Hinweis/Reminder: Kurz-Wiederholung: Arbeitsrecht. Basics of company law in context with tax law

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1 Hinweis/Reminder: Vorlesungsunterlage (Folien mit Stichwörtern) zur Mitschrift nutzen! Die Vorlesungsunterlage vermag die Teilnahme an der Vorlesung nicht zu ersetzen, weil der Vorlesungsinhalt und der Prüfungsumfang über den Folieninhalt hinaus geht. Die Prüfung orientiert sich an der Vorlesung. Kurz-Wiederholung: Arbeitsrecht 2 Basics of company law in context with tax law Hon-Prof. Dr. Walter Brugger 1

2 Companies 4 Unternehmensformen Unternehmer ist Alleininhaber Gesellschaften Kapitalgesellschaften Genossenschaften Förderung der Mitglieder gemeinsame Mitarbeit aller Gesellschafter (außer Kommanditist) Einzelunternehmer Personengesellschaften gemeinsame Kapitalaufbringung, auch Fremdorganschaft GesbR (ARGE) stg OG (OHG, OEG) KG (KEG) GmbH SPE AG SE 5 General Issues Articles of Association (formal, informal/oral) Common purpose, company name Minimum of organization (organs) At least 2 members (except for GmbH, AG) Numerus clausus of company forms (but mixed forms or atypical forms, see below) 6 2

3 Civil Law Partnership (Gesellschaft nach bürgerlichem Recht - GesbR, ARGE) Equivalent in Italy: Società semplice; Spain: Sociedad colectiva 7 Legal Source General Civil Code (Allgemeines Bürgerliches Gesetzbuch, ABGB) 8 How to set up Consensus between partners about common purpose No formal requirements (especially no registration in commercial register) Two or more partners 9 3

4 Partnership A B private assets <-> company assets? 10 Basics No separate legal entity No formal agreement required No separate organs (shareholder=director) Personal liability (jointly and severally), therefore: Claim of creditor (e.g. supplier) for payment each partner is liable as Defendant in law suit 11 Partnership: ARGE A GmbH B GmbH e.g. joint venture for construction works Note: Not viable if the annual turnover is in excess of EUR 700,000 (in two consecutive years, or in excess of EUR 1 mio in one 12 year) 4

5 General Partnership (Offene Gesellschaft - OG, formerly OHG, OEG) 13 Legal Sources - OG Commercial Code (Unternehmensgesetzbuch, UGB; formerly called Handelsgesetzbuch, HGB) Commercial Register Act (Firmenbuchgesetz, FBG) 14 How to set up Partnership agreement (no formal requirements) Common purpose Two or more partners Registration in commercial register 15 5

6 Basics - OG No separate legal entity, but equal to legal entity No formal agreement but registration required No separate organs (shareholder=director), joint workforce of partners Personal liability (jointly and severally), therefore: Claim of creditor (e.g. supplier) for payment company + unlimited partner is liable as Defendant in law suit 16 Claim of creditor (e.g. supplier) for payment company + unlimited partner is liable (+ limited partner if not paid in in full) = Law suit usually directed against: company + partners (as defendants) 17 Limited Partnership (Kommanditgesellschaft KG) 18 6

7 Basics - KG Differences between a General Partnership (OG) and a Limited Partnership (KG) Terms: Komplementär/unlimited partner; Kommanditist/limited partner 19 KG C D E limited partners A als Komplementär (Arbeitsgesellschafter) Kommanditanteile unlimimted (general) partners B als Komplementär (Arbeitsgesellschafter) KG 20 Basics - KG Claim of creditor (e.g. supplier) for payment company + unlimited partner is liable (+ limited partner only if not paid in in full) Claim of limited partner (Kommanditist) for dividends only company is liable, not any of the partners (OGH , 6 Ob 214/09b) 21 7

8 Limited Liability Company (Gesellschaft mit beschränkter Haftung - GmbH) Equivalent in Cech Rep: Společnost s ručením omezeným (sro); France: Société à Responsabilité Limitée (Sarl); Hungary: Korlàtolt felelösségü tàrsaság (Kft); Italy: Sociètà a responsabilità limitata (srl); Netherlands: Beslooten vennootschap (BV); Spain: Sociedad de responsabilidad limitada (SL); UK: Private Limited Company (Ltd); USA: Limited Liability Company (LLC); 22 Legal Sources - GmbH Law on Limited Liability Companies (GmbH-Gesetz, GmbHG) Commercial Register Act (Firmenbuchgesetz, FBG) 23 How to set up - GmbH Articles of Association in form of a notarial deed (single member company possible in contrast to partnerships, minimum capital EUR 10000) Appointment of managing director/s Model signature of managing director/s Payment of capital contributions by every shareholder Registration in commercial register 24 8

9 GmbH Gesellschafter A Gesellschafter B 60% 40% GmbH (Unternehmer) 2 GeFü Unternehmen (zb Papierproduk tion) Unternehmen (zb Autohandel) 25 Basics - GmbH Differences between a Limited Partnership (KG) and a Limited Liability Company (GmbH): legal entity, setting-up process, Organs, shareholder liability, transferability of shares, etc Shareholder s instructions to director Liability of Directors A legal entity is a (legal) person in its own right. The corporation (legal entity) is distinct and separate from its members. Shareholders (min 1) AG or GmbH 1. A legal entity is no natural person and can, therefore, act only through natural persons (managing directors). 27 9

10 Distinguish: Company < > Branch office Parent Company: "XYZ S.A." or "XYZ s.à.r.l." France office or plant France office or plant Spain branch office is not a separate legal entity! GmbH Italy office or plant Italy GmbH Slovenia office or plant Slovenia office or plant Austria office or plant GmbH Poland Germany office or plant Germany Basics - GmbH Capital Protection Doctrine: re Stated Capital (nominal capital) and legal reserves ( gebundene Rücklage ) Only dividends for shareholders Problem of related party transactions Capital decrease: Special procedure (creditor protection) 30 10

11 Basic questions Compare Partnerships (GesbR, OG, KG) vs Corporations (GmbH, AG): advantages of (registered) partnerships and advantages of corporations 31 How to set up a Company From the idea to the economically sound implementation Legal aspects think about in advance Partners/shareholders: name, birth date, address, capital Distribution of tasks (how many directors and/or Prokuristen? Name, birth date, address) Limited liability (and proper organisation) vs. simple organisation and unlimited liability: which type of company is appropriate? Company name, trademark, domain name <-> existing firms, trademarks or domains Define object of the enterprise for articles of association <-> trade licence application/who qualifies? Define: Stated capital / paid-in capital (legal requirements <-> business plan) Consult lawyer: Re above aspects + Articles of Association (majority votes? exit strategies?), Paperwork: powers of attorney, sample signature form, filing papers etc 32 GmbH & Co KG (limited partnership with a corporation as general partner) 33 11

12 GmbH & Co KG (also: AG & Co KG) A B C GmbH-Geschäftsanteile limited partners GmbH (oder AG) als Komplementär (Arbeitsgesellschafter) Kommanditanteile unlimimted (general) partner KG 34 Stock Corporation (Aktiengesellschaft - AG) Equivalent in Cech Rep: Akciová společnost (AS); France: société anonyme (SA) Hungary: Részvénytársaság (Rt) Italy: Società anonima (SA); Società per Azioni (S.p.A) Netherlands: Naamloze Vennootschap (N.V.) Spain: sociedad anónima (SA) [ UK: public limited company (PLC); USA: publicly-held/open corporation 35 Legal Sources - AG Law on Stock Corporations (Aktiengesetz, AktG) Commercial Register Act (Firmenbuchgesetz, FBG) Stock Exchange Act (Börsegesetz) 36 12

13 Basics - AG Differences GmbH < > AG Terminology Capital (minimum EUR 70000) Supervisory Board (and appointment of directors who are not bound by orders) General Meeting always with a notary public No shareholders instructions to directors Share Certificates allowed, easy share trading Listing at Stock Exchange optional for AG 37 Organs, who reports to whom? A B AG Shareholders' Meeting (Hauptversammlung) Shares may be traded at the Stock Exchange election AG C E D F managing directors (Vorstand) G!! Supervisory Board (Aufsichtsrat) election "two tier system" 38 Short Overwiev: Taxes 39 13

14 Differences in Taxation: OG/GmbH A B A B Besteuerung nach Progression 0 % bis zu 50 % ESt (income tax) Dividende 56,25 netto gesonderte Gewinnfeststellung (Tangente aus der OG) OG Gewinn (company profit) 150 einheitliche Gewinnfeststellung (Bilanzbündeltheorie) GmbH B C abz 25 % KESt (capital gains tax, vorläufiger Gewinn 150 wihtholding flat tax) abzügl GeFü-Bezug -50 GmbH-Gewinn 100 abz 25 % KöSt (corporate flat tax) =75 Geschäftsführer (executive officer) Besteuerung nach Progression 0 % bis zu 50 % ESt (income tax) 40 Differences in Taxation Personal income tax Basis: complicated + - items Tariff (2010): 0 to 11,000 tax rate 0% 11,001 to 25,000 (income minus 11000)*5.11/14000 i.e. marginal tax rate 36,5% to 60,000 (income minus 25000)*15.125/35000 i.e. marginal rate 43,21% Above (income-60000)*0,5+20,235 i.e. marginal tax rate 50% Extraordinary payments to employees: 6 % flat Corporate income tax + tax on dividends 25% flat corp. tax (e.g % = 75,-) 25% flat on dividends (e.g % = 18,75) Total tax therefore 43,75% 41 Balance Sheet or Cash method of Gewinnermittlungsarten accounting Unternehmer lt. 189/1/1 UGB (insb Kapitalgesellschaften) ja nein Angehöriger eines freien Berufes ja nein freiwillig nein Sonstiger Unternehmer ja Umsatz in zwei aufeinander folgenden Jahren > (Sonderregeln bei land- und forstwirtschaftlich en Betrieben) ja freiwillig nein Betriebsvermög ensvergleich 5 (1) EStG Einnahmen- Ausgaben- Rechnung 4 (3) EStG Betriebsvermöge nsvergleich 4 (1) EStG Keine Gewinnermittlung erforderlich 42 14

15 Value Added Tax VAT (made simple) Tax on turnover Entrepreneur, company As supplier: transfers received VAT to IRS ("zero sum game") As receiver: qualified for refund from IRS of VAT paid to his supplier on input (subject to an invoice evidencing VAT) Consumer As receiver: Not qualified for refund from IRS of VAT paid to supplier on input = effectively pays VAT 43 VAT System ,- UNTERNEHMER (Verkäufer) Rechnung UNTERNEHMER (Erwerber) Preis ,- 20%MWSt 2.000,- Summe , ,- Sache 2.000,- Finanzamt ,- VAT System Unternehmer A Ware ,-,- Rechnung ,- +20% 2.000, , * = Unternehmer B Finanzamt Ware ,- Rechnung ,- +20% 3.000, , * = Unternehmer C Ware ,- Rechnung ,- +20% 4.000, ,- Letztverbraucher 45 15

16 Terminology Annual Accounts, financial statements (Jahresabschluss) Extended financial statements for corporations balance sheet profits and loss account, income statement Notes (appendix) to the annual statement Manage ment Report Additional Reports If listed: Corporate Governance Report Bilanz G&V Anhang Lagebericht Corporate Governance- Bericht Report by supervisory board Bericht des AR 46 Stamp Duty Tax For official acts, e.g.: Filings (almost any), e.g. for citizenship, trade; extra stamp duty for each annex Copies or excerpts from public registers (matrimonial etc) Passport, Visa, driver's licence For papers (if signed), e.g.: Rent agreement, credit and loan agreement, declaration of suretyship, easement, settlement agreement, assignment, bill of exchange 47 Short Overwiev: Commercial Register (Register of Companies, Firmenbuch) 48 16

17 Commercial Register What the Commercial Register (Firmenbuch) shows to the public... Plus: Links to filed documents (minutes, accounts, sample signatures ) 49 GmbH

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