AUSTRIA Trends and Developments Contributed by: Markus Fellner, Paul Luiki and Peter Blaschke, Fellner Wratzfeld & Partner
items, while valuation uncertainties may be reflected in earn-out models. Contract drafting will lead to extended warranties and specific indemnities in share purchase agreements. Due to the long limitation periods for CSDDD liabili - ties, compensation periods of five to ten years are often required, which are often above standard M&A liability provisions. Ultimately, the value of a target is not only determined by its cash flows, but also by the integrity of its value chain, since supply chain risks now directly impact the purchase price and buyer liability. Start-Up Promotion Act The Start-Up Promotion Act, which came into force on 1 January 2024, introduced tax incentives for employ - ee participation in start-ups to increase employee loyalty and, in particular, address the so-called “dry income problem”, which has arisen in cases where start-ups and young SMEs lacked liquidity and were therefore unable to provide monetary compensation for highly qualified employees. When this was com - pensated for by granting equity shares, immediate taxation resulted in an additional liquidity burden for the recipients, thus creating the dry income problem. Under the new regulations, employees who acquire shares in a company within ten years of its founding – provided the company is of limited size (a maximum of 100 employees or annual revenue of up to EUR40 mil - lion, with no corporate affiliation) – can opt for special tax treatment. These shares must be transferable only with the employer’s consent (restricted transferability) and may be received either free of charge or for a maximum consideration equal to their nominal value. This special tax treatment means that the shares are only considered as received at the time they are sold or in certain other special cases, such as a transfer back to the employer, termination of the employment relationship or the removal of the transfer restric - tion. Additionally, 75% of the income from the sale of the shares can be taxed as other compensation at a fixed tax rate of 27.5%, provided that the employ - ment relationship has lasted for at least two years and the receipt occurs at least three years after the initial
issuance of the start-up employee participation to the employee. EU Digitalisation Directive II The digitalisation of the corporate environment is pro - ceeding at a fast pace at both the national and EU levels. Directive (EU) 2025/25 (Digitalisation Directive II) marks a turning point for European company law, introducing significant simplifications to cross-border M&A practices. A key objective of this framework is to reduce admin - istrative obstacles by digitising processes within the EU single market. For legal practitioners, the intro - duction of the EU company certificate is particularly relevant as this serves as standardised proof of legal registration of the company that is valid throughout the EU single market and largely eliminates the need for costly apostilles or certifications. At the same time, the digital EU power of attorney simplifies legal representation in multinational pro - ceedings, as it is based on a uniform model and is recognised in all member states. A further key technological pillar of the reform is the closer networking of the Business Register Intercon - nection System (BRIS), Beneficial Ownership Regis - ters Interconnection System (BORIS) and Insolvency Registers Interconnection systems (IRI), which ena - bles obtaining aggregated data via a single access point. This can significantly speed up the process of identification of target companies, title checks and the performance of compliance evaluation. The extension of disclosure requirements to private partnerships and corporate groups will also increase transparency of target companies. Another key element is the principle that companies do not have to resubmit information that is already stored in a national register to authorities in other member states. This leads to significant time and cost savings when setting up acquisition vehicles or regis - tering branches after a deal. The European Commission forecasts that these meas - ures will result in annual savings of around EUR437 million in administrative costs. Although member
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