Austria Company formation and taxation

1. AustriaCompany formationandtaxation Access to R & D and Innovation – a case study – AUSTRIA Innoprom 2011 Ekaterinburg July 2011

2. Establishing a company • Private limited company • Public limited company • Partnership • Private foundation

3. Private limited company („GmbH“) 1/2 • Minimum share capital EUR 35.000,--; • 1 % capital duty (partial relief possible) • residence and/or citizenship not necessary • residence of managing director Austria/EU not necessary • Active company, holding company or mixed company • Setting up with notarial deed (PoA possible)

4. Private limited company („GmbH“) 2/2 • names of shareholders are incorporated in the public company register – trusteeship possible • annual assembly necessary (possible in writing) • Transfer of shares only with notarial deed • In case of active company- a trade license and a resident managing director is necessary

5. Public Limited Company („AG“) 1/2 • Minimum share capital EUR 70.000,--; • 1 % capital duty (partial relief possible) • At least two shareholders for setting up, later only one shareholder necessary, residence and/or citizenship not necessary • shares • name shares, • bearer shares (if not listed on stock exchange – registration of shareholders necessary – new regulation) • residence of managing directors in Austria/EU is not necessary

6. Public Limited Company („AG“) 2/2 • Supervisory board with at least 3 members – 4 meetings a year (quarterly) • Audit mandatory • Annual assembly (notary mandatory) • Transfer of shares – no notarial deed necessary • In case of active company- trade licence necessary (Austrian resident managing director)

7. GmbH (Private limited company ) vs AG (Public Limited Company ) • The essential points on which the GmbH differs from the AG are: • AG has shareholders (Aktionäre), GmbH has members (Gesellschafter) • the shares of a GmbH cannot be offered publicly and cannot be quoted on a stock exchange; • the shares in a GmbH must be registered and they can only be transferred by notarial deed; • the GmbH is subject to less public disclosure of its financial affairs.

8. Types of Partnerships • general partnership (OG) • limited partnership (KG) • Silent partnership (“Stille Gesellschaft”) • Civil law partnership (“Gesellschaft nach bürgerlichem Recht”)

9. Partnership – OG, KG • At least 2 partners • OG – all partners with unlimited liability • KG – at least one partner with limited liability, one with unlimited liability • No minimum capital required • Mixed company forms – partnership with corporation (GmbH or AG) possible (reduction of personal risks and liabilities)

10. Private Foundation („Privatstiftung“) • At least EUR 70.000,-- founding capital • Does not have members but beneficiaries (“Begünstigte”) • At least 3 managing directors – beneficiaries or relatives cannot be appointed as directors • Supervisory board possible • Audit mandatory – nominated by the court based on suggestion of founder • Foundation charter and addendum very flexible • Change and withdrawal of private foundation possible if mentioned in the foundation charter

11. Taxation - corporations • Corporate income tax – flat rate 25 % • Group taxation regime – foreign and domestic losses can be offset against domestic profits • Favorable regime for R&D • International participation exemption on dividends and capital gains from selling shares in foreign subsidiaries (EU parent subsidiary direction) • Dividends liable to withholding tax – 25 % for Austria residents – Double taxation treaties reduce tax burden (DTT Austria/Russia – 5 %/15 %)

12. Taxation – private residents • Income tax 0 % - 50 % • Social security system mandatory for residents with income from self employment or employment – health, pension and accident insurance • Income tax on income from interests and dividends 25% • Income from capital gains from shareholdings etc. 25 % (1st April 2012) • No inheritance or gift tax

13. Holding as investment vehicle • Tax incentives for foreign investors establishing an Austrian holding company: • domestic dividends are tax-exempt under the participation exemption; • foreign dividends are tax-exempt under the international participation exemption; • capital gains from the disposal of a foreign subsidiary are exempt under the international participation exemption;

14. Holding as investment vehicle • Austria has a broad network of tax treaties, which either eliminate withholding taxes or reduce the rates; • there is no strict debt/equity ratio • there are no specific anti-avoidance rules in Austrian tax law, only a general provision which entitles the tax authorities to prevent abuse; • domestic and cross-border reorganizations of companies and partnerships may be realized without tax consequences

15. BF Consulting Contacts • Mag. Franz Schweiger franz.schweiger@bf-consulting.at • Elena Denissenko elena.denissenko@bf-consulting.at Mariahilfer Strasse 32 1070 Vienna Tel: +43 1 522 47 91 Fax: +43 1 522 47 91-1 Web: www.bf-consulting.at