On 26.5.2023, Ministerial Draft 275/ME was issued, which sent the Start-up Promotion Act and the Company Law Amendment Act 2023 (GesRÄG 2023) for review. It includes the introduction of tax benefits for employee shareholdings and the reduction of the share capital for limited liability companies. These are intended to make start-ups more attractive and flexible. The review period ends on July 7, 2023.
Start-ups are enjoying increasing popularity. In Austria, too, the rise of start-ups is ongoing and the trend is pointing upward. After repeated complaints in the past that there was a lack of tax incentives in this country and that company law was too inflexible for start-ups, the legislature has now taken an initiative to change this. The general conditions for start-ups in terms of company law and taxation are to be made easier with the Start-up Promotion Act and the GesRÄG 2023.
Cash flow and liquidity are currently one of the biggest challenges for start-ups. As a result, they are often not in a position to compensate suitable and qualified employees to the expected extent through salary payments. A remedy could be the participation of employees in the company's success, which would also be welcomed by many start-ups. Since a transfer of capital shares currently still leads to taxation of this non-cash benefit, employees experience an immediate outflow of liquidity, while a (risky) inflow usually occurs at a much later point in time.
Although the employees do not receive a monetary inflow, they must pay tax with regard to the shares granted to them that exceed the existing tax exemption ("dry income problem").
In order to make start-ups more attractive to highly qualified employees, the Start-up Promotion Act will in the future, under certain conditions
- deferral of taxation may be granted until the actual disposal of the shares,
- the taxation is carried out by means of a more favorable flat-rate taxation scheme, as well as
- preferential treatment in the area of social security and non-wage labor costs should be anchored.
Key points on employee participation
The regulation shall only be applicable to the gratuitous (but not discounted) transfer of capital shares, which are transferred for the first time as of January 1, 2024 and are to be applied for the first time for the wage tax deduction in 2024 or the income tax assessment in 2024. The taxation takes place, among other things, in the event of the sale of the employee's shares, termination of the employment relationship, capital participation of the employee of more than 10% or in the event of liquidation of the employer. If there are company value shares, immediate taxation can be averted upon termination of employment if the employer is liable for payment of the tax. The tax will then only be paid if the shares are sold at a later date, the restriction on transferability is lifted or the employee dies or moves away. However, certain deadlines must be taken into account. Prerequisites for a "start-up employee shareholding" would be, for example, size, turnover and date of foundation of the company.
The deferral of taxation is reflected under the ASVG in terms of contribution law insofar as the incurrence of the obligation to pay contributions in the current employment relationship is also deferred until the actual sale of the employee shareholdings or the occurrence of other circumstances.
Tax is then levied at a flat rate of 75% at a fixed rate of 27.5%, with the remaining 25% being taxed at the regular rate. In addition, an exemption from ancillary wage costs (municipal tax, employer's contribution) of 75% is also provided for. Only those non-cash benefits are to be subject to municipal tax and employer contributions that are to be taxed at the tariff rate, but not the portion of the inflow that is subject to the fixed rate of 27.5%.
The standardization of a fixed contribution basis enables a central simplification in the context of payroll accounting, which in turn is limited by the general restriction through the maximum contribution basis (cf. § 45 ASVG).
New legal form “flexible corporation”
Start-ups currently use almost exclusively the legal form of a GmbH (limited liability company), as this offers extensive structuring options in the articles of association. In order to provide entrepreneurs with more flexibility and structuring options in some areas, the new legal form of a "flexible corporation" is being introduced. Primarily, the provisions on the limited liability company apply to this legal form, supplemented by provisions from stock corporation law as well as provisions on the acquisition and holding of treasury shares, authorized capital and conditional capital increases. This also allows a key concern of start-ups to be met, namely enabling the disposal of company value shares.
Reduction of the GmbH minimum share capital to EUR 10,000
In order to further simplify company formations, the GmbH minimum share capital will be lowered from currently EUR 35,000 to EUR 10,000. According to the Federal Ministry of Finance, this alone will reduce the burden on the Austrian economy by around EUR 50 million.
Author:
|
Viktoria Drapak |
Contact person:
Thomas Neumann thomas.neumann@bdo.at +43 5 70 375 - 1720 |
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