FlexCo: A New Business Structure for Startups in Austria from 2024

As of January 1, 2024, Austria has introduced a new corporate structure designed to enhance the startup ecosystem—the Flexible Capital Company (FlexCo). This innovative legal form offers greater flexibility in financing, ownership, and corporate governance, making Austria a more attractive destination for emerging businesses.

The Role of FlexCo in Austria’s Startup Ecosystem

FlexCo represents a hybrid model that incorporates elements of both a limited liability company (GmbH) and a stock corporation (AG). It is specifically designed to facilitate investment opportunities and allow employees to participate in company ownership, aligning Austria’s corporate framework more closely with international best practices.

Key Advantages for Entrepreneurs and Investors

One of the most significant benefits of FlexCo is the reduced minimum capital requirement—startups can be established with an initial capital contribution of just €1 per shareholder, significantly lowering barriers to entry. Furthermore, the introduction of enterprise value shares (Unternehmenswert-Anteile) enables companies to grant employees an ownership stake, creating a structured incentive mechanism similar to international Employee Stock Option Plans (ESOPs). This approach enhances talent acquisition and retention without the immediate financial burden of high salaries. Additionally, taxation on these shares can be deferred, provided certain conditions are met, until the shares are sold or the employee leaves the company.

FlexCo also introduces simplified share transfer mechanisms. Unlike GmbHs, where share transfers require notarization, FlexCo permits transfers through private agreements executed before a lawyer or notary. Additionally, it allows greater flexibility in structuring ownership rights, enabling different classes of shares with varying privileges. A further innovation is non-uniform voting, which allows shareholders with multiple votes to allocate them differently, such as using some votes in favor of a motion while abstaining with others.

For companies seeking investment, FlexCo provides enhanced capital-raising mechanisms. Firms can increase their capital by up to 50% of their existing equity without requiring full shareholder approval, thereby improving their ability to secure funding. Moreover, companies are permitted to repurchase their own shares, similar to stock corporations, up to one-third of their capital, offering additional financial and strategic flexibility.

Learn More About FlexCo

For a comprehensive analysis of FlexCo’s implications for startups, listen to the latest episode of the DoDACHu podcast, featuring Zuzana Nötstaller, an attorney at FAIRSQUARE and board member of the Czech-Austrian Chamber of Commerce.

In this episode, she provides expert insights on the legal framework for establishing a FlexCo, the implementation of ESOPs, tax treatment of employee shares, and the broader impact on Austria’s startup ecosystem. Listeners will also gain a comparative perspective on how FlexCo differs from corporate structures in Austria, Germany, and the Czech Republic, as well as practical guidance on setting up a business and opening a corporate bank account in Austria.

Considering FlexCo for your startup? Gain expert insights and practical advice for Czech businesses expanding into Austria—listen now: DoDACHu: FlexCo with Zuzana Nötstaller.