How Austria wants to incentivise new startups in the country

The Local Austria
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How Austria wants to incentivise new startups in the country
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Austria is a great country to live in, but the bureaucratic steps and hurdles make it difficult for new startups to grow. Here's what the federal government wants to do to incentivise new companies.


The federal government is proposing tax breaks to facilitate the foundation of start-ups in Austria, according to broadcaster ORF.

The proposed measures aim to make it easier for these companies to offer employees a stake in the company and introduce a new corporate form that allows for a lower minimum tax. The bill was presented by Finance Minister Magnus Brunner (ÖVP) and Justice Minister Alma Zadic (Greens) on Friday and will now undergo a review process.

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Currently, start-ups face challenges when granting shares to employees, as payroll tax is immediately due upon transfer. However, in the early stages of building up a company, remuneration is often low or nonexistent, making it difficult for beneficiaries to pay the tax from their income.

Under the proposed changes, taxation would be deferred until the shares are actually sold. This means that taxes will be paid when there is actual monetary gain for startups.

New legal form

Additionally, under the new proposal, 75 percent of the proceeds from the sale of shares would be subject to a flat tax rate of 27.5 percent, similar to capital gains, while the remaining portion would be taxed at the income tax rate.

This recognises that the value increase of shares over time serves as an incentive for stakeholders and treats this increase as 75 percent income from capital assets, the federal government stated. Furthermore, start-ups would be spared the time-consuming process of determining the company's value at the beginning, simplifying the taxation of share transfers.

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To support start-ups in their initial phase, a new legal form called "Flexible Capital Company" (FlexKap) is being introduced. This legal form reduces the minimum share capital requirement to €10,000, compared to €35,000 for a limited liability company.


Consequently, the minimum corporate income tax, which is calculated as five percent of the share capital annually, would be reduced by approximately two-thirds, resulting in savings of around €1,250 per year.

The Ministry of Finance estimates that collectively, start-ups would save €50 million annually as a result of these changes.


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