, Wien Brunner/Zadic: Austria becomes more attractive as an innovation location
New package brings start-up employee participation and new corporate form "flexible corporation" - relief of 60 million euros per year

Justice Minister Alma Zadić and Finance Minister Magnus Brunner presented a comprehensive package of measures for Austria as a start-up location. This is intended to promote entrepreneurial innovations. In the future, the possibilities for employees to participate in the company's success will be expanded, the new company form "flexible corporation" will be introduced and the GmbH minimum share capital will be reduced to 10,000 euros. In order to initiate these changes, the Company Law Amendment Act 2023 was sent for assessment together with the Start-up Promotion Act. In addition, an evaluation of the law is planned in five years.

Austrian Finance Minister Magnus Brunner commented: “Start-ups are a key economic factor and drivers of innovation. We have now turned important screws to make our location even more attractive for start-ups. With this package we improve the environment for young entrepreneurs who take risks to create innovations. We also provide attractive incentives to keep our talents in Austria.”

Justice Minister Alma Zadić: “Austria has always been a country of inventors and founders. We need innovation - for example in the joint fight against climate change, where innovative, green concepts and business ideas are of crucial importance. With the amendment to company law, we are now creating the necessary framework for this. Part of the amendment is a new legal form, the so-called "Flexible Corporation", or "FlexKap" for short. With the FlexKap we combine the advantages of a GmbH with those of an AG - and thus enable simple and flexible founding".

Strengthen innovative power - ensure legal certainty and employee protection

Since 2011, more than 3,300 start-ups have been founded in Austria - this corresponds to around 25,000 employees. For the specific needs of start-ups, the new corporate form "flexible corporation" is also being created. This gives the start-ups greater freedom for individual structuring and expanded opportunities for employee participation than are offered by the currently applicable GmbH law. At the same time, it will be ensured that employees are guaranteed a say in resolutions that subsequently bring about a change in the rights of the company's shareholders. It is also ensured that employees are not economically worse off than the founders themselves when it comes to the balance sheet profit - this is why they generally share in the balance sheet profit and liquidation proceeds to the extent of their capital participation. At the same time, it is ensured that this type of company share can be transferred easily – i.e. in writing.

In addition, it will be possible to convert FlexKaps easily and unbureaucratically into an AG or a GmbH - in accordance with the respective entrepreneurial requirements of a successful young company.

The lowering of the GmbH minimum share capital to 10,000 euros represents a further simplification for founding a company. This is accompanied by a reduction in the minimum corporation tax by more than 70%. The minimum corporation tax is 5% of the statutory minimum share capital.

A challenge for start-ups and young companies is liquidity, which is why these young companies often pay urgently needed, highly qualified employees in the form of company shares instead of money.

"Dry income" problem solved, fairer taxation

Previously, start-ups had to value their shares at the time of delivery so that they could be taxed. That was expensive and time-consuming. This problem will disappear in the future. In addition, employees previously had to pay taxes when they received a share in the company, although no money had flowed (“dry income”) from which the tax liability could be paid. This problem is now also solved. In addition, future tax treatment will be as follows: Taxation does not take place as before when the employee participation is granted, but there is a tax deferral – usually until the shares are actually sold, which means that taxes only have to be paid when money is flowing.

The flat-rate taxation of 75% with a fixed tax rate of 27.5% takes account of the fact that any increase in the value of the company value shares is treated as income from capital assets. The remaining 25% is taxed on the basis of the income tax rate.

Finance Minister Magnus Brunner explains the planned measures: "We are creating our own tax model for start-up employee participation - and thus strengthening employee loyalty. As a further step, we are taking corporate law measures to promote company start-ups and are reducing the minimum corporate income tax by two thirds. In total, we relieve our business location with around 60 million euros per year. In this way we are strengthening Austria as a business location and making it fit for our start-ups.”

Justice Minister Alma Zadić emphasises: "With the introduction of FlexKap, we are now sustainably strengthening Austria's position on the international labor and innovation market by enabling simple start-ups with low minimum capital and high flexibility. This makes it easier for us to start a business, especially for young people who are just starting out in their professional lives.”