Business Law: Registration and exercise of business by foreigners in Austria

The Industry Law (“Gewerberecht”) regulates all rights and obligations relating to the registration and exercise of businesses in Austria.

Basic requirements for registration and exercise of business by foreigners in Austria (business license)

The following applies to both nationals and foreigners: 

A business can be exercised by a natural person as well as by other legal entities. This includes companies, cooperatives, associations, branches of foreign companies registered in the commercial register, political parties, regional authorities, legally recognised churches and religious communities, chambers and other public corporations. 

The Industry Code (“Gewerbeordnung – GewO”) distinguishes between free businesses and regulated businesses:

Both forms have in common that certain general requirements must be met in order to exercise them. Companies, for example, must be registered in the company register and appoint a managing director under industry law - this person is responsible to the business authority for compliance with the regulations under industry law (they also need to be distingushed from directors under corporate law who might not necessarily be the same individual). Natural persons must, among other things, be of legal age.

Free businesses may be registered and exercised without proof of competence, whereas proof of competence (i.e. a certificate of the business' professional and commercial-legal knowledge, skills and experience) is required for the registration of a regulated business. 

In the case of sole proprietorships, the owner must provide proof of competence or appoint a managing director under industry law. In the case of companies, the managing director under industy law, who must be appointed, must provide proof of competence.

In the case of sole proprietorships, the managing director under industry law must be an employee who is employed in the business for at least half of the normal weekly working hours and is fully liable for social security contributions. This also applies to companies; alternatively, the managing director under industry law can be given power of representation (e.g. if the managing director under corporate law also acts as managing director under industry law).

Exercise of a business by foreigners

The exercise of a business in Austria by foreigners is subject to certain additional requirements:

In the case of foreign natural persons, the exercise of the business must not be expressly reserved for Austrian citizens (e.g. in the case of certain weapons businesses). Furthermore, certain international treaties may provide for extensive equality with nationals (EU/EEA citizens and Swiss nationals). 

However, in the case of third-country nationals, the prerequisite for a business licence is, in principle, legal residence of the foreigner in Austria, whereby the residence title must permit the exercise of self-employed activity. 

Foreign companies generally require a branch office registered in the company register. Alternatively, it is of course also possible to establish a company in Austria. 

Foreign companies must also appoint a managing director under industry law who fulfils the requirements for a business licence (and provides proof of competence in the case of regulated businesses). The managing director can therefore also be a third-country national who is entitled to reside in Austria and carry out the activity.

If no proof of competence can be provided, a declaratory decision on the "individual" qualification or the recognition of the foreign training is possible in principle.

Natural persons without a corresponding proof of competence can consider founding an Austrian company that appoints a competent managing director under industry law. However, caution is advised here – for example, if there is no work permit or if there is no declaratory decision by the Public Employment Service (“Arbeitsmarktservice”) on the significant influence of the foreign partners on the management, the registration of the foreign partners in the company register may be refused.

Residence title permitting the pursuit of self-employment

There are different residence titles. According to the Settlement and Residence Act (“Niederlassungs- und Aufenthaltsgesetz – NAG”), the business applicant who is not yet legally resident in Austria must prove the required authorisation to exercise a business before a residence title is granted for the first time, if the purpose of residence is to exercise a business. For this purpose, the competent business authority issues a certificate stating that all requirements for the exercise of the business are met with the exception of the residence title.

Attorney business law

Attorney at Law Dr. Simon Harald Baier LL.M. advises in connection with business licenses and the right of settlement and residence as well as on all questions of business law.

Article at shb-law.at