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EUROPEAN HOLDING COMPANIES

The Austrian Holding Company

Overview Related Resources Austria Key Elements

HOW TO PROCEED

OVERVIEW

The Austrian Holding Company is an ordinary company which falls within the scope of general tax law and may benefit from the double taxation treaties concluded by Austria and the European tax directives.

There are no limitations on the activities of the company.

Legal Form

An Austrian Holding Company can be constituted as an “Aktiengesellschaft” (joint stock company- AG) or a “Gesellschaft mit beschraenkter Haftung” (private limited company- GmbH).

Formation

The minimum share capital for incorporation of an Austrian company is €70,000 for an « AG » and €35,000 for a « GmbH ». While the share capital of an « AG » must be fully paid up, for a company incorporated as a « GmbH » a minimum of €17,500 or the equivalent of 25% of the share capital must be paid up on incorporation.

Taxation

Resident and non-resident companies are taxed at a flat rate of 25%. The Minimum tax payable is €1,750 for a Gmbh and €3,500 for an AG.

Capital duty of 1% is levied on the amount of capital contributed to a new corporation or when the capital of an existing corporation is increased:

Income

The taxable income of an Austrian Company is based on the annual financial statements prepared in accordance with generally accepted accounting principles subject to adjustments and provisions.

Dividends Exemption

Dividends received by an Austrian Company from:

An Austrian subsidiary are exempt from tax, regardless of the amount of participation held.

A non-resident subsidiary will not be subject to tax if the parent company owns at least 10% of the share capital for a minimum period of 1 year.

In order to benefit from the participation exemption, the following rules must be met:

  • The subsidiary’s primary type of income must not derive from interest, leasing property other than land and buildings or capital gains.
  • The subsidiary must be subject to corporate income tax at a minimum rate of 15%.
  • The shareholders of the subsidiary are mainly individuals and Austria’s right to tax such income is limited.
Capital Gains Exemption

Gains derived from the disposal of shares of a non-resident company in which the parent holds at least 10% of the share capital for a period of at least 1 year are exempt from tax. The previous antiabuse rules applied to dividends must also be applied to capital gains.

Interest and Royalties

See income above.

Some Advantages of the Austrian Holding Company

Besides the common advantages of a holding company, the Austrian Holding Company may also enjoy from the following:

Exemption from Withholding Tax on Payment of Dividends

Dividends paid are exempt from withholding tax if the following conditions are met:

  • The recipient is an Austrian company that owns at least 25% of the distributing company.
  • The recipient company is an EU resident (proved by a residence certificate) which owns at least 25% of the distributing company for a minimum period of 2 years and confirms by writing that its activities are not mere asset administration.
Exemption from Withholding Tax on Payment of Interest and Royalties

Interest and royalties paid by an Austrian company subject to unlimited corporation tax to an EU resident are exempt from withholding tax. The same exemption is applied for interest and royalties paid to a parent company which owns at least 25% of the payer for a minimum period of 1 year.

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RELATED RESOURCES

Double Tax Treaties

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AUSTRIA KEY ELEMENTS

Formation
Legal Form: Joint stock company (AG);
Private limited company (GmbH)
Minimum Subscribed Capital: €70,000 (AG)
€35,000 (GmbH)
Minimum Paid-Up Capital: €70,000 (AG)
€17,500 (GmbH)
Number of Shareholders: 1 (AG)
1 (GmbH)
Type of Shares: Registered (AG)
Registered (GmbH)
Substance Requirements: Nil
Taxation
Capital Duty: 1%
Net Worth Tax: 0%
Corporate Income Tax: 25%
Double Tax Treaties: 74
Dividends Exemption: 100%
Holding Requirements: 10% and 1 year
15% corporate tax
Capital Gains Exemption: Yes
Holding Requirements: 10% and 1 year 15% corporate tax
Tax Credit: Yes
Relief of Losses: Carry forward indefinitely1
CFC Rules: No
Debt-to-Equity Ratio: No
Withholding Taxes
Dividends: EU Parent Co- 0%2
Treaty Countries- 0%2-10%
Others- 25%
Interest: EU Parent Co- 0%2
Treaty Countries- 0%2-25%
Others- 25%
Royalties: EU Parent Co- 0%2
Treaty Countries- 0%2-15%
Others- 20%
Liquidation: Nil

1Losses carry forward may only be offset against 75% of the profits of the year.

2If conditions are met.

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