Relocating your company

When the owner moves and the business cannot simply be sold, there are three workable shapes. Each is legitimate; each has a distinct tax and management logic; and the right answer often combines them — a foreign operating company kept at arm's length, say, beneath a new Austrian holding that collects dividends tax-efficiently. The employment, permit and payroll side of the same move is mapped on the business and employment hub.

If you will build activity in Austria, or want a clean vessel above your international holdings, a new Austrian GmbH is straightforward — formed in about a week with EUR 10,000 minimum capital. As a holding location Austria is quietly competitive. Dividends from Austrian subsidiaries are exempt from corporate tax without any minimum stake. Under the international qualified participation exemption, dividends from comparable foreign subsidiaries — and, notably, capital gains on their sale — are exempt where the holding reaches 10% and has been held for a year. Portfolio dividends from qualifying foreign companies are exempt even below that threshold. The exemption falls away, though, where the foreign company is mainly passive and taxed abroad at under 15%: from a 5% stake it gives way to a credit for the foreign tax, and gains on the shares become taxable too. Add a flat 23% rate on what remains taxable, the treaty network, and no withholding on qualifying dividends to EU parent companies, and the pieces of a durable holding structure are all present.

Related Austrian companies can also form a tax group, pooling the results of domestic members in the hands of the group parent, with the losses of directly held foreign subsidiaries in the EU, or in a state that gives Austria comprehensive administrative assistance, usable pro rata to the shareholding, capped at 75% of the group's domestic income and recaptured later. For an owner drawing income out, the arithmetic stacks simply: 23% at company level, then 27.5% withholding on the dividend — a combined burden a shade over 44% on distributed profits, which is why the split between salary, dividends and retention deserves modelling against the progressive income tax bands.

Whatever the structure, dealings between you, your Austrian entities and your foreign entities must run at arm's length. Management fees, licence royalties, loans and the price at which anything moves between related companies need a defensible basis. General record-keeping duties apply to every business, but a statutory master file and local file are only required once an Austrian group entity's turnover has exceeded EUR 50 million in each of the two preceding financial years; country-by-country reporting starts at EUR 750 million of group turnover. This is not paperwork for its own sake — cross-border owner-managed structures are exactly where tax auditors look first.

An entity doing business in Austria will usually need a VAT registration (standard rate 20%) — from the first taxable supply if it is established outside the EU, while a business established in Austria or elsewhere in the EU can stay outside the system while its turnover stays under the EUR 55,000 small-business threshold. Staff who relocate with the business must be on an Austrian payroll — employer registration before the first working day, monthly wage-tax withholding, and the employer's share of social security; employees seconded temporarily from an EU country can often remain in their home system with an A1 certificate. And through every question on this page runs one theme: substance. Offices that exist, people who decide, minutes that record it. Structures with real substance survive audits; paper structures do not.