Ministerial drafts: Start-up Promotion Act and Company Law Amendment Act 2023

  • At the end of May 2023, both the Start-Up Promotion Act and the Company Law Amendment Act 2023 were published as ministerial drafts and sent out for review.
  • The ministerial drafts provide for tax and corporate law measures to promote the start-up sector in Austria. The draft laws include regulations on the taxation of employee shareholdings, the introduction of a new legal form (flexible corporation) and the reduction of the minimum share capital of limited liability companies (GmbH) to EUR 10,000.
  • It remains to be seen in detail whether the proposed measures will become law. The review period ends on 07.July 2023. We can provide an initial overview of the possible changes below.

Background and objective

The Start-Up Promotion Act and the Company Law Amendment Act 2023 were published as ministerial drafts at the end of May 2023 and sent out for review. While the first package provides for essential measures under tax law to promote start-ups, the second package is intended to implement measures under company law.

The aim of the tax regulations is to make the taxation of employee share ownership more attractive and simpler. In terms of company law, the government programme for the years 2020 to 2024 provides for the creation of a new form of capital company, which is intended to offer an internationally competitive option, especially for start-ups and founders in the early stages. At the same time as the introduction of the new capital company form, the minimum share capital for limited liability companies (GmbHs) is to be reduced to EUR 10,000. The lower share capital is also to benefit the new company form.

Tax law (taxation of employee shareholdings and reduction of the minimum corporate income tax)

The free or discounted transfer of capital shares to employees results usually in immediate taxation of the non-cash benefit. This means a so-called "dry income" problem. Tax is due even though the employee does not receive a cash inflow. Due to a separate taxation regime for start-up employee shareholdings, this shall be compensated for and the loyalty of employees to the start-up promoted.

For this purpose, the Start-Up Promotion Act provides for a deferral of taxation for so-called start-up employee shareholdings. Start-ups are defined as companies with no more than 100 employees and no more than EUR 40 million in turnover that were founded no more than ten years ago. If certain conditions are met, the pecuniary advantage from the free (not discounted) transfer of capital shares is not to be taxed at the time of the granting of the shares, but only upon the actual sale or upon the occurrence of defined circumstances (e.g. termination of the employment relationship, exceeding a certain amount, liquidation, relocation and others).

In addition, the tax amount is to be determined on the basis of a flat-rate regulation for simplification purposes. The taxation will be 75% at a fixed rate of 27.5%, the remaining 25% will be taxed at the regular rate.

For purposes of wage labour costs and social security, corresponding parallel regulations shall be implemented.

The planned reduction of the minimum share capital for limited liability companies to EUR 10,000 (see below) is also accompanied by a reduction of the minimum corporate income tax. The minimum corporate income tax will amount to 5% of the (decreased) statutory minimum share capital.

Company law (FlexKapG and reduction of share capital)

For the needs of start-ups and other innovative enterprises, a new form of capital company called a flexible capital company is to be established. A new federal law is to be enacted for the new form of company, with the Act on limited liability companies (GmbH Gesetz) applying subsidiarily.

The FlexKapG is to have structuring options that are based on the regulations for stock corporations (in particular facilitated capital increase measures).

The minimum share capital requirements are basically the same as in the future for the GmbH (EUR 10,000), but the minimum share capital contribution of the individual shareholder should only be EUR 1.00 (for the GmbH this is EUR 70).

If so provided in the articles of association, circular resolutions may also be passed without the individual consent of all shareholders.

As a further simplification, the draft also provides, for example, that (unlike in the case of GmbHs) a notarial or lawyer's private deed is to be permitted as an alternative to the notarial deed for share transfers and takeover declarations in the case of a capital increase.

In order to allow employees to participate in the company's success at attractive conditions, the issue of so-called "company value shares" is to be made possible in terms of company law. There should be only minimal formal requirements for the takeover and transfer of shares, and they should not participate in the decision-making process of the company.

For limited liability companies (GmbH), the minimum share capital is to be reduced to EUR 10,000. In the future, it will therefore no longer be possible to take advantage of the foundation privilege. For existing GmbHs with foundation privileges, there will be no termination of the foundation privileges due to the passage of time.


The review period for the ministerial drafts ends on 07 July 2023. The entry into force of the provisions is not expected before autumn 2023. We will keep you informed.

Please do not hesitate to contact us if you have any questions.