Becoming self-employed is an exciting and rewarding career path for many internationals in Austria. And it is often the only career option. Especially, at the beginning of their time in Austria if they don’t speak German (well enough or at all).
However, it’s not uncommon for circumstances to change over time, leading to the decision to terminate self-employment. A shift in personal priorities, business-related challenges or moving into an employed role means you want to look at deregistering as a self-employed person. And the process can be a daunting process.
If you’re reading this with plans to end your self-employment journey in Austria,
I completely understand if you feel any of the following:
- Feel intimidated by the Austrian authorities
- A deep dislike dealing with paperwork and legalities
- Uncertainty of what steps you need to take to close your business
As a business consultant in Austria, I help a lot of people register for self-employment and I can help you deregister too. In this blog post, I will guide you through the steps involved in terminating self-employment. We’ll cover everything from assessing your financial situation to notifying clients and the relevant Austrian authorities to wrapping up loose ends.
Whether you’re only considering terminating self-employment or have already decided to close your business, my goal is to provide you with both valuable insights and actionable advice to end your self-employment employment journey. And help you move forward with clarity and purpose, into your next chapter.
Please note, that this blog post serves the needs of self-employed business license holders (Gewerbetreibende in German) and new self-employed (Neu Selbständige in German). There are additional steps and processes to closing other forms of business ownership – please get in touch via email if you need guidance for terminating another form of business.
Ending your Business in Austria – a surprisingly easy process!
Believe it or not – the process to terminating self-employment in Austria is much easier than many people believe.
There are 3 main areas of consideration, and we will go through them one by one:
Ready? Let’s dive in!
1. Legal requirements for ending self-employment in Austria
To end your self-employment, you need to notify the same offices you contacted when you registered your business to begin with.
1.1 Business license Office
If you are a business license owner (whether it is a free business license or a qualified one), you must get in touch either with the Business License Office (Gewerbebehörde), or the Chamber of commerce (WKO).
There is no better or worse option here – contacting either office is fine! Each office is required to notify the other one about the change in the status of your license.
You can close your business online, through the GISA system, by email (to either of the offices), or in writing delivered by post.
You need to state the end date of your activity. If you don’t pick a particular date, the official date of the termination of your license will be the date the authorities receive your notification.
Important : make sure that you do not exercise any commercial activity that falls under your license past that date. Failing to do so may result in a fine (up to EUR 3600).
1.2 Social security
Everyone’s favourite – SVS! You need to notify SVS when you are ending your self-employment in Austria. And you need to do it within a month of ending your business activity. However, keep in mind that for the purposes of the social security contributions, they will be calculated up to the last day of the month you notified SVS.
Pro Tip : It is smart to plan your end date around the last month of the quarter to avoid unnecessary extra payments.
And if you’re thinking (hoping?) that this is the last time you will be dealing with SVS. I am sorry, but it won’t be!
There might still be back payments as you (hopefully, by now) know. The final amount of your social security contributions is determined only after your tax assessment for the year is ready.
1.3 Tax office
As with the SVS, you must inform the tax office within a month of ending your self-employment.
How? Send them form Verf25.
You might be wondering if you will still have to pay the advance income tax payments if you close your business before the end of the tax year. Yes, often, that will be the case.
Remember Austria taxes your universal income. The chance is the tax office will wait and not be in a hurry to cancel those advance tax payments. Of course, this is different if you are leaving the country for good.
Or maybe if you’re feeling bold, you can request an earlier tax assessment. It’s worth trying. After all, if you don’t ask, the answer will always be “No”.
2. Financial considerations when ending self-employment in Austria
This is an important one! Don’t be too quick to clear out your bank account and spend whatever you have left from your self-employed work. On the plus side, if you have overpaid on either your SVS or tax contributions, you will get a refund. But, as mentioned above, there is also big chance you will have outstanding back payments for social security and income tax.
And what happens if your clients pay your invoices after your termination date?
As these payments are part of the turnover from your self-employment, they will count towards social security and income tax. BUT – don’t worry about being in violation of the ‘no conducting business after you’ve ended your self employment’ rule. Just because the payments were made after the end date, it does not mean that you were still active in your business. In this case you are not seen to be conducting business – so you’re safe.
Before you can close your self-employment in Austria, you must settle any outstanding debts related to your business. Failure to do so can result in legal and financial consequences. If you have any business assets, such as inventory or equipment, you will need to liquidate them. The proceeds can be used to settle any outstanding debts or taxes. Whatever is left, will be added to your profit from the business.
3. Notifying clients and business partners
3.1 B2C operations
For those of you with a B2C business, there are a few other steps to take in addition to the ones already mentioned.
You need to understand which consumer protection regulations apply to your operation and make sure you follow them precisely.
Simply put, any outstanding commitments you have made to customers, must be honoured. And if that is not possible, you will have to issue a suitable refund.
As an example, if your business offers any kind of subscription plans, you need to notify your clients early enough and possibly, refund them for the part of the time you will not provide the service. Check what you have communicated in your own terms and conditions.
Remember, in Austria, it is incredibly easy for consumers to get what is owed to them using the support of various bodies. Most of the time, consumers won’t even need a lawyer to pursue a consumer protection issue. This increases the likelihood for consumers to take legal action – even for the smallest amount of money.
Keep in mind that as a sole proprietor you are fully liable for any damages that occur because of your work. That liability does not disappear just because you have closed shop. If there are no business assets, your personal ones will be needed to pay off any outstanding debt. And a heavy fine will be added on top.
3.2 B2B operations
For a B2B set up, carefully review your existing contracts and agreements with clients or business partners. Identify any clauses related to termination or notice periods that you need to stick to and ensure that you comply with the terms outlined in these contracts.
You’ll need to also follow up on all outstanding and unpaid invoices or and ensure payments are settled – ones that you owe and the ones that clients owe you.
3.3. Business partners and service providers
And now for the small but important details that can be easy to forget when closing your business. Thinking back to when you first started out, you probably purchased various software tools and concluded contracts with service providers for things such as internet, coworking spaces, car leasing etc.
Just because you are not in business anymore, does not mean that they will let you off any due payments. Although if you’re lucky – depending on the contractor, you might be able to negotiate your way out of a contract in a favourable way. Make sure you review the Terms and Conditions of each provider before you take any actions.
Even as you close the door on your self-employment, don’t burn any bridges. You never know when the relationships you established during your self-employment will be useful after its end.
And, just like your business: that’s a wrap, folks! A comprehensive guide on how to end self-employment in Austria that leaves you feeling confident about walking into whatever is next for you.
If, after all, you are not entirely sure if you really are done with your business – no problem! Why not consider putting it on hold? This is called a “Ruhenmeldung”.
It can give you a much-needed pause – not only from social security contributions but also from a busy schedule so you can reassess and make a new (business) plan.
Send me an email if you want to find out more about pausing your business and if any of the Business Development services I offer, might help you.