The Austrian Ltd. Company
The Austrian Ltd. and advantages thereof...
The Limited Company (Ltd.)
The Ltd. is the most existing legal form of a company after the single proprietorship. The reason for high attractiveness already results from its name: the limited liability for the company. Thus it is particularly suitable for joining the partners, who want co-operate in a company, and who want to reduce a risk for their capital investments.
Especially the fact, that partners often break this limited liability in praxis, must be taken into account.
Normally this company is liable within granting a credit personally against a bank. All the same wide spectrum of liability rests on the commercial and legal management of a company.
The Limited company can be also formed as a single proprietorship and does not require two partners.
The minimum basic capital of Ltd. is EUR 35,000, the minimum investment in cash is totally EUR 17,500, i.e. 50 per cent; the confirmation thereof can also serve as a reference. The minimum basic investment of each partner is EUR 70.
The memorandum of association is required for formation of a Ltd. company, where the agreement must be realized in a form of notary registration.
The company is formed by registration into the Business Register.
The business name of a Ltd. company can be created from the personal name, the subject or the fictitious part, which must include the designation of “The company with limited liability”; this designation can be also abbreviated to Ltd.
The personable name of a company: Springer, Ltd.
The subject name of a company: XY Holzhandel, Ltd.
The fictitious name of a company: Complex, Ltd.
As an appendage can be also used the designation of business activity.
The Limited company, as a legal entity, is entitled for legal acts but without the legal capacity, to represent externally a company through one or more executive managers, and in case of caused damage they are liable in full extend.
If the company would like to perform the trade activity, the Ltd. must possess the trade license. The trading certificate must be issued in name of Ltd. company. Here the company, which started to exist only after being registered in the Business Register, can perform the notification of a trade, or make the request for license only after being registered in the Business Register upon the presentation of a certificate stating the legal status of a company to the Trade Licensing Office.
To receive the trading certificate, the Ltd. company must nominate the commercial and legal executive manager of a company. This person must comply with any personal requirements and to perform a corresponding activity in the enterprise. Besides this, he/she must have the evidence of qualification that either he/she is entitled to represent the company bodies (member of Board of Directors or the executive manager) or he/she can be a company employer with full insurance liability.
The partners of Ltd. principally do not subject to any insurance obligation. If a partner performs the trade activity and simultaneously he/she is the commercial and legal executive manager of a company, principally is subject to the insurance obligation according to the Trade Social Insurance Act (Gewerblichen Sozialversicherungsgesetz, GSVG). Exception is, if the partner – the company executive manager can not have the prevailing influence in the company, i.e. the 25 per cent participating share. Another one exception results from the participating share in the interval between 26 to 49 per cent and the mandatory duty; in this case the insurance duty according to the General Social Insurance Act (Allgemeinen Sozialversicherungsgesetz, ASVG) applies.
The company profit is subject to legal entity income tax (25 %). Providing the fiscal year neither creates any profit nor any loss, thus the company is liable to pay the annual minimum legal entity income tax amounting 5 per cent from the basic capital established by a law, which amounts EUR 437.5/quarter (in the first year only EUR 273/quarter) in advance payments. The company profit distribution is subject to capital gain tax (25 %).
The wages, which are remunerated to the partners for their function in the company, are taxed either with the income tax (see the social security) or with the natural person income tax. The bonuses are also subject to the tax liability.