Legal forms in Austria (Rechtsformen): overview and comparison

Choosing a legal form is one of the first decisions when starting a business. Which legal form fits in Austria depends on who is founding, how much capital is available and how the risk is to be shared. The legal forms themselves are set by law, so the choice is made from a fixed catalogue.

This article presents the common legal forms (Rechtsformen) in Austria, from the sole proprietorship (Einzelunternehmen) to the partnerships GesbR, OG and KG and the corporations GmbH, FlexCo and AG. A table compares them by founders, minimum capital, liability and company register, followed by the criteria for choosing. The information is based mainly on the Austrian Economic Chambers (WKO).

Which legal forms exist in Austria?

According to the WKO, anyone founding a business faces the question of whether to run it alone or with partners. For a solo founder, the usual route is the sole proprietorship. If several people pursue a common purpose, they can found a company. The types of company are set by law; they differ, in part considerably, in founding, bodies, liability and scope, as well as in tax and social insurance law.

The business forms in Austria can be roughly divided into two groups. In partnerships such as the OG and KG, the partners and their personal liability are at the centre. Corporations such as the GmbH, FlexCo and AG are legal persons of their own, whose shareholders are generally liable only with their contribution. There are also the cooperative and the silent partnership.

Legal forms at a glance: the table

The table gives an overview of the legal forms in Austria:

The table does not replace a detailed check: every legal form has exceptions and special rules, for example on payment in cash or on liability during the founding phase.

The sole proprietorship

The sole proprietorship is the obvious legal form for anyone founding alone without setting up a company. According to the WKO, it generally comes into being with the trade registration, and for tax purposes with the first business expenses. The owner is liable without limit, including with private assets, and in return the profit belongs to them alone. A sole proprietorship can also employ staff.

A sole proprietorship only has to be entered in the company register once it is subject to accounting obligations. Voluntary entry earlier is possible, then with the suffix “eingetragener Unternehmer” or “e.U.”. Sole traders who are not entered use their surname with at least one first name written out. A sole proprietorship becomes subject to accounting obligations, and so to full bookkeeping, once turnover exceeds €700,000 in two consecutive financial years or €1 million in a single year. This obligation does not apply to the liberal professions.

A sole proprietor carrying on a trade is a member of the Economic Chamber and generally compulsorily insured with the Social Insurance Institution for the Self-Employed (SVS). Profit is subject to income tax, and VAT has to be paid unless the small business rule applies. If the owner lacks the qualification for a regulated trade, another person can take on professional responsibility as trade-law managing director.

Partnerships: the GesbR, OG and KG

When several people want to run a business together without share capital, a partnership is the natural option among the company forms in Austria. The GesbR, OG and KG differ mainly in whether they are entered in the company register and who is liable and how.

Civil-law partnership (GesbR)

According to the WKO, a GesbR can be formed for any lawful purpose but has no legal personality of its own. It therefore cannot acquire rights or take on obligations itself and cannot be entered in the company register. The partners are generally jointly and severally liable for the partnership’s debts. If turnover exceeds the accounting thresholds, the GesbR has to be entered in the company register as an OG or KG.

General partnership (OG)

An OG is founded by a partnership agreement. The law prescribes no particular form, but according to the WKO a written agreement is strongly advisable. The OG only comes into being with the entry in the company register and can then acquire rights and take on obligations under its company name. No share capital is needed. The partners are personally, jointly and severally liable without limit for the OG’s obligations. In principle, every partner is authorised to manage the business and can represent the OG alone; an OG can pursue any lawful purpose, including freelance activities.

Limited partnership (KG)

A KG is basically structured like an OG. Besides the partners with unlimited liability, the general partners (Komplementäre), there are also partners with limited liability, the limited partners (Kommanditisten). They are only liable up to the liability amount entered in the company register and are generally not authorised to manage or represent the partnership. A separate form is the silent partnership: a silent partner contributes assets to another person’s business, shares in its profits and losses and is generally not authorised to manage or represent it.

Corporations: the GmbH, FlexCo and AG

Corporations are legal persons of their own. They need minimum capital, are usually founded by notarial deed and come into being with the entry in the company register. Their profit is subject to corporate income tax of 23%.

Limited liability company (GmbH)

According to the WKO, the GmbH is a very widespread company form in Austria and can be founded for practically any purpose, including by a single person. Founding requires articles of association (Gesellschaftsvertrag) or, for a single-member GmbH, a declaration of establishment, each as a notarial deed. If a single natural person is both the sole shareholder and the sole managing director, a simplified formation without a notarial deed is possible under certain conditions; this also applies to the FlexCo. Share capital is at least €10,000; at least €5,000 in total has to be paid in cash at founding.

Beyond their contribution, the shareholders are not liable for the company’s obligations. The highest body is the general meeting, and the GmbH is managed and represented by one or more managing directors. Regardless of profit, at least the minimum corporate income tax of 5% of the statutory minimum share capital is payable, currently €500 a year; the same applies to the FlexCo. The former founding privilege (Gründungsprivilegierung) has not been available for new GmbHs since 1 January 2024.

According to the WKO, how a managing shareholder is insured depends on their stake. With up to and including 25% of the share capital, they are as a rule insured as an employee under the ASVG. With a stake of more than 25% and less than 50%, it depends on whether the features of dependent employment are present; from 50%, insurance under the ASVG is ruled out. Where there is no ASVG insurance, the managing shareholder is generally compulsorily insured under the GSVG. A managing director without a stake is as a rule insured as an employee under the ASVG.

Flexible limited company (FlexCo)

The FlexCo builds on GmbH law and adds structuring options that are partly based on stock corporation law. As with the GmbH, minimum share capital is €10,000, but an individual contribution can be as low as €1. Besides regular shares (Geschäftsanteile), the FlexCo can issue company value shares (Unternehmenswert-Anteile) without voting rights, in total below 25% of the share capital. It can also be founded by one person. Unlike for a GmbH, for transferring shares in a FlexCo a document drawn up by a notary or lawyer is enough instead of a notarial deed; for company value shares, written form is enough.

Stock corporation and cooperative

The AG is also a legal person. Its articles are agreed by notarial deed, and the share capital is at least €70,000. Mandatory bodies are the management board, supervisory board and general meeting; shareholders are not liable for the AG’s obligations. For the AG, the minimum corporate income tax is based on its higher minimum share capital. The cooperative (Genossenschaft), in turn, serves to promote the business or trade of its members, for example as a purchasing or housing cooperative, and has a management board and a general meeting as its bodies. It must appoint a supervisory board if it permanently employs at least 40 employees; otherwise the articles can provide for one.

Which legal form fits?

Which legal form fits in the end is a matter of weighing things up, because every legal form has its pros and cons. The WKO offers an online guide for this. These questions help most when comparing legal forms:

The difference in liability between the legal forms is particularly clear: sole traders and OG partners are personally liable, GmbH shareholders generally only with their contribution. In return, founding and running a corporation takes more effort, and the social insurance of a managing shareholder also depends on their stake. Because tax and social insurance vary greatly in individual cases, advice before the decision is worthwhile, for example from the Economic Chamber’s start-up service or a tax adviser.

Founding costs compared

Costs also differ by legal form. According to the WKO, the trade registration itself is free of charge. For a sole proprietorship, fees only arise for an entry in the company register, at around €100. For an OG or KG, costs depend mainly on whether the partnership agreement is drawn up with legal advice and how extensive it is.

For a single-member GmbH, the WKO gives around €100 to €150 for a declaration of establishment with the statutory minimum content, and around €500 to €1,000 with additional provisions by a notary, depending on scope. For a GmbH with two or more shareholders it is at least €2,000. The company register entry of a GmbH adds around €450 in each case. For new businesses, the fees for the company register entry can be waived under the New Business Promotion Act (Neugründungsförderungsgesetz); this requires a confirmation of advice from the Economic Chamber.

Mandatory details for registered businesses

Choosing a legal form with a company register entry also means taking on disclosure duties. According to the WKO, all businesses entered in the company register have to state certain details, whatever their legal form. These are the company name, the legal form, the registered office, the company register number and the company register court, on business letters, order forms, addressed emails and websites. Registered sole proprietorships may also use a descriptive or invented business name; a legal form suffix such as “e.U.” is mandatory, and if the business name differs from the owner’s name, the owner’s name also has to be stated.

A business account by legal form

The legal form also determines in whose name the business account is held. With Vivid, sole traders (Einzelunternehmer) and new self-employed persons (Neue Selbständige) from Austria can open a business account, as can a GmbH, AG, cooperative, OG and KG. The online application shows which legal forms are available. Opening the account itself costs nothing. An overview:

Even on plans without a monthly fee, individual services can incur charges. These include additional cards, cash withdrawals above certain allowances or premium features from higher plans.

One account for sole traders, OGs, KGs and GmbHs

Open the Vivid business account online, whether as a sole trader or for a GmbH, OG or KG.

Open an account

This article is for general information only and is not legal or tax advice. The rules and amounts mentioned are based mainly on information from the Austrian Economic Chambers (WKO); for a specific case, the Economic Chamber’s start-up service, a tax adviser or a notary is the right point of contact. Payment services are provided by Vivid Money S.A., 21 rue Glesener, Luxembourg, L-1631, Luxembourg, an Electronic Money Institution authorized and regulated by the Commission de Surveillance du Secteur Financier, Luxembourg, under the register number W00000015.