Austria vs Singapore: Offshore Financial Centre Comparison
Austria and Singapore are two of the world’s leading offshore financial centres. When choosing to incorporate offshore, it’s important to consider the following:
- Ease of doing business
- Setting up a business
- Corporate compliance
- Trained workforce
We're going to take a look at the main differences between incorporating in Austria versus Singapore so that you can make an informed decision on which country to choose for incorporation.
Ease of Doing Business in Austria and Singapore
Austria was previously ranked higher in the World Bank’s ranking of ease of doing business, but the country has fallen to 26 out of 190 economies.
Singapore, on the other hand, ranks 2nd out of 190 economies.
Factors that have been considered in the rankings include:
- Starting a business
- Construction permits
- Electricity availability
- Registering property
- Obtaining credit
- Protection for investors
- Paying taxes
- Cross-border trading
- Contract enforcement
- Resolving insolvency
- Regulations in the labor market
In pure terms of doing business, Singapore offers a much easier business environment than most of the world’s economies except New Zealand, which overtook Singapore in the rankings three years ago.
Setting Up a Company in Austria and Singapore
How does setting up a business in Austria compare to setting up a business in Singapore? Austria’s procedures have a little more “red tape,” and the costs are more than in Singapore. The steps that a company has to take to incorporate in the country are:
- Prove that the business is a new enterprise. This is done at no charge and requires conformation from the Economic Chamber. The form is available on the Austrian Ministry of Finance’s website.
- Notarize the articles of association and statutes. A one-day procedure, the cost depends on the authorized share capital and are often around €2,000.
- Minimum capital requirement most be deposited, and this will often be between €0 and €30.
- Register the company at a cost of €34. The process will take six days to complete, and all of the above requirements must be met. A limited liability company may be formed (GmbH). Under laws enacted in January 2018, the business may have to disclose information about owners.
- Once registered, the business will need to register with the Tax Office through a process that takes 12 days to complete.
- The sixth step is to register trade with the trade authority, which can be done via mail, in person or online. There is no fee for the registration, and it takes one day to complete.
- Companies that have employees will need to apply for an employer’s account number.
- The final step is to register with the municipality. This is a one-day process and will be responsible for all taxes on the business.
If a business plans to build factories or buildings, the process can take over half a year to complete or longer. It's a costly process that costs €10,000 or more to complete.
Setting Up a Company in Singapore
Singapore makes setting up a business quick and easy, but there are regulations and requirements that do need to be followed.
Accounting and Corporate Regulatory Authority (ACRA) offers quick online
registration of all businesses. The ACRA allows for all major registrations to
be done online. This will include:
- Company name search, which comes at a cost of SGD 15. Name applications can be approved in minutes. However, if the name does need approval, this can take 14 days to 2 months to complete. The name is reserved for 60 days.
- Registration can be done in 15 minutes once all of the documents and information are submitted. The fee for registration is SGD 300.
- Employee Compensation Insurance must be applied for at an insurance agency.
Setting up a business in Singapore is very straightforward. There are a few additional steps and requirements that need to be met, including:
- Appointing at least one resident director
- Appointing a resident company secretary within six months of incorporation
- Provide a Singapore address as a registered address
There’s no need to apply for an Employment Pass or Entrepreneur Pass if you operate the business from overseas. A Singapore work visa is not required if you operate the business from overseas.
But all foreigners that are opening a business in Singapore will need to use a professional firm to register their business.
Singapore’s partnership with Bizfile has made incorporating a business one of the easiest in the world. It's a fast, cheap process that has far fewer steps than Austria. In terms of purely starting a business, the process is much easier in Singapore.
Corporate Compliance in Austria and Singapore
Corporate compliance in Austria requires businesses to do the following:
- Register employees with the regional medical insurance company.
- GmbH companies are a joint stock company that must have a minimum share capital of €5,000.
- Operating licenses must be maintained.
- Managing directors must be appointed.
- Pay all value-added tax of 20% of income (exempt for partnerships or sole proprietors with less than €30,000 in income).
- Quarterly income tax of 25% of income.
- GmbHs pay a minimum corporate tax of €1,750 annually; €3,500 for AGs.
- One managing director or more must be maintained.
- Annual financial statements must be submitted.
- Consolidated statements must be submitted.
- All financial statements and consolida6ted statements must be audited by a chartered accountant.
- General shareholder meetings must be held at least once per year and within the first eight months of the year.
Double taxation agreements are in place to avoid double taxation in Austria.
Corporate Compliance in Singapore
Singapore’s corporate compliance requires the following:
- Appoint a company secretary within six months of incorporation
- Maintain a physical address as a registered address for the company
- Appoint a resident director
in auditor within 3 months, but exemptions are made if the business meets one
of the following:
- Fewer than 50 employees
- Assets total less than S$10 million
- Annual revenue is less than S$10 million
- Register to pay Goods and Services Taxes if earnings are S$1 million or higher
the following annual documents:
- Financial statements
- Filing of your annual tax return
- Filing of chargeable income
- ACRA filing of your annual return
- Financial statement audit
Business licenses may need to be obtained, and a hard copy or digital register of controllers must be available.
Singapore maintains a corporate tax rate of 17%, but a tiered system is in place. Companies will pay the following:
- 0% for taxable income of S$0 – S$75,000
- 8.5% for taxable income of S$100,001 – S$200,000
- 17% for taxable income of S$200,001 and above
Singapore does have double taxation agreements with over 80 countries.
Availability of a Trained Workforce in Austria and Singapore
Austria and Singapore both have excellent workforce that have standard workdays of eight hours. Austria workers have a maximum number of working days of 5.5, while Singapore has a maximum number of working days of 6.
Austria’s workforce has 4.4 million workers, with 40% being female.
The country’s labor laws are exceptional, and this motivates the workforce. Workers are granted protection from unfair work conditions. The country’s business environment allows for lawmakers, unions and employer representatives to work together to form rules and regulations.
Average work hours in the country stand at 41.8.
Skilled labor is not an issue in Austria, which has been an example of how vocational education can translate to a thriving workforce and business environment.
Singapore is a leading financial centre for many reasons, but one reason is the country’s trained workforce. The workforce has been able to meet the quality demands of the world’s largest businesses.
There's a strong link between employment and education, and workers are always encouraged to continue their education. The WSG and SSG are both in place to help with hiring and training needs, allowing businesses to seek out highly trained workers that are able to help the company excel.
Singapore’s employment rate for people between 25 and 64 is 80.3%, with more women being a part of the labor force. Women account for 46% of the labor force, allowing for a diverse workforce.
University enrollment in Singapore rose greatly from 2016 to 2017, as more youths are encouraged to pursue higher education. The country maintains a literacy rate of 97.2% and the country spent S$12.8 billion on education alone in 2018.
Austria and Singapore both offer a robust workforce that is willing to help companies grow their revenue and compete on the global marketplace. When it comes to setting up a business, Singapore has a more fluid approach that can all be done online and without the need for long wait periods.
Austria’s approach to opening a business is lengthy, which will scare away many potential business owners who don’t want to jump through several regulatory hoops to be able to open their business.
The World Bank has ranked Singapore as the easier place to do business, and with Austria’s rankings deteriorating in the last few years, it seems like Singapore will remain the optimal choice as an offshore financial centre. From taxation to formation, Singapore makes it as easy as possible to attract the best businesses in the world.