The procedure and necessary steps for the liquidation of a GmbH in Austria

In challenging economic times, more and more considerations are being made to close companies. In this regard, liquidation as a form of termination of a GmbH represents an important process that is intended to ensure the proper winding-up and termination of the company. The aim is to terminate business operations, realise assets, settle all liabilities, and finally delete the company from the Commercial Register. In practice, several parties are thus involved, such as shareholders, liquidators, tax authorities, and advisors. Due to the formal requirements and the many steps necessary, the process often extends over a longer period. The following steps are important in an orderly liquidation:

1. Resolution of the shareholders on dissolution

At the outset is the formal resolution by the shareholders concerning the dissolution of the GmbH. This takes place at a general meeting and usually requires a qualified majority, unless the articles of association provide otherwise. The resolution, which must be notarised, determines the date of dissolution and appoints who will act as liquidator for the company. Liquidation is not possible in cases of complete insolvency or bankruptcy, restructuring, or nationalisation.

2. Appointment and duties of liquidators

In this general meeting resolution, the former managing directors must first be discharged, and a resolution on the appointment of the liquidators must be passed. The liquidators shall take the place of the managing directors and represent the GmbH during the liquidation phase. Their task is to wind up ongoing business, realise assets, collect claims, settle liabilities and properly document the entire liquidation process. Unless otherwise stipulated in the resolution or the articles of association, the managing directors shall assume the role of liquidators.

3. Company Register Entry of Liquidation

The resolution for dissolution and the appointment of the liquidators must be registered with the Commercial Register. Upon registration, the company name will be supplemented with the addition "in Liquidation" or "in Liqu.". The specimen signatures of the liquidators must be certified for the Commercial Register, unless the previous managing directors are appointed as liquidators.

4. Creditor Call and Notification

An essential step in the liquidation proceedings is the call for creditors. The liquidators must publicly announce that the GmbH is in liquidation and invite all creditors to register their claims. This announcement is made on the Federal Electronic Announcement and Information Platform (EVI). In addition, known creditors must be notified directly. This step serves the protection of creditors and ensures that no claims are overlooked. Creditors must register their claims within three months. If these claims are asserted thereafter, they must be considered as long as the liquidation has not yet been completed. After the call for creditors, no distributions may be made to the shareholders. The purpose of this waiting period is to await possible creditor registrations and to ensure that all obligations are properly fulfilled. Only after the expiry of the blocking period and after full satisfaction of liabilities can any remaining surplus be distributed to the shareholders.

5. Liquidation opening balance sheet

The liquidators must prepare an opening balance sheet as of the dissolution date. The liquidation balance sheet is intended to provide an outlook on the liquidation result and is not submitted to the Companies Register. During the liquidation, however, the obligation to prepare a full annual financial statement on every balance sheet date and to submit it to the Companies Register continues to exist.

6. Conducting current business

The liquidators are tasked with winding up all of the company's open business. This includes collecting receivables, realising assets, terminating contracts and settling statutory dues. Employment relationships must be regulated, contractual relationships terminated and legal obligations properly concluded. This step forms the core of the liquidation phase, as the economic settlement takes place here.

7. Final balance sheet on liquidation

Once all assets have been realised and all debts settled, the liquidators prepare a final liquidation balance sheet. This provides information on the final liquidation result. It forms the basis for the decision on the final distribution of assets to the shareholders. The cut-off date for the final liquidation balance sheet is the day on which all realisation actions and tax assessments are completed. The balance sheet must be prepared together with the profit and loss account and notes; a management report is not foreseen. From a tax perspective, this final balance sheet is relevant for determining the liquidation profit or loss.

8. Tax settlement

In the course of liquidation, the liquidators must fulfil all tax obligations. The tax liquidation profit is determined for the period starting from the end of the financial year immediately preceding the dissolution and running until the actual termination or realisation of assets. The taxable base for corporate tax is the difference between the final liquidation assets and the initial liquidation assets. Taxable profit distributions are no longer possible during the liquidation period; these are treated as advance payments on the liquidation proceeds. The company can only be deregistered once the tax authorities have confirmed that there are no outstanding tax liabilities.

9. Application for removal from the Companies Register

Upon completion of all liquidation steps, the liquidators apply for the deletion of the GmbH from the commercial register. In addition to the final balance sheet and the certificate of no objection from the tax office, it must be stated who will take over the safekeeping of the business records. With the deletion from the commercial register, the company finally ceases to exist as a legal entity.

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