Brexit: need for action for British Limited companies with a place of management in Austria

In recent years, Austrian entrepreneurs have often chosen the British "Limited Company" ("Ltd.") as a legal form for their business activities. The Ltd. was formally registered in the UK, but its place of management and its business activities are in Austria. As the Brexit will most likely lead to the non-applicability of most EU law regulations, those companies will lose their legal status, leading to legal and tax consequences.

The attractiveness of the British Ltd

Contrary to Austrian corporate forms with limited liability, the British Ltd. does not require a minimum capital. Hence, a Ltd. founded in the UK having its administrative headquarters and place of management in Austria is an attractive option for Austrian entrepreneurs. Typically in those cases, the Ltd. is only formally registered in the UK and has no business activities there.
The basis for the recognition of the Ltd. in Austria is the ECJ's case law on the freedom of establishment. Because of this case law, member states are obliged to recognize the legal and party capacity of all companies which are properly constituted and have their legal seat in a member state.

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