Unsurprisingly, most international founders want to know more about the Simplified Company GmBH to set up their company in Austria. Setting up a company in Austria is for many people, including Austrian founders, a complex process. And foreign business owners can easily get lost in the administrative maze; not made any easier by a language barrier or the realisation that things work very differently to the country where you previously owned company.
In this blog:
- The simplified company GmBH registration – an alternative option
- Pros and Cons of the simplified company GmBH registration
- What are the limitations to using the Simplified Company Registration process?
- Is the Simplified Company Registration process right for you?
The simplified company GmBH registration – an alternative option
If you’re a (future) business owner in Austria who has done even a little bit of research into setting up a company in Austria, I’m going to assume you know that there is an alternative option for company registration in Austria – one that does not require a notary.
This alternative choice, known as the Simplified Company registration (Vereinfachte Gründung) is available for both the classic limited liability company (GmbH), and its spinoff, the FlexCo (suitable for startups).
Pros and Cons of the simplified company GmBH registration
One of the biggest pros of the simplified registration is that it is low cost (because you don’t need to involve a notary). And the registration process is quicker.
You probably noticed that, though, I didn’t use the word “quick” regarding the duration of the set-up process. That’s because it really isn’t.
The shortest amount of time I’ve seen this achieved for business owners was 4 weeks (I managed it for one of my clients). And that was in a case where there were no hiccups, the client already had their electronic signature sorted and already had a local bank account set up.
However, even considering this, the simplified company registration is still a great option, if you are in a hurry, have limited budget and your business operation is quite traditional.
But, be aware.
The simplified company registration does not provide for you to create your own declaration of establishment (i.e. the equivalent of articles of association for single shareholders). Instead, a sample declaration is used which content fits the minimum legal requirements for company incorporation in Austria.
It is this lack of individualisation for your company operations and structure that might lead you to question whether the Simplified Company registration, really what your company needs.
What are the limitations to using the Simplified Company Registration process?
Not all the glitters is gold.
At first glance, the Simplified Company registration (SCR) seems attractive for business owners in terms of its cost and relative speed.
However the SCR option is not going to be the process that suits everyone. And choosing a process that doesn’t align with or support your company journey is always going to end up costing you more time and money in the long term.
Why?
Because if you decide you want to do something with your company that exceeds the basics, then you will have to create a declaration of establishments, use a notary, then send the changes to the company register.
And that all needs to be done before you can do the thing you want to do with your business. And from start to finish, that could take anything from a few weeks to a few months.
So, it’s worth taking the time to think carefully about whether the Simplified Company Registration option is for you.
9 limitations that come with the Simplified Company Registration process
We’ve put together this list to help you work out whether it’s a beneficial option for your business. Links are included to relevant government institutes .
- The company must have a single shareholder, and that shareholder must be an individual.
- The same individual must be the only managing director of the company.
- The representative function of the MD cannot be limited, and it is always presumed in full.
- The process of registration should not be a simple legal form transformation, but a completely new business should be set up (eg, you cannot use the simplified company formation, if you are switching from self-employment to limited liability company. Nor can you use it to transform a general partnership into a limited liability company, etc.).
- You must have a specific electronic signature – either ID Austria, or EU Log In, so you can log in in to the Austrian Business Service portal
- If the company register has additional requests (e.g. that you make corrections into the registration declaration), you can only make submissions online through the same portal. Customer support in the portal is only offered in German.
- In a custom-made declaration of establishment, you can stipulate that a certain amount of registration costs will be compensated from the company’s accounts. However, with the Simplified Company registration process, that amount is limited to EUR 500.
- The minimum company capital is EUR 10.000. EUR 5.000 of the minimum company capital must be paid in cash at the moment of incorporation, whilst the other half can be in assets.
But, if you register your company with the simplified company registration, the minimum capital can only be monetary.
- The general meeting of the shareholders must be held once a year (yes, i know, point 1 was that there is a single shareholder and that it’s you. Even so, the necessary paperwork must be completed and should not be forgotten about).
Is the Simplified Company Registration process right for you?
Deciding on the right company registration process can be difficult, especially if you are an international business owner. The Austrian rules and guidance for this may differ significantly to the process in the country where you have previously worked or run your company.
There is a way to achieve more individualisation of your company’s operation and structure under Austrian system. But this will require you to make changes in the declaration of establishment and as a result, you won’t be able to avoid using the services of a notary.
Remember, choosing a process that doesn’t align with or support your company journey is always going to end up costing you more time and money in the long term.
Whichever route you choose for registering your company in Austria, there is absolutely no need to go through it without professional expertise and knowledge to make the process smoother.
If you’re looking for full clarity and support on whether the Simplified Company registration process is a good option for your company in Austria – our best recommendation would be to click the button below and have a chat with us.
