EOR or GmbH in Austria: choosing a route for your first hires

Whether to use an EOR or GmbH in Austria usually turns on three things: how many people you will employ there over the next two years, how confident you are that the Austrian presence will last, and whether you need an Austrian legal person for anything besides employment, such as invoicing Austrian customers in your own name. A small or tentative headcount leans towards an employer of record. A growing team with commercial activity of its own leans towards founding a company.

Plenty of businesses do both, one after the other. They put their first hire or two on an EOR’s payroll, watch how Austrian customers respond and incorporate once the case has been made. Others go straight to incorporation because Austria is central to their plans from the outset. Either sequence can be right, and the sections below set out the facts on each side so you can test your own plan against them.

If the employer of record model is new to you, read our page on the EOR role in Austria first and come back for the comparison.

A Gesellschaft mit beschränkter Haftung (limited liability company) needs at least €10,000 of share capital. The figure dropped from €35,000 on 1 January 2024, and no less than €5,000 of that has to be contributed in cash at incorporation. The articles of association are executed in notarial form, although one founder setting up a standard GmbH may use a simplified online route instead. The company exists from the moment the court enters it in the Firmenbuch (commercial register).

Start-ups have a second option since 2024, the Flexible Kapitalgesellschaft or FlexCo, with the same €10,000 minimum and a way to give staff a stake through so-called company value shares. For a business whose only Austrian need is to employ people, the choice between the two corporate forms matters less than the decision to incorporate at all.

Entry in the register makes a company, not an employer. A managing director has to be appointed and recorded, a business bank account opened for the cash contribution, and an accountant engaged for the annual financial statements. Before the first payslip, the new GmbH still has to arrange:

• a tax number and an employer account with the tax office, which will receive wage tax, the Dienstgeberbeitrag (DB) and its regional surcharge;
• ELDA access and an ÖGK employer number, so each hire can be registered before their first working day;
• Kommunalsteuer registration with the municipality where the workplace sits;
• a contract with a Betriebliche Vorsorgekasse, the fund that receives 1.53% of every employee’s pay for severance;
• a trade authorisation (Gewerbeberechtigung) where the activity needs one, with membership of the economic chamber, WKO, following automatically.

Each item is routine for an Austrian tax adviser. Taken together, though, they turn one hiring decision into a corporate project with shareholders, a managing director, a bank account, bookkeeping and yearly filings. A ten-person sales office carries that overhead easily. A single customer success manager in Linz does not.

The Unternehmensserviceportal (USP) lists the formation and employer registration steps in one place, which is a useful reality check before you commit.

On the EOR route the corporate steps above are simply absent from your list. In law, the person you choose is employed by the EOR, which issues the employment contract and the Dienstzettel (written statement of terms), files the ELDA registration and runs every monthly return. Your side of the arrangement is a service agreement with the EOR and the day-to-day management of the person’s work. Wage tax, DB and its surcharge reach the tax office on the 15th following each pay month, the contribution return reaches ÖGK through ELDA on that same date, and the annual Lohnzettel (L16) is filed by the end of February. None of those dates becomes yours to track, and neither do the surcharges that follow a missed one. When an auditor arrives for the joint payroll review, the questions go to the employer on record.

The trade-off is that the employment sits on someone else’s books. The contract, the payslips and the ÖGK record carry the EOR’s name, and any change to the terms goes through it. For a client with two or three people in Austria that is usually a comfortable bargain. For a group that wants its Austrian staff on its own payroll from the first day, it may feel like an extra layer.

Money-wise, salary and statutory employer charges are joined by a single service charge for each person, which with us starts at €599 a month. Nothing is tied up as share capital and nothing needs liquidating if the Austrian plan is shelved. The page on our Austrian EOR services describes what that fee includes.

A common misreading is that one route makes the employee cheaper. It does not. Social insurance, the 1.53% owed to the severance fund, the family-fund levy with its regional top-up, the municipal payroll tax and the 14 salary payments all land on whoever employs the person, at identical rates.

Take the reference hire used across this site: €60,000 a year for a single Vienna-based office employee in 2026, split into fourteen monthly payments of €4,285.71. The employer bill lands at about €77,805, which is 29.7% on top of the salary. Inside that figure are about €12,545 of employer social insurance, €918 for the severance fund, €2,220 of DB, €216 of Vienna surcharge, €1,800 of Kommunalsteuer and €106 of the Vienna weekly levy. Put the same person on your own GmbH’s payroll and every line stays where it is. Outside Vienna the totals shift a little, because the DB surcharge varies by province, between 0.31% (Upper Austria) and 0.40% (Burgenland), and the €2 weekly Vienna levy disappears. Those differences follow the workplace, not the legal form of the employer.

The genuine comparison, then, is the EOR fee set against the cost of owning an Austrian company: capital that sits in the GmbH, the notary and formation work, annual accounts and tax returns, a payroll provider or in-house payroll, and the hours your finance team spends on all of it. For one or two employees the fee is normally the smaller figure. Each additional hire spreads the company’s fixed costs further, and at some headcount the balance tips. Every statutory line is broken out in what an employee costs in Austria.

Beyond the arithmetic, a handful of practical questions usually settle it. Answer them on paper before speaking to anyone who sells either route.

• Will you sell, sign leases or bid for tenders in Austria as an Austrian company? Only a GmbH or FlexCo gives you that legal person; an EOR covers employment and nothing else.
• How many hires, and over what period? Two people across two years is a different decision from fifteen people this financial year.
• How firm is the plan? If Austria is an experiment, avoiding share capital and formation work keeps the exit cheap and quick.
• Are any candidates from outside the EU? The Red-White-Red Card is tied to one employer, so your route decides whose name goes on the application. Check each candidate’s position early.
• Who will carry the employer duties? With your own company someone must run payroll and answer the joint payroll audit (GPLB), which reaches every employer every three to five years.

One more test is worth adding: imagine the Austrian plan is cancelled in eighteen months. With an EOR you give notice under the usual Austrian rules and the service ends. With a GmbH you also have a company to wind down, accounts to close and capital to recover. If that scenario is realistic, weigh it now rather than later.

If most answers point one way, you have your decision. If they split, the EOR route usually buys time without closing the other door, which is the subject of the next section.

Choosing an EOR now does not rule out a company later. When your GmbH is ready to employ, the people on the EOR’s payroll can move across on new contracts, with a fresh ELDA registration and an attachment to the severance fund your company selects. Give yourself a few months of lead time and agree the switch date with the EOR, so one payroll ends at a month-end and the other begins the next day.

Employees will want to know what survives the change. Their balance at the Vorsorgekasse belongs to them and stays invested, so the move does not wipe out their severance savings. Collective agreement grade, salary, the timing of the next Urlaubszuschuss (holiday bonus) and any unused leave should all be addressed in writing in the new offer, because Austrian staff will check each one.

Talk to the team early. A new employer name on a payslip can unsettle people even when nothing else moves, and a clear letter explaining what stays the same does more than any reassurance given after the fact. Name the new employer, the switch date, the salary and grade, and who to call with payroll questions from the first month onward.

When you want the two routes costed for real roles, Employer of Record Austria can lay the EOR figures alongside the employer costs your own GmbH would carry. If you are comparing providers at the same time, work through the provider-vetting questions with each of them.