AUSTRIA Trends and Developments Contributed by: Horst Ebhardt, Philipp Kapl, Hartwig Kienast and Matija Bernat, Kinstellar
transfers, using a look-through approach with multi - plicative ownership tracing across multiple levels. A new “group clause” aims to simplify administration and ease intra-group restructurings: reorganisations under the RETT regime that result in indirect share transfers within the same group will not trigger RETT. Direct share transfers through reorganisations remain subject to RETT. For the first time, the law defines “real estate compa - nies” as entities primarily engaged in the sale, leasing or management of real property. Transactions involv - ing such companies now face RETT at 3.5% of the fair market value ( gemeiner Wert ) of the real estate – an increase from the prior 0.5% rate based on the lower property value ( Grundstückswert ). This substantially increases the tax burden, particularly in urban areas and for asset-heavy portfolio companies. PE investors should now review holding structures, financing chains and acquisition strategies to mitigate unintended tax exposures. Many legacy structures designed to stay below the 95% threshold may now be ineffective under the new 75% rule. Early planning and legal counsel are essential to adapt to this stricter regime. Use of Flexible Corporations in PE transactions in Austria The Flexible Corporation (FlexCo) was introduced under the Austrian Flexible Company Act (FlexKapGG, in force since 1 January 2024), and has been widely accepted as a modern corporate form tailored to the needs of start-ups, scale-ups and innovative business models. By mid-2025, approximately 1,200 FlexCos had already been established across Austria – an indication of the market’s interest in this hybrid entity, which blends elements of a limited liability company (GmbH) with characteristics traditionally associated with a stock company (AG). One of its standout features is the introduction of Enterprise Value Shares ( Unternehmenswert-Anteile – UWAs), which are non-voting equity instruments designed to facilitate employee participation and minority investor involvement without diluting con - trol rights. UWAs may constitute up to 25% of the
company’s share capital, providing a valuable tool for structuring employee stock ownership plans (ESOPs), employee incentive programmes or minority financing rounds while maintaining governance stability in the hands of founders or lead investors. The FlexCo also enables greater flexibility in capital structuring. Compared to the GmbH, capital increases and reductions are subject to a less rigid framework, enabling tailored solutions for scaling businesses or implementing investor-driven recapitalisations. In addition, FlexCos can acquire and redeem their own shares, mirroring mechanisms available to stock corporations and offering useful instruments for exit structuring and cap table optimisation. From a transactional standpoint, the FlexCo offers a notable simplification of share transfers. Unlike the GmbH, where share transfers must be notarised, Flex - Co shares may be transferred through private deeds executed by a notary or attorney, significantly reduc - ing execution costs and facilitating faster transaction timelines – a key consideration in PE-backed roll-ups or exit events. These streamlined mechanics also apply to the transfer of UWAs, where no notarisation is required, enhancing usability in day-to-day practice and increasing the attractiveness of FlexCo structures in employee and investor participation models. For PE investors, the FlexCo offers a number of ben - efits, including: • greater transactional efficiency through simplified share transfers and reduced formalities; • flexible capital structuring tools, including UWAs and redemption options; • enhanced alignment of interests through modern employee participation schemes; and • governance protections via preservation of voting control and structured equity issuance. Despite its advantages, the FlexCo is not without limi - tations, particularly for institutional investors seeking predictability and legal certainty. As a new legal entity, the FlexCo lacks an established body of case law and administrative practice, creating uncertainty around key issues, including shareholder
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