000.00—thefinancialreportingobligations apply immediatelyfrom the following year, withoutanybufferyear.

The financial reporting obliga-tions for these groups also entail the use of double-entry book-keeping, compliance with the as-sessment provisions set out in the Austrian Commercial Code andtheprovisionofannualfinan-cial statements. However, these groups do not have to produce ap-pendices or an annual report. Mo-reover,theydonothavetocomplywith the detailed requirements for corporations concerning layoutand evidence.

Freelance workers, farmers and forestryworkersareexemptfromthe provisions of the Austrian Commercial Code.

4.1.1.2. BRANCH OFFICEs

Current opinion is that the finan-cial reporting provisions set out in the Austrian Commercial Code (§ 189)donotapplytobranchofficesof foreign companies located in Austria. There is no legal obligation forbranchofficestoproducesepa-rate annual financial statements.Branch offices are subject to thefinancialreportingrequirementsofthe country inwhich the companyhas its seat.

Austrian limited liability com-pany law contains a provision (§ 112) which stipulates that for-eignbranchofficesmustkeepse-parate accounts for their business activities in Austria. However this applies only to branch offices offoreign corporations and not tho-se belonging to foreign sole pro-prietorships or partnerships. The above requirement for separate book-keepingdoesnotentailanyobligation to produce separate annual financial statements forbranchoffices.

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Moreover, current opinion is that this provision violates freedom of establishment and that therefore EU/EEA companies are not expec-tedtocomplywithit. 4.1.2 tAx REGUlAtIONs

4.1.2.1. DOMEstIC COMPANIEs

All companies which are liable for tax that generate income from business activities and are sub-ject to book- keeping obligations under the Austrian Commercial Code, must also observe the book-keeping requirements set out in the Austrian Commercial Code when calculating their taxable earnings (authoritative principle), unless tax law contains provisions tothecontrary(reverseauthorita-tive principle). The following spe-cialprovisionsalsoapply:

� Upon request, it is possible to select a financial year period which differs from the standard calendaryear. � Voluntaryassets (i.e.assets in- directly associated with the business), provided these are not essential personal assets, maybe included in thebalance sheet.

This method for calculating taxa-ble earnings is known as „ascer-tainment of profits“ in § 5 of theAustrian Income Tax Act [Einkom-mensteuergesetz or EStG]. Seealso the publication on duties and taxes entitled „Methods for the ascertainment of profit takinginto account the 2007 amend-

ments to the Austrian Commer-cial Code“ (Die Gewinnermitt-lungsarten ab 2007 Neuerungen durch das Unternehmensgesetz-buch) which is available at: wko.at

4.1.2.2. BRANCH OFFICEs

Even though the book-keeping obligations set out in the Austri-an Commercial Code do not ap-ply, the Austrian branch officesof foreign corporations and other branch offices, which exceed the book-keeping threshold set out in the Austrian Commercial Code, must standardise their profit cal-culations in line with § 5 of the Austrian Income Tax Act (§ 21, pa-ragraph 1, item 3, Austrian Cor-porate Tax Act [Körperschafts-steuergesetz]; § 5, paragraph 1,Austrian Income Tax Act).

4.2 PUBlICAtION PROvIsIONs

4.2.1 DOMEstIC COMPANIEs

Corporations and undisclosed corporations [verdeckte Kapi-talgesellschaften] must submittheirannualfinancial statementsto thecompanyregistercourt forthe company‘s seat at the latestnine months after the year-endaccounting date.Small companies with limited li-ability — i.e. those companieswhich do not exceed two of the fol-lowingkeyfigures:balancesheettotal = EUR 4.84 million; turnover = EUR 9.68 million; 50 emplo-yees—mustsubmitashortenedbalance sheet (no profit and lossaccount) to the commercial regis-

ter; the appendices thereto must be submitted using the form pro-vided for this purpose.

These forms are available at www.bmj.gv.at/internet/html/de-fault/home in the Services section under Forms — commercial register

If the turnover in the 12 months be-fore the year-end accounting dateexceeds EUR 70,000.00, the docu-ments must be submitted in elec-tronic form. Corporations which exceed the afo-rementioned key figures (mediumand large companies) must submit more comprehensive documentati-on (completefinancialstatements,annualreportandauditor‘sreport).

4.2.2 BRANCH OFFICEs

In accordance with § 280a of the Austrian Commercial Code, the re-presentativesofthebranchofficesof foreign companies must submit the financial reporting documen-tation (e.g. financial statements,appendices, etc.) for the (entire) company— this having been pro-duced, audited and published in ac-cordance with the law of the coun-try of the company headquarters— to the commercial register in a German language version. Pursu-anttoarulingbytheAustrianSu-preme Court of Justice [Obersten Gerichtshof],thisprovisionalsoap-plies if there is no requirement for the foreigncompany tobeauditedunderitsowncountry‘slaw.

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4.3 PRACtICAl IMPlICAtIONs

4.3.1 BRANCH OFFICEs

As is explained in section 5.1.3., theprofitsof thebranchofficeofa foreign company are subject totaxation in Austria. Even though the book-keeping obligations set out in the Austrian Commercial Codedonotapply tobranchoffi-ces of foreign companies, Aust-rian tax law requires that, where these book-keeping obligations would otherwise apply, taxableearnings should be calculated in accordance with the provisions of the Austrian Commercial Code.

Thus, iftheforeigncompanyisacorporation or the turnover of an Austrian branch office of a for-eigncompanyexceedsthebook-keeping threshold set out in the Austrian Commercial Code, cur-rent opinion is that a set of finan-cial statements (or similar) must be produced for the branch office, for tax purposes, in accordance with the Austrian Commercial Code.

If the branch office does not fall within the scope of the above, it is sufficient for it to provide details of its income/expenditure.

4.3.2 sUBsIDIARIEs

A subsidiary — regardless ofwhether it is in the form of a cor-poration or a partnership — is classified as a domestic compa-nyandisthereforesubjecttothesame book-keeping and publica-tion requirements as domestic companies (see 4.1.1.1., 4.1.2.1. and 4.2.1.).

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5. tAx lAw

The most important forms of taxa-tionwhichapplytoforeigncompa-nieswithabranchorsubsidiaryinAustria are:

� taxes on earnings, i.e. income tax (Einkommensteuer or ESt) and corporation tax (Körper schaftssteuer or KÖSt) � VAT (Umsatzsteuer or USt)

As regards income tax and corpo-ration tax, fewsignificantdifferen-ces in treatment are made between citizens of EU member states and those of third countries. However, under the Austrian VAT Act (Um-satzsteuergesetz or UStG), the movement of goods and services withintheEUisgovernedbyitsownseparate set of provisions.

5.1 tAxEs ON EARNINGs

5.1.1 INCOME tAx — GENERAl

5.1.1.1. tAxPAYERs AND BAsIs OF AssEssMENt

The income of individuals is taxed per calendar year. Income is thesumofseventypesofincomeminuscertain tax-deductible private out-goings such as insurance, hospital or funeral costs (known as special

expenses[Sonderausgaben]andex-ceptional outgoings [außergewöhn-licheBelastungen]).Anyprofitsandlosses or surpluses between the differenttypesofincomeareoffset.Theprimaryincomecomponentforthosewhoareself-employedistheprofit or loss resulting from theircommercial activities.

Lossesresultingfromdouble-entrybook-keeping can be carried for-wardforanindefiniteperiod,provi-dedthattheycannotbeoffsetwithother typesof income in thesameyear; however theymust be offsetat the earliest possible opportuni-ty. Losses from the previous threeyearscanbecarriedforwardifsim-plycalculatingincome/expenditure.Lossescanonlybeoffsettothema-ximum level of 75% of the total sum of earnings. The remaining sum is not lost, but rather can be used in thefollowingyears.Theprofitsandlosses of partnerships (i.e. the Aus-trian legal structures OHG, KG, etc.) are distributed among the sharehol-ders and are subject to income tax.

5.1.1.2. UNlIMItED AND lIMItED tAx lIABIlItY

Unlimited tax liability applies tothose individuals who have their

permanent residence or habitu-alabodeinAustria.Generally,anindividual‘s place of residence isconsidered their habitual abode if theyhavebeenlivinginAustriaforover six months. Unlimited tax li-abilitymeansthatallformsofin-come, earned both in Austria and anywhereintheworld,aresubjectto income tax. In order to avoid double taxation situations, Aust-ria has negotiated double taxation treaties with other countries.

Limitedtaxliabilityappliestotho-se individuals who have neither their permanent residence nor their habitual abode in Austria.

Inthecaseoflimitedtaxliability,only certain types of income setout by law are subject to incometax. There is no difference in the tax rates between limited and unlimited tax liability. However,tax-deductible amounts will not be deducted in the case of limited taxliability.Lossesfrombusinesspremises in Austria (branch offi-ces)canonlybecarriedforwardifthey exceed any (foreign) incomewhich is not subject to limited tax obligations. The aim of this is to ensure that, in the case of foreign nationals, Austria only permits

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lossestoberecoveredwheretheycannotberecoveredinthecountryof residence. In the case of limited taxliability,anadditionalamountto the order of EUR 8,000.00 — EUR 9,000.00 as of the 2009 as-sessment — is incorporated into the income tax calculation.

Citizens of EU member states and EEA contracting states can ap-ply to be treated as having unli-mitedtaxliability,eveniftheydonotmeet the necessary require-ments, provided that 90% of their income is subject to Austrian in-come tax.

Following the entry into force oftheAustrianbylawonsecondho-mes [Zweitwohnsitzverordnung],individuals with a residence in Austriaarestill classifiedasha-vinglimitedtaxliability,ifthisre-sidence is a second home which isusedforamaximumof70dayspercalendaryearandiftheyhavehad their main residence abroad foroverfiveyears.

5.1.1.3. tAx RAtEs

The income tax rate was sig-nificantly reduced in 2009. Thefollowing table outlines the tax rates:

tAx RAtE tABlE

Up to and including 2008

From 2009

The most significant improve-ments were the increase in the tax-free income threshold to

EUR 11,000.00 and the application of the highest rate of tax (50%) to incomes over EUR 60,000.00.

Income in EUR Average tax rate in % Marginaltaxrateforeveryadditional euro earned in %

≤ 10,000.00 0 0

>10,000 to 25,000.00 0-23 38.33

>25,000.00 to 51,000.00 23- 33.5 43.596

>51,000.00 >33.5 50

Income in EUR Average tax rate in % Marginal tax rate for everyadditional euro earned in %

≤ 11,000.00 0 0

>11,000.00 to 25,000.00 0-20.4 36.50

>25,000.00 to 60,000.00 20.4-33.7 43.2143

>60,000.00 >33.7 50

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5.1.2 CORPORAtION tAx —GENERAl

5.1.2.1. tAxPAYERs AND BAsIs OF AssEssMENt

Corporation tax is income tax for legal entities. The uniform tax rate is 25%of taxableprofit. Thereareno deductions for corporation tax. A capital gains tax [Kapitalertrags-steuer or KEST] of 25% must belevied on the distribution of ear-nings by the distributing compa-ny and paid to the tax authorities.Dividends paid out to corporations in Austria are exempt from capi-tal gains tax, if the shareholding in thedistributingcompanyisatleast10%. As regards the carrying for-ward of losses, the same provisions noted above in conjunction with in-cometaxapply.

5.1.2.2. UNlIMItED AND lIMItED tAx lIABIlItY

Corporations which have neither seat nor business premises in Aus-tria are subject to limited corpora-tion tax liability.As in the caseofincometax,corporationtaxisonlypayableoncertaintypesofincome.As regards the maximum losses which can be carried forward for business premises in Austria, the same provisions noted above in conjunctionwithincometaxapply.

5.1.2.3. GROUP tAxAtION

The group taxation regime, enables

the positive and negative results of all (domestic) group members to be pooled for the purposes of taxation. Profitsand losseswithin thegroupcan be balanced without having to resort to complicated manoeuvres such as mergers.

The precondition for this is that the head corporation (the shareholding corporation) has a share of more than50%intheassociatedcompany,holdsthemajorityofvotesandisinpossession of a valid group contract. The group must also have been es-tablishedforatleastthreeyears.

Foreign EU or EEA corporations, which are subject to limited tax liabilityandwhichhavetheirseatormanagementseatabroad,mayalsoqualifyasheadcorporationsiftheyhaveabranchofficeregis-tered in a commercial register in Austriaandtheyhaveasharehol-ding in said branch.

Further details about group taxati-on can be found in our „Group ta-xation“ (Grupppensbesteuerung) information sheet which is available from the website of the Austrian Fe-deral Economic Chamber at wko.at

5.1.3 tAxEs ON EARNINGs FOR BRANCH OFFICEs

5.1.3.1 DOUBlE tAxAtION tREAtY AGREED

Cross-border commercial activities can easily lead to taxation obliga-

tions in both the country in whichthe company has its seat and thecountryinwhichithasabranch.

In order to avoid double taxation, Austria has signed double taxation treatieswithmanycountries.The-se are bilateral agreements which allocate taxation rights to each of the respective contracting states. Double taxation treaties can restrict ornullifytheprovisionsconcerninglimited tax liabilityunder theAus-trian Income Tax Act (Einkommen-steuergesetz) and the Corporate Tax Act (Körperschaftsteuerge-setz).

However, double taxation treaties cannot introduce additional tax ob-ligations which are not provided for under Austrian law.

there are two systems for preven-ting double taxation:Under theexemptionsystem, thestate in which the individual or le-galentity residesdoesnot inclu-deanyearnings which, for thepurposes of taxation, are allo-cated to the other country, inits own tax base calculation. Of-ten this method is applied in con-junction with a „special exemption with progression“ (e.g. double ta-xation treatieswithGermanyandSwitzerland). This means that the countryofresidencetakesintoac-count the taxable earnings in the other country when determiningits tax rate.

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Under the offsetting system, thecountryofresidenceoffsetstheta-xes to be levied in the other count-ry,pursuanttothedoubletaxationtreaty, against its own taxes (e.g.double taxation treaties with Italyand the UK).

Companyprofitsandbusinesspre-mises Under most double taxation treaties, company profits are nor-mallytaxedinthecountryinwhichthe company has its seat. If thecompany has business premisesin the other country, the taxationrights for the profits from thesepremises are ascribed to this other country.Asarule,thefollowingareclassifiedasbusinesspremises: aplace of management, branch, of-fice,factoryorworkshop.Thetermbusiness premises does not inclu-defacilitiesusedsolelyforstorage,delivery or display purposes (e.g.warehouses, entrepôts and show-rooms).Inthevastmajorityofdou-ble taxation treaties, the following are also deemed to be business premises:

� construction sites or assembly projects which exist for more than six months � persons acting on behalf of a company with the authority to conclude contracts on its behalf

Theprofitsofeachbusinesspremi-sesare to be calculatedas if theywerefullyindependentofthecom-pany headquarters. For examp-le,prices for thedeliveryofgoodsfrom the foreign headquarters to

the branch office in Austria mustbeinvoicedastheywouldbefortwofullyindependentcompanies.Moredetails about book-keeping obliga-tions and methods for calculating profitcanbefoundinsection4.

Example 1 — Foreign sole proprie-torships or partnershipsIf a sole proprietor or a partnership whose shareholders are resident in anothercountryfoundsabusinesspremises in Austria and a double taxationtreatyexistsbetweenAus-triaandtheothercountry,asarule,onlytheprofitsoftheAustrianbusi-ness premises are subject to taxati-on in Austria. Taxes will be levied in Austria in accordance with Austrian law. If the individuals in question have neither their permanent home nor habitual abode in Austria, taxes will be levied within the scope of li-mited income tax liability. .

Example 2 — Foreign corporationsIf a foreign corporation has busi-ness premises in Austria, the pro-fits from these premises are sub-ject to corporation tax at a rate of 25%. The minimum corporation tax is not levied (see item 5.1.4.1.).

5.1.3.2. NO DOUBlE tAxAtION tREAtY ExIsts

Ifthereisnodoubletaxationtreatyinforce between Austria and the count-ryinwhichthecompanyhasitsseat,taxationinAustriawillgenerallybesubjectexclusivelytotheprovisionsof limited tax liability. More infor-mationaboutlimitedtaxliabilityfor

individuals can be found under item 5.1.1.2., while further details about limited tax liability for corporationscan be found under item 5.1.2.2.

the above means that:Unlike a situation where a double taxationtreatyexists, taxeswillbelevied on earnings — for example from the provision of commercial or technical services in Austria as well asthedeploymentofpersonnelforcarryingoutworkinAustria—even if there are no business premises in Austria.

If both Austria and the country inwhich the individual or companyis domiciled levies tax on the total earnings both in Austria and abroad (as Austria does), double taxation is the result where no double taxa-tion treaty is in force. In thiscase,acertificateofexemptionmustbeapplied for, either in the foreign countryorinAustria. 5.1.4. tAxEs ON EARNINGs FOR sUBsIDIARIEs

5.1.4.1. CORPORAtION tAx

Ifthesubsidiaryhasthelegalstruc-ture of a limited liability company(GmbH) or incorporated company(AG) and has its seat or management seat in Austria, it is subject to unli-mitedcorporationtaxliability.Dou-ble taxation situations arising from theAustriansubsidiaryhavingbusi-ness premises abroad are prevented through double taxation treaties. If nodoubletaxationtreatyexistswith

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theforeigncountryinquestion,Aus-trian lawstipulates that theprofitsfrom foreign business premises in Austria are not subject to taxation if their average tax obligations abroad are more than 15%. If the foreign tax obligations are 15% or less, these are offset against the taxes levied in Austria.

Even if no profits are generated, aminimum corporation tax is levied. For newly established corporationsit is levied at EUR 273.00 per quarter forthefirstfour(full)calendaryearsfollowing accession to unlimited tax liability status. Subsequently, it islevied at EUR 437.50 per quarter for limitedliabilitycompanies(GmbHs)and EUR 875.00 per quarter for in-corporated companies (AGs). The minimum corporation tax is credited asatypeofadvancepayment;thesepaymentscanbeoffsetagainstac-tualcorporationtaxesinlateryearsforanindefiniteperiod.

5.1.4.2. DIstRIBUtION OF EAR-NINGs

The distribution of earnings of an Austrian subsidiary to a parentcompany with its seat in an EUmember state and with one of the legal structures listed in the appen-dix to the Austrian Income Tax Act (e.g. a German AG, German GmbH, société anonyme, società a res-ponsabilitàlimitata),ortoaparentcompanybasedinathirdcountry,isexempt from the capital gains tax of 25%, if the shareholding in the Aus-triansubsidiaryisatleast10%and

hasbeenheldcontinuouslyforoneyear.Toreleasethesubsidiaryfromliabilityformisfeasance,theparentcompanymustprovideofficialproofof domicile and a written statement confirming that the subsidiary isactivelyengagedincommercialac-tivities, employs its own staff andhas its own business premises.

If the shareholding in an EU or EEA corporation is below 10%, thiswillgenerallyresultinanex-emption from investment income tax provided that comprehensive administrative assistance and as-sistance in enforcement is provi-ded(thisiscurrentlyonlythecaseinNorway).

If, however, the investment in-come is taxed, this double taxati-oncanbeavoidedbyapplyingtheprovisions of the double taxation treaty.

Under most double taxation tre-aties, the taxation rights for the distribution of earnings are assi-gned to the country inwhich therecipient of the dividends resides. Austria is often entitled to deduct a reduced amount of tax from for-eign recipients.

The OECD Model Tax Convention provides for 15%, or 5% for divi-dends to parent companies that have at least a 25% shareholding. More information about the pro-visions of the individual double taxation treaties can be found in the competence centre duties and

taxes information sheet „Interna-tional tax law and taxes deduc-ted at source“ [Quellensteuern im internationalen Steuerrecht],available at wko.at

The reduced tax can be deducted at source, i.e. when the dividend is paid out. The conditions for this are outlined in the competence centre duties and taxes informa-tion sheet „Ordinance on relief from taxes under double taxation treaties“ [Doppelbesteuerungs-abkommen-Entlastungsverord-nung],availableatwko.at

The full tax amount of 25% can alsofirstbedeductedandthefor-eign recipient then reimbursed for any surplus capital gains taxpaid upon request. 5.2. vAt

5.2.1. GENERAl

Basic systemThe following are subject to VAT in Austria:

� deliveries or other services car- riedoutbyacompanyaspartofits regular paid business in Austria � private consumption in Austria � imports from third countries � purchases from other EU member statesbyEUcompanies

Foreign companies that generate turnover in Austria, but possess neitherasubsidiarynorabranchinAustria, are also subject to VAT ob-

20

ligations in Austria. Double taxation treatiesdonotapply toVAT. If for-eign companies provide services or workdeliverieswithinAustria,anyVATincurredwillbeowedbythere-cipient of services (reverse charge rules). The foreign company mustprepare an invoice without VAT.

If, however, the company providesdeliveries (except for work delive-ries), the VAT must be indicated. The VAT must be paid to the Graz tax authorities by the recipient ofthe deliveries on behalf of the for-eigncompany.

Deduction of input taxAs a rule, companies can deduct the VATinvoicedbyothercompaniesfortheir services as input tax. The pre-condition for this is the provision of a correct invoice. The result is that VAT is cost neutral within the chain of companies and affects only thefinalconsumer.ImportVATcanalsobe deducted as input tax.

Up to and including 2009, foreign companies which do not genera-te any turnover in Austria whichissubject to taxation,mustapplyto the tax authorities for the reim-bursement of the input tax. The minimum reimbursement period is three months and the maximum period is one calendar year. Theminimum amount for reimbur-sement is EUR 360.00. However, if the reimbursement period is one calendar year, theminimumamountforreimbursementisonlyEUR 36.00. The application must

be submitted within six months of theendofthecalendaryear.

Applicationssubmittedbycompa-nies in other EU member states after1January2010aresubjecttonew regulations: Applications must be submitted electronically usingthe electronic portal provided for thispurposeinthecompany‘sownmember state.

The tax authorities will then for-ward the applications on to the re-levant countries. The deadline for applications has been extended to nine months. The amount to be reimbursed must be at least EUR 400.00. For a reimbursement peri-odofonecalendaryear, themini-mum amount is EUR 50.00. Third country companies must continueto submit their applications to the Austrian tax authorities.

The deadline is still six months.

tax ratesAustria has the following tax rates:

� Standard rate 20% � Reduced rate of 10% (e.g. for � food, meals and rental of residentialproperty) � 12% (e.g. for wine)

Prepayment and due datesAs a rule, companies must cal-culate their VAT and deductible inputtaxonamonthlybasis.Anyexcess VAT over and above the in-puttaxispayablebythe15thdayof the following month. An ad-vance VAT return [Umsatzsteuer-

voranmeldung]detailing thecal-culation base must be prepared. Thetaxreturnmusthoweveronlythen be filed with the tax authori-ties if 1) the turnover in the pre-viousyearexceedsEUR100,000;2)thepaymentisinarrears;or3)the input tax is in credit. The tax return must be submitted elec-tronically wherever an internetconnection is available. In addi-tion, an annual VAT return must be filed.

It is very easy to submit tax re-turnselectronicallyusing„Finan-zonline“, a data transfer portal providedby theAustrianFederalMinistry of Finance. More infor-mation about this service can be found at www.bmf.gv.at/EGovern-ment/FINANZOnline/_start.htm.

5.2.2. MOvEMENt OF GOODs — tHIRD COUNtRIEs

Austrian tax levies on third coun-triesareguidedbythecountry-of-destination principle. This means that VAT is levied in the countrywhich is the recipient of the goods. The movement of goods to third countries, no matter whether to companies or to individuals, is exempt from VAT under certain circumstances(exportverificationand in some cases foreign buy-ers); in this instance input tax can be deducted in full. Conversely,goods imported from a third coun-trytoAustriaaresubjecttoAust-rian import VAT.

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5.2.3. MOvEMENt OF GOODs — EU MARKEt

The movement of goods between EU member states in thecor-poratesectorissubject,byandlarge,tothecountry-of-desti-nation principle. If an Austrian companysuppliesgoodstoanothercompanyinanotherEUmember state, this intra-Com-munitytransactionistax-free.The purchaser is considered to havemadeanintra-Communityacquisition in its own state, i.e. the state to which the goods are delivered.Itcalculatestheprofitand income tax on the basis of itsowncountry‘sVATratesandcansimultaneouslydeductitasinputtax.TheVATidentificationnumber[Umsatzsteueridentifika-tionsnummerorUID]hasrepla-ced monitoring through border controls, which have now been abolished within the EU area. The VATIDnumberisissuedbythetax authorities. The precondi-tion for the tax-exempt status of intra-Communitytransactionsisthat the VAT ID numbers of both the supplier and the recipient are listedontheinvoice.Asummary

ofintra-Communitytransac-tions must be submitted to the tax authorities. Sales between companies and non-companies arelargelysubjecttothecountry-of-origin principle, which means thatthecountryinwhichthegoodsoriginatehasarighttolevytaxes (exception: new vehicles and mail-order businesses).

5.2.4. OtHER sERvICEs

Services are only subject to VATinAustriaiftheserviceisactuallyperformed in Austria. In 2010, si-gnificantchangestotheregulati-ons concerning the place of per-formance were introduced. The basic rule is that services provided byonecompanytoanother(B2B)must be performed at the location where the recipient of the services manages its business operations and/oroneoftherecipient‘sotherbusiness premises.This creates greater flexibility:if the services provided are sub-ject to taxation at the recipient‘splace of performance, liabilityfor this tax is transferred, within the EU, to the recipient of the services(reverse charge), provi-

ded that the service provider does not have a branch in the given EU member state. Invoices can be drawn up without VAT and the re-cipient of the services can gene-rallydeduct its taxobligationsasinput tax. The recipient of the ser-vicesdoesnothavetopaytheVATin advance or make complicated arrangements for the reimbur-sement of input tax. See also the provisions contained in item 5.2.1.

Note: examples of received services include: advertising services, legal, financial and technical consultan-cy services, accountancy servicesand interpretation services. For the purposes of monitoring, from 2010 the summary of transactionsmustincludenot only deliveries to otherEU member states, but also services where the basic rule dictates that the place of performance is located in another member state (i.e. the re-cipientoftheservicesisacompanywith its seat in said member state and is therefore liable for the rele-vant taxes).

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5.3 AUstRIAN NEw COMPANIEs PROMOtION ACt

5.3.1 GENERAl

Under the Austrian New Companies Promotion Act [Neugründungsför-derungsgesetzorNeuföG],boththeestablishment of a new business and the take-over of an existing business are exempt from certain federal administrative charges, va-rious commercial taxes (tax on the purchase of real estate, corporation tax) and certain other fees. Further-more, non-wage labour costs to the orderof7%arenotpayableforthefirst year following the establish-ment of a new company; howeverthisdoesnotapplyinthecaseofthetake-over of an existing business. The precondition for eligibility forthe establishment of a new busi-ness as well as the take-over of an existing business is that the most senior member of the management (i.e. business owner or person taking over the business) has not exercised a top managerial function in a simi-

lar typeofbusiness in theprevious15years,eitherinAustriaorabroad.(Forbusinessclassifications,seetheÖNACE groups, the Austrian versi-on of the NACE.) Furthermore, the newly established company musthave a new operational structure. Further information is available in the competence centre duties and taxes information sheets „Austrian New Companies Promotion Act and the founding of new companies“ [NeuföGfürNeugründer]and„Aus-trian New Companies Promotion Act and company take-overs“ [NeuföGfürÜbernehmer],availableatwko.at

5.3.2 BRANCH OFFICEs

As a rule, the privileges provided for under the Austrian New Companies PromotionActdonotapplytothees-tablishment of branches which ope-rate in the same commercial sector astheheadcompany.

5.3.3 sUBsIDIARIEs

The privileges provided for under the Austrian New Companies Promotion Actdonotapplyiftheforeignparentcompany/corporationhasmorethana 50% shareholding in the newlyfounded Austrian subsidiary andoperates in the same commercial sector. The same applies if the ma-naging director of the Austrian sub-sidiaryhasamorethan25%share-holdinginthesubsidiary(directlyorindirectly)andhasbeenself-emplo-yed in thesamecommercialsectorinthelast15years.

Belowarethemostimportant„placeofperformance“definitionsforservices:

Typeofservice Place of performance up to 31 December

Placeofperformancefrom1January2010

Basic rule Countryoftheserviceprovider Forcompanies:countryoftherecipient

Forindividuals:countryoftheservice provider

Placement services Countrywhererevenuefromservicesis earned

Forcompanies:countryoftherecipient

Forindividuals:countrywherereve-nue from services is earned

Real estate related services Locationofproperty Locationofproperty

Artistic,scientificandpedagogicalservices

Countrywhereserviceisperformed CountrywhereserviceisperformedFrom 2011Forcompanies:countryoftherecipient(exception:ticketing—countrywhereservice is provided)Forindividuals:countrywhereservice is provided

Received services For companies: countryoftherecipient

aspreviously

For individuals in the EU: For individuals in the EU:countryoftheserviceprovider

aspreviously

For individuals in third countries countryoftherecipient

aspreviously

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Belowarethemostimportant„placeofperformance“definitionsforservices:

6.1 REGIstRAtION OF A BRANCH OFFICE IN AUstRIA

FAOThe regional court in its function as a commercial court Commercial register

Details of the foreign legal entity

Company

Legalstructure(intheoriginallanguageoftheseatofthecompanyheadquarters) Seat

Business address/address for correspondence

Recorded/registered with (authorities, court, etc.)

Reg. No

Capital Currency Closing date for accounts:

Those vested with power of representation(name, date of birth, address for correspondence, nature/duration of power of representation)

Permanent proxies:

(name, date of birth, address for correspondence, nature/duration of power of representation) (onlymandatoryforcountriesoutsidetheEUandEEA)

Deed of partnership/articles of association of

LastamendedbydecisionoftheGeneralAssembly

sample 1

6. APPENDIx

24

Details of the branch office in Austria

Company(branchofficeaddendum)

Seat Address for correspondence

Activity:(maximum of 40 characters)

, date

Companysignature(certifiedandtranslatedpreferablybyadomesticlegaltranslator)

(Number of persons vested with power of representation:powerofrepresentationisgovernedbythelawofthecountryinwhichtheentityhasitsseatand/orthedeedofpartnership)

Enclosures:1.Deedofpartnership/articlesofassociationinthemostrecentGermanversion(certifiedtranslation)2.Mostrecentexcerptfromtheregistryofthehomecountryasanoriginalorcertifiedcopy.3.Resolutionregardingtheestablishmentofthebranchoffice (unless an explanation is provided in the registration application)4.Proofoftheestablishmentofthebranchoffice(e.g.certificatefromtheeconomicchamber/-tenancy agreement)5. Sample signatures of those vested with power of representation as well as their permanent proxies

*) Should an excerpt from the register not be available, another form of proof of the legal existence of theentityandthemanagementstructuremustbeprovided.

sample 2

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6.2 sAMPlE sIGNAtUREs OF tHE REPREsENtAtIvE(s) OF tHE BRANCH OFFICE

FAOThe regional court in its function as a commercial court Commercial register

I(firstnameandsurname) Date of birth

Occupation

Address

asarepresentativeofthefollowingbranchoffice

shallsignonbehalfofthecompanyasfollows:

Sample signature

Signature*

, date

*)notarisedorlegallycertified

sample 3

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6.3 FORM FOR FOUNDING A DOMEstIC BRANCH OF A FOREIGN ENtItY

to be addressed to the legal department of the Vienna Economic Chamber at Stubenring 8-1010 Vienna, Fax +431/514 50-1483, T +431/514 50-1615, E rechtspolitik@wkw.at

Head office:

Company:

Headofficeaddress:

Line of business:

Branch office:

Company:

Branchofficeaddress:

Line of business:

Date on which the branch was founded (abolishedterminated):

Location where the branch’s accounts are managed:

Capitaldedicatedtothebranchoffice(not required for companies based in EU countries):

Name and permanent address of the representative (managing director):

Telephonenumberoftherepresentative/managingdirector(forday-timecontact):

Informationprovidedby(companysignature):

Date:

sample 4

27

7. CONtACt ADDREssEs FOR vIENNACommercial register vienna Commercial Court Marxergasse 1a, 1030 Vienna T 01/515 28-0

Immigration lawMunicipal Department 35ImmigrationOffice3.0—„Employment“BlockC,Dresdner Straße 93, 1200 ViennaT 01/4000 35-255www.einwanderung.wien.at

trade lawMunicipal Department 63Department for trade law andLegalAspectsofFoodSafetyWipplingerstr. 8, 1010 ViennaT 01/4000 97-117www.wien.gv.at/wirtschaft/gewerbe

Municipal District Offices(incl. extensions for the contacts for business-related matters) MunicipalDistrictOfficeforthe1st and 8th districts

Municipal District Office for the 1st and 8th districts 1010 Wien, Wipplingerstraße 8T 01/4000 01-000 oder 08-000

Municipal District Office for the 2nd district1020 Wien, Karmelitergasse 9T 01/4000 02-000

Municipal District Office for the 3rd district1030 Wien, Karl-Borromäus-Platz 3T 01/4000 03-000

Municipal District Office for the 4th and 5th districts1050 Wien,Rechte Wienzeile 105T 01/4000 04-000 oder -05 000

Municipal District Office for the 6th and 7th districts1060 Wien, Hermanngasse 24-26T 01/31 4000 06-000 oder -07 000

Municipal District Office for the 9th district1090 Wien, Wilhelm-Exner-Gasse 5T 01/4000 09-000

Municipal District Office for the 10th district1100 Wien, Laxenburger Straße 43-45T 01/4000 10-000

Municipal District Office for the 11th district1110 Wien, Enkplatz 2T 01/4000 11-000

Municipal District Office for the 12th district1120 Wien, Schönbrunner Straße 259T 01/4000 12-000

Municipal District Office for the 13th and 14th district1130 Wien, Hietzinger Kai 1-3T 01/4000 13-000 oder 14-000

Municipal District Office for the 15th district1150 Wien, Gasgasse 8-10T 01/4000 12-000

Municipal District Office for the 16th district1160 Wien, Richard-Wagner-Platz 19T 01/4000 16-000

Municipal District Office for the 17th district1170 Wien, Elterleinplatz 14T 01/4000 17-000

Municipal District Office for the 18th district1180 Wien, Martinstraße 100T 01/4000 18-000

Municipal District Office for the 19th district1190 Wien, Gatterburggasse 14T 01/4000 19-000

Municipal District Office for the 20th district1200 Wien, Brigittaplatz 10T 01/4000 20-000

28

Municipal District Office for the 21st district1210 Wien, Am Spitz 1T 01/4000 21-000

Municipal District Office for the 22nd district1220 Wien, Schrödingerplatz 1T 01/4000 22-000

Municipal District Office for the 23rd district1230 Wien, Perchtoldsdorfer Straße 2T 01/4000 23-000

General legal information Vienna Economic Chamber Wirtschafts-kammer Wien1010 Wien, Stubenring 8-10wko.at/wien

Business start-up hotlineT 01/514 50-1050E gruenderservice@wkw.atlegal DepartmentT 01/514 50-1615E rechtspolitik@wkw.at

Department of Financial AffairsT 01/514 50-1625Ewnfinpol@wkw.at

7.1 lIst OF ABBREvIAtIONs

AG - Aktiengesellschaft

begl. - beglaubigt

DBA - Doppelbesteuerungs-abkommenEST - Einkommenssteuer

EStG - Einkommenssteuergesetz

EU- Europäische Union

EWR - Europäischer Wirtschaftsraum

Geb.Dat - Geburtsdatum

GmbH - Gesellschaft mit beschränkter Haftung

GV - Generalversammlung idR - in der Regel

HV - Hauptversammlung

MA - Magistragsabteilung

OG - Offene Gesellschaft

KG - Kommanditgesellschaft

MS - Mitgliedsstaat

NeuföG - Neugründungs-förderungsgesetz

OGH - Oberster Gerichtshof

Reg.Nr - Registernummer

Rl - Richtlinie

UST - Umsatzsteuer

UStG - Umsatzsteuergesetz

VST - Vorsteuer

NOtEs

Weiter kommen.

Die beste Wahl

für Ihr Anliegen!

& 01/514 50wko.at/wien

Telefonisch für Sie erreichbarMO von 8.00 Uhr bis 17.00 Uhr, DI bis DO von 8.00 Uhr bis 16.30 UhrFR von 8.00 Uhr bis 16.00 UhrBitte halten Sie nach Möglichkeit Ihre Mitgliedsnummer bereit.

Persönliche BeratungVereinbaren Sie bitte einen Termin.

DW

Arbeitsrecht und Kollektivverträge 1010

Außenwirtschaft 1302

Bildung und Lehre 2010

Steuern

1010

Förderungen 1055

Umwelt und Energie 1045

Unternehmensgründung 1050

Verkehr

1040

Wirtschafts- und Gewerberecht 1010

Betriebsstandort 1100

EPU-Service 1111

Finanzierung 1122

Firmenverzeichnisse und Statistik 1133

Krisensituationen und Sicherheit 1144

Mitgliedschaft in der WK Wien 1155

Netzwerke, Kooperationen 1166

Unternehmensführung 1177

ServiceNetzwerke, Kooperationen DWFrau in der Wirtschaft Wien 1426Junge Wirtschaft Wien 1347Kooperationsbörse Wien–Bratislava 1302 Kreativwirtschaft 1404Marktplatz auf wko.at www.meinmarktplatz.atNetzwerk Diversity 1070POOL Kooperations–Service der WK Wien 6724TECinvent 1203Wiener Einkaufsstraßen Management 6700 Wiener Marktmanagement 6700WIEN PRODUCTS 1517

Bildungseinrichtungen der WK Wien DWBerufsinformation (BiWi) 6518

FHWien-Studiengänge der WKW 5744Hernstein Institut

5600Werbe Akademie

5251WIFI Management Forum

5232WIFI Wien

5555Tourismusschulen MODUL 01/476 70-0MODUL University Vienna 01/320 35 55-0

DW

Sparte Gewerbe und Handwerk 2222

Sparte Industrie 1250

Sparte Handel

3242Sparte Bank und Versicherung

1283Sparte Transport und Verkehr

3579Sparte Tourismus und Freizeitwirtschaft 4104Sparte Information und Consulting

3720

Meine Branche

RS_Folder A4_130312.indd 1 10.09.2012 11:58:45

Imprint: Vienna Economic Chamber | Stubenring 8-10 | 1010 Vienna | T 01/514 50 | Content: Legal Department of the Vienna Economic Chamber | wko.at/wien/rp Graphics: Unit Organisation Management | Although the information contained herein has been compiled with the utmost care, the authors and the Austrian economic chambers are not liable for the contents of this publication.