1. FlexCo as a new legal form for startups

FlexCo offers certain advantages compared to a GmbH, e.g.:

- Acquiring one's own shares is permitted under certain conditions.

- In addition to an ordinary capital increase, a conditional capital increase (e.g., stock options for employees) and an authorized capital increase (resolution to increase capital on a "reserve") are also possible.

- The articles of association may stipulate that the consent of all shareholders is not required for a written vote and that the form of voting may be provided for in text form (e.g. email).

- Non-voting shares are possible.

2. Attractive research bonus

A research premium of 14% is available tax-free for research expenses.

Both in-house research and contract research are eligible for the research premium. It is ideal for start-ups, as it is paid out even in loss-making years. The Federal Ministry of Finance (BMF) recently published a draft of new guidelines for the research premium, the finalization of which should be monitored.

3. Supporting start-ups with funding in the seed and pre-seed phase

Various Austrian institutions offer funding programs for startups. Popular contacts include INITS, AWS, and FFG. This allows young companies to receive the best possible support at different stages of development – it works exceptionally well!

4. Indefinite loss carryforward (no time limit)

At the level of an Austrian startup, tax losses can be carried forward indefinitely and offset against positive income in subsequent periods up to a maximum of 75%. A 100% loss offset is only permitted in exceptional cases (e.g., prior group losses of group members, subsequent taxation of foreign losses, liquidation, sale of the business or part of the business).

5. Employee participation models

Both virtual and traditional employee share ownership plans are generally feasible in Austria. Traditional share ownership plans can also be implemented with non-voting shares (e.g., profit participation rights, equity shares). To avoid "dry income," traditional share ownership plans must be implemented accordingly (e.g., negative liquidation preference, employee share ownership pursuant to Section 67a of the Austrian Income Tax Act). Under certain conditions, virtual share ownership can also be converted into a new start-up employee share ownership plan pursuant to Section 67a of the Austrian Income Tax Act tax-neutrally until the end of 2025.

The creation of Section 67a of the German Income Tax Act (EStG) was a worthwhile attempt, but some of the provisions are still too restrictive – improvements could/should be made! Unfortunately, exits from virtual shares can have serious tax consequences (up to 60% of the exit premium goes to the state!).

6. Flat rate for exit taxation

In most cases, startup exits occur via a share deal, in which the shares in the startup are sold. The founders are taxed at a rate of 27.5%. Many other European countries also have similarly favorable capital gains tax rates (so this is acceptable).

7. High labor tax

Austria has one of the highest labor taxes (absurdly high, including payroll taxes). With a gross salary increase of €100, approximately €50 ends up with the employee and approximately €80 with the tax authorities (including social security, municipalities, etc.). Therefore, the salary increase costs the employer €130 and only €50 ends up with the employee!

8. Lack of an Austrian capital market

Austria has far too few investors, so startups have to look for foreign investors very early on; there is no real Austrian capital market – something urgently needs to be done about this, and the startup fund of funds is a first real step in that direction!

9. Hardly any university spin-offs

Universities are internationally the basis for the establishment of startups, but this is still not sufficiently established in Austria.

10. Startup talent

Many young people seek secure jobs and think too little entrepreneurially, which is essential for startups.