Austrian GmbH or Slovak s.r.o.?
Which legal form suits your business best?

1. Why choosing the right legal form is crucial

When starting a business, one of the first key decisions is: in which country should you register your company? For entrepreneurs from Austria or Slovakia, the question often comes down to: is an Austrian GmbH (limited liability company) or a Slovak s.r.o. (Spoločnosť s ručením obmedzeným) the better option?

Both offer limited liability structures but differ significantly in tax, administrative, and financial aspects. Choosing the wrong form can lead to long-term disadvantages — it's worth carefully comparing the differences to find the right fit for your business goals.

2. Start-up costs and minimum capital requirements

There is a clear difference between the Austrian GmbH and the Slovak s.r.o. when it comes to minimum share capital and start-up costs.

Key points:

• Austrian GmbH: Minimum share capital is €10,000, of which at least €5,000 must be paid in at the time of incorporation.
  
  Tip: The start-up privilege lowers the financial entry barrier for small businesses but should be carefully calculated.


• Slovak s.r.o.: Minimum share capital is just €5,000, which must be deposited before entry in the commercial register.
  
  Tip: If you want to start with lower initial investments, the Slovak option may be more attractive.

3. Tax differences: Where is the burden lower?

A major factor in choosing between an Austrian GmbH and a Slovak s.r.o. is taxation. Tax rates vary significantly between the two countries.

Key points:

• Corporate tax (CIT): Austria: 24% (from 2024: 23%) / Slovakia: 21%.
  
  Tip: If you want to minimise your tax burden, compare which country offers more favourable conditions for your business model.


• Dividend tax: Austria: 27.5% withholding tax on distributed profits. Slovakia: 7% for individuals, 0% for corporate shareholders.
  
  Tip: If you plan to pay out profits regularly, Slovakia may offer better conditions.


• VAT: Austria: 20% standard, reduced rates at 10% and 13%. Slovakia: 23% standard, reduced rate at 19% and 10%.
  
  Tip: For cross-border activities, check where VAT registration is more beneficial or easier to manage.

4. Administration and ongoing costs

Another important factor is the ongoing administrative and accounting costs.

Key points:

• Accounting obligations: Both forms require double-entry bookkeeping and annual financial statements. However, accounting and tax advisory costs are often lower in Slovakia.
  
  Tip: If you want to keep administration costs low, compare fees in both countries.


• Required managing director: Both countries require at least one director, either an individual or a legal entity.
  
  Tip: If you plan to act as director, check whether you will become liable for social security contributions — in Austria, these costs are often higher.


• Annual reporting: Slovak s.r.o.s generally have less stringent reporting requirements than Austrian GmbHs.
  
  Tip: If you prefer minimal bureaucracy, the Slovak s.r.o. could be the simpler option.

5. Liability and legal security

A major advantage of both forms is limited liability: shareholders are not personally liable, only the company’s assets are at risk.

Key points:

• Austrian GmbH: Austria offers a high degree of legal security and well-regulated insolvency protection.
  
  Tip: If you’re planning long-term business relationships in Austria, this stability could be a significant advantage.


• Slowakische s.r.o.: Liability is also limited to the company’s assets, but the legal framework is not always as clear as in Austria.
  
  Tip: If you opt for a Slovak s.r.o., ensure contracts and legal documents are well prepared to avoid disputes.

6. Social security and directors compensation

In both countries, shareholder-directors may be subject to social security contributions. These are particularly high in Austria.

Key points:

• Austria: Shareholder-directors usually fall under the self-employed social security scheme (SVS), which can be costly.
  
  Tip: When setting up a GmbH, factor monthly SVS contributions into your budget.


• Slovakia: Often no automatic social security obligation for directors if no regular salary is paid.
  
  Tip: If you want to keep flexibility in income, Slovakia could help reduce social security costs.

Conclusion: Which legal form is right for you?

Whether an Austrian GmbH or a Slovak s.r.o. is better depends on your business goals.

An Austrian GmbH is ideal for:

• Businesses with a long-term focus on the Austrian market


• Companies seeking high legal security and stability


• Entrepreneurs willing to accept higher formation and administration costs

A Slovak s.r.o. is advantageous for:

• Companies looking for lower formation costs and reduced tax burden


• Entrepreneurs who want flexibility in profit distribution and social security


• Business models involving cross-border activities within the EU

If you’re unsure, we recommend a detailed tax and legal consultation to make the best long-term decision for your business.

(This article is for general information only and does not replace professional legal or tax advice. For specific questions and personal support, please feel free to contact us.)