Corporations planning to extend operations beyond their borders and shores can open a subsidiary overseas to establish a foothold for “testing the market”. This can be a risky business venture – costly both in time and money – with no guarantee of success from the effort and financial investment. The strength of Austria’s stable and developing economy sees it inside the world’s top 20 countries for per capita Gross Domestic Product – and the sixth richest in the European Union. Landlocked Austria’s infrastructure and superb logistics capitalize on its ideal location in Central Europe with trading corridors stretching north, south, east and west, plus six international airports.
Foreign companies must establish a subsidiary in Austria to hire staff and operate their payroll. The most popular choice is to open a private limited liability company, a GmbH. It is incorporated through the Commercial Register, operates under the Austrian Company Act and follows the Code of Corporate Governance, which sets out the management rules. Warning! Expanding overseas is a significant step. If the move fails, companies face the added costs and bureaucracy of closing their operation, selling property and paying off employees. These are unwanted distractions while also concentrating on building a business in your home country.
The sensible alternative is to use a Professional Employment Organisation (PEO) and Employer of Record (EOR), such as Bradford Jacobs, to find the best local talent and administer your payroll in Austria. Your company will be up-and-running in days rather than weeks or months without any risks.
Before taking the first steps into the Austrian economy, foreign companies must decide which business structure best suits their plans. The most popular choice is to launch a subsidiary as a private limited liability company, a GmbH, which offers protection to both its shareholders and the parent company. The company is incorporated through the Commercial Register, operates under the Austrian Company Act and follows the Code of Corporate Governance, which sets out the regulations for management. Incorporation requirements and procedures include:
Once incorporated, the company must follow other procedures before they can operate payroll for the staff of their subsidiary, including:
Note: Nationals from the European Union (EU) and those from the European Economic Area (EEA) nations of Iceland, Norway and Liechtenstein, plus Switzerland, have free access to the Austrian employment market and do not require authorization from labour market authorities.
The foreign-owned subsidiary in Austria operates under the Company Act as a separate legal entity independent from the parent company. It follows the management regulations of the Code of Corporate Governance. As a private limited liability company, a GmbH, the subsidiary protects from liabilities to the foreign parent company and the shareholders, who are generally liable only to the value of their share contribution.
Additionally, the subsidiary can ‘test the market’ in Austria by following its business ideas and entering into different areas of operation for the owning company. The subsidiary can also draw up its contracts and agreements with clients. Other benefits for a subsidiary:
However, there is a more straightforward option to the risks and costs of setting up a subsidiary in Austria and working with Bradford Jacobs in Austria. Using a global Professional Employment Organisation (PEO) such as Bradford Jacobs means staff can be sourced, placed in their roles, and be up and running within days rather than months. All the payroll, taxation and compliance difficulties are under control thanks to our Employer of Record (EOR) services.
A subsidiary set up in Austria as a private limited liability company (GmbH) is incorporated through the Commercial Register, operates under the Austrian Company Act and follows the Code of Corporate Governance regarding the regulations for management. Incorporation requirements and procedures include:
Registration and Documentation:
Accounts and Taxation: