1. Starting a Startup in 5 Steps

To save costs during the start-up phase, you can take advantage of the benefits offered by the New Business Start-up Promotion Act (NeuFöG). This includes various tax breaks and exemptions (e.g., exemption from stamp duties and federal administrative fees incurred during the start-up process; exemption from court fees for registration in the commercial register; exemption from employer contributions for any employees). Tip: Be sure to submit your application on time during the start-up process!

Regardless of this, founders must also keep an eye on their own tax situation. In this context, particular attention should be paid to informing the relevant tax office about expected future income (e.g., from shareholder-managing director activities) and the social security implications.

Special tax issues can arise if something has already been developed prior to the startup's founding that is ultimately to be transferred to the newly founded startup (since tax-neutral transfers of existing developments with value are only possible within the scope of the Reorganization Tax Act). This aspect should be analyzed on a case-by-case basis beforehand to potentially avoid the risk of dry income taxation.

2. What comes after the startup is founded?

As a startup founder, you should focus on the essentials (e.g., finding investors, securing financing, product development, funding programs, recruiting employees, etc.). Nevertheless, ongoing tax compliance must also be managed. It is advisable to have a tax advisor on hand who takes a hands-on approach to tax compliance and is also familiar with the numerous specific aspects of the startup industry (e.g., equity investments, financing issues, funding programs, exit strategies, restructuring, etc.).

Ongoing tax compliance includes:

• Monthly/quarterly VAT returns

• Monthly payroll processing (in the case of employees)

• Annual tax returns (sales tax and corporate income tax return)

• Annual financial statement preparation

• Compliance with other reporting obligations (e.g. WiEReG)

From a VAT perspective, a preliminary assessment of the business model is essential to ensure correct processing. This is particularly important in the area of VAT, as the multiplier effect of incorrectly processing business transactions and the resulting need for corrections leads to significant administrative effort and associated costs. Therefore, the first step is to agree on the framework of the business model, focusing on the following aspects:

• Are goods delivered or services provided?

• Implementation of the business model in B2C or B2B trade

• Are the customers located domestically or abroad (in this case a distinction must be made between EU and third countries)?

Authors:

Christoph Puchner , Partner and Tax Advisor & David Gloser , Partner, Tax Advisor and Auditor at ECOVIS Austria , one of Austria's leading tax advisors for startups. www.ecovis.at