Austria

Overview

Austria is a strategically located EU and Schengen member state with a mature legal framework, deep private banking tradition, and a well-established role as a gateway jurisdiction for Central and Eastern European (CEE) business structures. While not a low-tax jurisdiction in the headline sense, Austria offers a coherent combination of corporate holding company tools — notably the participation exemption — strong treaty relationships with CEE and emerging market countries, and the Austrian Privatstiftung (Private Foundation) as a distinctive and powerful private wealth planning vehicle.

Vienna's proximity to Central and Eastern European markets, combined with Austria's historically strong economic ties to countries including Germany, Hungary, Czech Republic, Poland, Romania, and the former Yugoslav states, makes it a natural base for groups with significant regional operational footprints.

Company Formation — GmbH and AG

The GmbH (Gesellschaft mit beschränkter Haftung) is Austria's standard private limited company, with a minimum share capital of €35,000 (of which €17,500 must be paid up on incorporation). Incorporation is completed through a notary and the Austrian commercial register (Firmenbuch), typically within 2–4 weeks. A simplified formation process for small GmbHs ("Gründungsprivileg") previously reduced the effective minimum to €10,000 for the first 10 years, though reforms have modified this framework.

The AG (Aktiengesellschaft) is the Austrian public company, requiring €70,000 minimum share capital, used for larger enterprises and entities seeking capital market access.

Austria's corporate income tax rate is 25% (reduced from 25% to 23% transitionally and then settling at 23% from 2024 as part of the Eco-Social Tax Reform — advisers should confirm the current applicable rate for the relevant year). A range of deductions and credits are available, including a research premium of 14% on qualifying R&D expenditure.

Participation Exemption

Austrian tax law provides a participation exemption for dividends and capital gains derived from qualifying domestic and foreign subsidiary shareholdings. For domestic (Austrian) and EU/EEA subsidiaries, dividend income is generally exempt without a minimum holding requirement. For third-country subsidiaries, the exemption applies where the Austrian parent holds at least 10% for a minimum of one year, provided the subsidiary meets subject-to-tax conditions.

Capital gains on the disposal of qualifying international participations can be structured to be exempt, making Austria an effective holding company location for groups with CEE subsidiary networks, particularly where subsidiaries are located in Austria's extensive treaty partner countries.

Austrian Private Foundation — Privatstiftung

The Privatstiftung is one of Austria's most distinctive and widely used private wealth planning vehicles. Established under the Private Foundations Act 1993, it is a legal entity with no shareholders or members — assets are transferred into the foundation by the founder (Stifter) and held for the benefit of defined beneficiaries, which may include the founder and their family during the founder's lifetime.

Key features:

• The founder retains no legal ownership of foundation assets once transferred, though they may retain certain reserved rights (amendment or revocation rights) as permitted by Austrian law.
• The foundation is managed by a board of directors (Vorstand) and, in many structures, supervised by an advisory board on which the founder or family members may serve.
• No corporate income tax is levied on the Privatstiftung's domestic and qualifying international investment income at the foundation level, subject to an interim tax of 12.5% on certain income types (dividends, capital gains) — significantly lower than the standard 25% corporate rate.
• Distributions to Austrian-resident beneficiaries are subject to capital gains tax at 27.5%, but the deferral of tax until distribution can be highly valuable for long-term wealth accumulation.
• The Privatstiftung is widely used for succession planning, business asset holding, investment portfolio management, and ensuring continuity of family wealth across generations without the forced heirship risks of direct individual ownership.

Inheritance tax in Austria was abolished in 2008, removing a formerly significant concern for asset transfer into and out of the Privatstiftung structure. This makes Austria an attractive environment for succession-oriented wealth planning.

Private Banking

Austria has a deep private banking tradition centred on Vienna. Key institutions include Raiffeisen Bank International (RBI), which provides extensive CEE banking coverage through its subsidiary network across more than a dozen regional markets; Erste Group/Erste Private Banking, a major regional institution with significant retail and private banking operations across Austria and CEE; and Bank Austria (UniCredit), offering Italian parent-backed private banking services to international clients. Specialist private wealth boutiques and smaller Austrian private banks complement these larger institutions.

Residency and the Red-White-Red Card

Austria offers a points-based Red-White-Red Card residency scheme for non-EU nationals with qualifying skills, employment, or investment profiles. For high-net-worth individuals not seeking employment, residency for affluent persons (Niederlassungsbewilligung) is available on proof of sufficient financial resources and accommodation, without requiring Austrian employment. Austrian residency provides Schengen travel rights and a pathway to permanent residency after five years, and Austrian citizenship (though typically requiring 10 years of legal residence) after extended continuous residency.

A lump-sum taxation option (Zuzugsbegünstigung) is available for qualifying HNW individuals relocating to Austria, allowing a negotiated fixed annual tax arrangement, though the specifics require engagement with the Austrian tax authority (Bundesministerium für Finanzen) and specialist local tax counsel.

Capital Gains Tax

Austrian individuals are subject to capital gains tax of 27.5% on income from financial assets including dividends, interest, and gains on the disposal of shares and other securities. This rate applies to both Austrian-source and foreign-source financial investment income for Austrian tax residents. Business asset disposals may be treated differently depending on whether the assets are held as private or business assets.