Foundation of new GmbH
Existing GmbH
Other changes
Amendments to Austria's federal tax law – which, among other things, have revised the Limited Liability Companies Act – were published on February 28 2014 and came into force on March 1 2014.(1)
Between July 1 2013 and March 1 2014, the required minimum share capital of a limited liability company (GmbH) was reduced from €35,000 to €10,000, under the Company Law Amendment Act.(2) The minimum amount of share capital to be paid in on establishment was reduced to €5,000 instead of €17,500. Furthermore, a GmbH incorporated before July 1 2013 was allowed to reduce its share capital to the new minimum share capital of €10,000, by way of an ordinary capital decrease (for further details please see "New law will make establishing limited liability companies easier and cheaper").
With effect from March 1 2014, the minimum share capital of a GmbH has been raised again to the former level of €35,000. Furthermore, out of the share capital to be contributed in cash, at least €17,500 must once again be paid in when founding the GmbH.
In order to keep the legal form of a GmbH attractive for entrepreneurs with more limited financial resources, the newly introduced Section 10b of the Limited Liability Companies Act provides for a foundation privilege. Such privilege enables the founding of a GmbH with a 'privileged' amount of cash contributions of only €10,000, whereby an amount of €5,000 must be paid in. Contributions in kind are not possible in such cases.
The articles of association must stipulate the usage of the foundation privilege and the amount of cash contributions privileged at foundation of each shareholder. Such data must also be registered in the Commercial Register.
The foundation privilege will end at the latest 10 years after registration of the GmbH in the Commercial Register. By that date, the full amount of €17,500 must be paid in in cash. Thereafter, the data registered in the Commercial Register with respect to the foundation privilege can be deleted.
Existing GmbHs with a share capital of less than €35,000 must make a capital increase to that or a higher amount by March 1 2024.
A tax foundation privilege has also been introduced. Any GmbH incorporated after June 30 2013 will pay a reduced minimum corporate income tax for the first 10 years. Such reduced minimum corporate income tax amounts to €500 per year in the first five years and €1,000 per year in the following five years. Thereafter, a minimum corporate income tax of €1,750 per year must be paid.
Contrary to the draft governmental act, GmbHs using the foundation privilege need not build up a foundation reserve in the amount of 25% of their annual profits. A reference to the foundation privilege in their business letters, order forms and webpages is also not required. Further, existing GmbHs with a share capital of less than €35,000 need not build up a recapitalisation reserve in the amount of 25% of their annual profits in order to raise financial resources for the required capital increase; nor do they need to include any reference in their business letters, order forms and webpages.
For further information on this topic please contact Roman Perner or Stefanie Wöss at Schoenherr by telephone (+43 1 5343 70), fax (+43 1 5343 76100) or email ([email protected] or [email protected]). The Schoenherr website can be accessed at www.schoenherr.eu.
Endnotes
