Association
The association is a corporate form that is frequently chosen in art and culture and also suited for individual artists, in particular in dealing with projects, exhibitions, performances, publications and similar undertakings.
To form an association, you need just one other natural person, who need not be engaged in artistic activities. Members of an association may provide services to the association as sole traders or be employed by the association.
An association may generate receipts (subsidies, sponsoring funds, ticket sales, etc.), but must not be profit-oriented.
Austrian citizenship is not required, however, the association must have its registered office in Austria.
At a glance
| Minimum capital | No |
| Separate legal personality | Yes |
| Legal basis | Statutes |
| Number of persons required for formation | Minimum of 2 persons |
| Foundation costs | Minimal, less than EUR 30 |
| Owner | None |
| Bodies | General assembly (members meeting), executive body (management board) – minimum of 2 persons, supervisory body (optional) |
| Audit | Two auditors, with large associations statutory auditors of the financial statements |
| Personal liability of members | No |
| Personal liability of the members of the management board | Members of the management board are liable in case of personal fault |
| Minimum corporate tax | No |
| Accounting, financial statements | Small association: cash basis of accounting and statement of assets/liabilities; (medium or large association: accrual basis of accounting, balance sheet, profit and loss statement (large association plus notes): no disclosure of the financial statements |
What is an association?
Within the parameters of the Association Law 2002 (Vereinsgesetz 2002), an association is a legal person. As such, it has legal capacity and takes part in legal life with all pertaining rights and duties through its bodies. It may enter into (work) contracts, for e.g. renting office space, acquiring assets, receiving subsidies and organising cultural events, it can sue and be sued.
Who can found an association?
At least two persons (natural and legal persons) who join forces on a voluntary and permanent basis, based on Statutes (agreement on foundation), to pursue defined, non-lucrative objectives together. Non-lucrative objectives are such which are not for profit.
While an association may engage in gainful activities (privilege of secondary objective) and even generate profits, it must not distribute these profits to the members but reinvest them in the association, in particular to attain its non-lucrative objectives.
Good to know
The corporate form of an association cannot be used for an activity which is exclusively profit-oriented.
Founding an association
When founding an association, you must differentiate between its establishment and its formation.
An association is established through the adoption of Statutes by its founders (minimum of 2 persons). As a legal entity, the association is formed only upon notification in writing of the establishment of an association sent to the association authorities (provincial police directorate, district administration authorities) and its non-prohibition within four weeks.
To found an association in Austria, you must be at least 14 years of age.
Procedure / Foundation
- Establishment of an association: the founders agree on the Statutes
- The founders or the legal representatives of the association, if they have already been appointed, send notice of its establishment to the responsible association authority by sending it a copy of the Statutes.
- If the documentation is incomplete or faulty (e.g. risk of being confused with another association), the authority will request that the missing or corrected documents be subsequently filed. The authority checks the Statutes as to their legal conformity. If the association is found to be unlawful in terms of its objective, name or organisation, the authority will forbid the founding of the association in an official ruling (Bescheid).
- If the check ends positively, the association may take up its activities; after a period of four-weeks or, as the case may be, an extended six-week period, or even before the expiration of this time period, when an explicit permission to take up the association’s activities has been issued through an official ruling (formation of the association), and the association is deemed a legal entity.
The association authority will enter the relevant data of the new association in the local association register. These data are then available in the Central Association Register (ZVR). The extract from the association register provides information about the legal status of an association and its current representation. Extracts from the association register with up-to-date information, may be requested online (free of charge) or directly from the authority (subject to a fee).
Good to know
Associations must indicate their ZVR number in legal transactions with third parties (e.g. letters, emails, contracts, quotes, invoices). Failure to indicate the ZVR number is a punishable administrative offence.
Statutes
The Statutes are the legal basis for the organisation of an association. The founders and the bodies of the association, who may pass a resolution on the adoption of amendments to the Statutes, are free, within the limits of the law, in the way they organise the association. In general, the Statutes must be worded unambiguously and drafted in German.
The following information must be provided:
| Name | must allow to infer the objective of the association, must not be misleading and must not lead to confusion with existing associations and institutions |
| Registered office | must be in Austria |
| Objective | detailed description of the activities envisaged to achieve the objective and how the association is financed |
| Acceptance as a member and termination of membership | |
| Rights and duties of the association members | Bodies of the association and their tasks, in particular a clear and comprehensive statement as to who manages the business of the association and who represents the association vis-à-vis third parties |
| Mode of appointment of the bodies of the association and duration of their term of office | (maximum of 5 years) |
| The requirements for resolutions to be validly adopted by the association’s bodies | |
| Dispute resolution | |
| Dissolution of the association |
Good to know
The bodies of an association are obliged to hand out a copy of the Statutes to each member upon request.
Foundation costs
The founding costs are less than EUR 30. The fees are due after the proceedings have been closed. For that purpose, an invoice is usually sent.
Bodies/offices of the association
An association is a legal person which acts through its officers. The Statutes must call for at least two officers:
General Assembly, members meeting
The members meeting, also called annual meeting or general assembly, allows the association members to agree upon common intentions and must be convened at least every five years.
Executive body
The executive body, also management board or executive board, manages the business of the association and represents the association vis-à-vis third parties. It must consist of at least two natural persons (e.g. chairperson, deputy). In addition, you would normally have a secretary and a treasurer. If the executive body consists of only two persons, all decisions must be reached unanimously. The rights and duties of the bodies of the association are set out in its Statutes.
The first-time appointment of the legal representatives of the association may be carried out before or after the formation of the association. If appointed after the formation of the association, such appointment must be conducted within one year. This deadline may be extended on application. Every further appointment of legal representatives of the association at the intervals set out in the Statutes (“term of office”) is to be made known to the association authorities by way of election notice within 4 weeks following the adoption of the resolution, even if all previous legal representatives of the association have been reinstated.
Supervisory body
The appointment of a supervisory body is not mandatory. If the association has a supervisory body, the latter must consist of three natural persons pursuant to the Association Law. Supervisory bodies may not be a member of any other body of the association (with the exception of the general assembly). They supervise the activities of the association and are appointed by the general assembly.
Auditor and statutory auditor
Every association must appoint at least two auditors. An association which is required to submit extended financial statements must, in addition, appoint a statutory auditor for the financial statements. Appointments are made by the general assembly.
The auditors examine the regularity of the accounts and the use of funds as set out in the Statutes.
Members of the association
The rights and duties of the association members, the provisions on member admission and on membership termination are set down in the Statutes.
Various forms of membership exist: regular members, extraordinary members, honorary members.
The executive body is under obligation to inform the members at the general assembly of the activities and financial operations of the association. Aside from the general assembly, the executive body must provide this information to members upon request by at least one tenth of the members indicating their reason, within four weeks.
Liability
As a legal entity, the association is liable for the payment of its debt with the entirety of the association’s assets.
Example
An association which rents a venue for an event is liable for the payment of the agreed rent and for compliance with all other contractual obligations such as avoidance of noise, cleanliness, visitor safety, etc.
Management board members and members of the association generally are not liable for paying the debts of the association, unless a liability by the members of the association is explicitly laid down in the Statutes. In such cases, admission as a member generates a liability for the payment of debt. If however, a board member fails to meet his/her statutory duties or such, which arise from the Statutes or is in breach of lawful resolutions adopted by the bodies of the association, he or she shall be held liable for the resultant damage or loss. This holds equally for the auditors of the association.
Good to know
Before an association has been formed, the acting persons (= founders) are jointly and severally liable for all debts entered into. Liability passes on to the association upon its formation.
Example
If a sales contract for the purchase of computers, office furniture, etc. is concluded, the founders or the legal representatives of the association are personally liable for payment of the purchase price until the association has been officially recognized as a legal entity.
Taxation
Receipts such as membership fees, donations, subsidies, gifts, legacies, etc. which are used to attain the association’s objectives are not subject to tax.
An association only becomes liable for taxes if it renders, and intends to continue rendering, services to members or non-members for consideration (receipts). An operation (business) is required to generate sales of a considerable amount (more than EUR 2,900), as a minimum annual average.
Accounts / Financial statements
If the annual income or expenditure of an association is less than EUR 1 million, it is sufficient to keep cash-based accounts. If the ordinary income or expenses exceed EUR 3 million each, or if the annual volume of donations is more than EUR 1 million each in two consecutive financial years, the association must prepare extended financial statements (balance sheet, profit and loss statement, notes) starting with the next following financial year.
The financial year of an association need not correspond to the calendar year, however, it must not exceed twelve months.
Dissolution
An association may voluntarily decide its dissolution or be dissolved by the authorities. If the general assembly resolves to dissolve the association, this results in liquidation proceedings in which the association’s assets are calculated, debts are settled and the remaining assets are transferred to the purposes set out in the Statutes. The legal personality of an association generally ends on registration of the dissolution in the association register.
| MODEL FORM | Notice of the establishment of an association | |
| LINK / MODEL FORM | Statutes | |
| LINK | Notice of election (appointment of the legal representatives) | |
| LINK | Notice of amendment of the Statutes |
The provisions governing the association are laid down in the Association Law.
Further links / information:
The German text of the Association Law 2002 (Vereinsgesetz 2002) in its current version is accessible in the Federal Law Information System RIS
https://www.bmf.gv.at/services, www.bmf.gv.at (information on the taxation of associations)