Choice of legal form.

2.1 Limited Liability Company

This is the most common and very flexible form of a corporation in Austria. In Austria it is called Gesellschaft mit beschränkter Haftung (GmbH). The minimum statutorily required capital is € 35,000 of which 50%, or at least € 17,500, must be paid in (if share capital is  3 being contributed in cash). The cost of establishing a simple GmbH with a stated capital of € 35,000 is about € 5,000. The formation of a GmbH requires only one shareholder. A shareholder can be an individual, a partnership or a legal entity. The managing directors are either appointed by a shareholder’s resolution or are appointed in the articles of associations. A supervisory board has to be appointed by the shareholders under certain conditions: for instance if the stated capital exceeds € 70.000 and the company has more than 50 shareholders or the average number of employees exceeds 300.

With the Corporate Law Amendment Act 2013, the statutory minimum share capital for limited liability companies was reduced from € 35,000 to € 10,000 as of 1 July 2013. However, as of 1 March 2014 the minimum share capital shall again increase to € 35,000.

In view of the fact that the limited liability company is a legal entity separate from its shareholders, assets are held in the corporation’s name. The company may sue and may be sued under its own name. Shareholders are not liable for obligations of the company.

2.2 General Partnership

The name of this partnership in Austria is Offene Gesellschaft (OG).

The general partnership is a partnership, the object of which is to conduct a commercial business under a common firm name, if the liability of none of the partners towards the creditors is limited. The partners can be either natural persons or legal entities or other partnerships. The partnership agreement is not subject to any form requirements. Whether – and to which extent – the partners are to make contributions is determined by the partnership agreement. Unless agreed differently every partner has the right and the obligation to manage the business. The partners are jointly and severally liable for the obligations of the partnership and any agreement to the contrary is ineffective as towards third parties. Such liability of the partners for the debts of the partnership is unrestricted.

2.3 Limited Liability Partnership

The name of this partnership in Austria is Kommanditgesellschaft (KG).

A limited partnership is a partnership, the purpose of which is to conduct a commercial business under a common name, if the liability of one or several partners is, in respect of the partnership's creditors, limited to a specific amount of contribution (limited partners) whereas the remaining partners have unlimited liability (general partners). The limited partners are excluded from management of the partnership unless there is an agreement which allows limited partners to participate in management.

2.4 Civil Law Partnership

The civil law partnership is defined as an agreement between two or more partners which combine their efforts or funds (or both) for a common purpose. No particular form is required for the partnership agreement. It may be formed by written or oral partnership or even conclusively. The civil law partnership is not registered with the Commercial Register like all other partnerships mentioned before. The partners' contribution to the civil law partnership may be money, a working commitment or assets. The partners are directly liable to creditors.

2.5 Branch

The procedure to establish branches in Austria is rather tedious (especially depending upon the seat of the foreign company), therefore foreign companies prefer to do business in Austria by means of subsidiaries rather than branches. In order to be registered in Austria as a branch of a limited liability company, the foreign company must be similar to an Austrian limited liability company (for example German and Swiss GmbHs, French societé á responsabilité limitée etc.; US-companies are generally considered to be similar to stock corporations).

2.6 Subsidiary

Many commercial partnerships in Austria take the form of limited partnerships. Another option is the establishment of a public limited company (Aktiengesellschaft). By far the most common and flexible legal form for subsidiaries of foreign countries operating in Austria is the "limited liability company" Gesellschaft mit beschränkter Haftung or GmbH. The obvious advantage of a GmbH over a branch is that the liability of the parent is limited to the amount of the share capital of the GmbH.

2.7 Sole Trader

A sole trader conducts his business without any partners or shareholders. He contributes the original capital all by himself and he is subject to unlimited liability. He may have of course employees.

2.8 Public Limited Company

The name of this company in Austria is Aktiengesellschaft (AG). The public limited company (stock corporation) is designed as the corporation business form for larger business enterprises. At present there are only a few hundreds of public limited companies in Austria.

From the other form of corporations in Austria, the GmbH, there exist around 100 thousand in Austria. The minimum capital is € 70,000. € 17,500 must be paid in cash upon formation. The shareholders may be individuals or corporations. In view of the fact that public limited companies are designed for the general public, various provisions assure protection of such general public. Therefore, formation of a public limited company is regulated in greater detail than formation of the limited liability company (GmbH).

Shareholders are not liable for obligations of the company.

2.9 Foundation

The foundation is called Privatstiftung (Stiftung) in Austria.

The Stiftung is a legal entity, the internal organisation and purpose of which is largely determined by the founder (grantor), who provides the assets necessary to achieve the aim of the Stiftung. The Stiftung is bound to execute the intentions of the grantor as documented in the declaration of establishment.

The Privatstiftung is an interesting instrument to avoid the splitting up family business and property as well as inheritance and gift tax levied on such property when it is passed on to the next generation. The legal basis is the Privatstiftungsgesetz which came into force in 1993. The main objective of the Austrian Parliament was to avoid the outflow of capital to other countries and at the same time to encourage foreign investors to set up a Privatstiftung for their family property in Austria.