1. Openness To, and Restrictions Upon, Foreign Investment
Policies Towards Foreign Direct Investment
The Austrian government welcomes foreign direct investment, particularly when such investments have the potential to create new jobs, support advanced technology fields, promote capital-intensive industries, and enhance links to research and development.
There are no specific legal, practical or market access restrictions on foreign investment. American investors have not complained of discriminatory laws against foreign investors. However, in October 2019 a new digital services tax was signed into law, effective on January 1, 2020. This 5% tax on advertising revenues targets companies with global revenues exceeding €750 million ($848 million) provided at least €25 million ($28 million) of that sum comes from Austria, with a carve-out for Austria’s national broadcaster (ORF) which would otherwise be taxed. Government officials claim the tax is intended to level the playing field.
The corporate tax rate, a 25 percent flat tax, is above the EU average, and the government has indicated plans to reduce this rate to 21 percent within the current parliamentary term which runs through 2024. U.S. citizens and investors have occasionally reported that it is difficult to establish and maintain banking services since the U.S.-Austria Foreign Account Tax Compliance Act (FATCA) bilateral agreement went into force in 2014, as some Austrian banks have been reluctant to take on this reporting burden.
Potential investors should be aware of Austria’s lengthy environmental impact assessments in their investment decision-making. The mining and transportation sectors are also more heavily regulated than in other economies. The requirement that over 50 percent of energy providers must be publicly owned limits foreign investments in the energy sector. Strict liability and co-existence regulations regarding crop contamination in the agriculture sector virtually outlaw the cultivation, marketing, or distribution of genetically-modified crops.
Austria’s national investment promotion organization, the Austrian Business Agency (ABA), is a useful first point of contact for foreign companies interested in establishing operations in Austria. It provides comprehensive information about Austria as a business location, identifies suitable sites for greenfield investments, and consults in setting up a company. ABA provides these services free of charge.
The Austrian Economic Chamber (WKO) and the American Chamber of Commerce in Austria (Amcham) are also good resources for foreign investors. Both conduct annual polls of their members to measure their satisfaction with the business climate, thus providing early warning to the government of problems identified by investors.
Limits on Foreign Control and Right to Private Ownership and Establishment
In principle there is generally no limitation on establishing and owning a business in Austria. However, a local managing director must be appointed to any newly established enterprise. For non-EU citizens to establish and own a business, the Austrian Foreigner’s Law mandates a residence permit that includes the right to run a business. Many Austrian trades are regulated, and the right to run a business in regulated trade sectors is only granted when certain preconditions are met, such as certificates of competence, and recognition of foreign education.
The requirement that over 50 percent of energy providers must be publicly owned limits foreign investments in the energy sector. Strict liability and co-existence regulations regarding crop contamination in the agriculture sector virtually outlaw the cultivation, marketing, or distribution of genetically-modified crops.
Austria maintains a national security investment screening process to review potential foreign acquisitions of 25 percent or more of a company deemed essential to national security or which is involved in the provision of public services such as energy, water, telecommunications, and educational services. The government plans to reduce the threshold for review to ten percent and expand covered sectors through adoption of a new investment-screening law in 2020. The current screening process has seldom been used since its introduction in 2012. The EU Regulation establishing a framework for the coordination of members’ national security screening of foreign direct investments into the Union entered into force in April 2019. It creates a cooperation mechanism through which EU countries and the European Commission will exchange information and raise concerns related to specific investments which could potentially threaten the national security of EU countries.
Non-EU/EEA citizens need authorization from administrative authorities of the respective Austrian province to acquire land. Provincial regulations vary, but in general there must be a public (economic, social, cultural) interest for the acquisition to be authorized. Often, the applicant must guarantee that he does not want to build a vacation home on the land in order to receive the required authorization.
Other Investment Policy Reviews
While the World Bank Doing Business Index ranked Austria as the 27th in 2020 (www.doingbusiness.org), starting a business takes time and requires many procedural steps (Austria ranks 127 in this category ). The average time to set up a company in Austria is 21 days, compared to just 9.2 days in other high income countries. In order to register a new company or open a subsidiary in Austria, a company must first be listed on the Austrian Companies Register at a local court. The next step is to seek confirmation of registration from the Austrian Economic Chamber (WKO) establishing that the company is really a new business. The investor must then notarize the “declaration of establishment,” deposit a minimum capital requirement with an Austrian bank, register with the tax office, register with the district trade authority, register employees for social security, and register with the municipality where the business will be located. Membership in the WKO is mandatory for all businesses in Austria.
For sole proprietorships, it is possible under certain conditions to use an online registration process via government websites (in German language only) to either found or register a company:
https://www.usp.gv.at/Portal.Node/usp/public/content/gruendung/egruendung/269403.html: or www.gisa.gv.at/online-gewerbeanmeldung. It is advisable to seek information from ABA or the WKO before applying to register a firm.
Austria’s national investment promotion organization, the Austrian Business Agency (ABA), is a useful first point of contact for foreign companies interested in establishing operations in Austria. It provides comprehensive information about Austria as a business location, identifies suitable sites for greenfield investments, and consults in setting up a company. ABA provides these services free of charge. The website of the ABA contains further details and contact information and is intended to serve as a first point of contact for foreign investors in Austria: https://investinaustria.at/en/starting-business/.
With more than 50 percent of its GDP derived from exports, the Austrian government encourages outward investment. Advantage Austria, the “Austrian Foreign Trade Service” is a special section of the WKO that promotes Austrian exports and also supports Austrian companies establishing an overseas presence. Advantage Austria operates six offices in the United States (Washington, DC, New York, Chicago, Atlanta, Los Angeles, and San Francisco.) It also has trade offices in 26 European, 19 Asian, 7 other North- and South American, 6 African countries, and Australia.
https://www.wko.at/service/aussenwirtschaft/aussenwirtschaftscenter.html#heading_aussenwirtschaftscenter The Ministry for Digital and Economic Affairs and the WKO run a joint program called “Go International,” providing services to Austrian companies that are considering investing for the first time in foreign countries. The program provides grants for market access costs and provides “soft subsidies,” such as counseling, legal advice, and marketing support.
4. Industrial Policies
Financial incentives and business subsidies provided by Austrian federal, state, and local governments to promote investments are equally available to domestic and foreign investors and include tax incentives, preferential loans, loan guarantees, and grants. Most incentives are targeted to investments that meet specified criteria, including job-creation, use of cutting-edge technology, improving regional infrastructure, strengthening SMEs, revitalization of a community, and promoting startups. Tax allowances for advanced employee training and R&D expenditures are also available, as are financing options for start-ups and cash grants. The Austrian Labor Market Service (AMS) offers grants for job creation and personnel development training.
Austria offers financial and tax incentives within EU regional co-funding schemes to firms undertaking projects in economically underdeveloped and rural areas. In the 2014-2020 funding period, roughly EUR 536 million (USD 638 million) from the European Regional Development Fund (ERDF) is available to Austria for strengthening investments in growth and jobs.
Austria’s Wirtschaftsservice (AWS) is the governmental institution that provides financial incentives for businesses. In April 2020, the government established a EUR 100 million (USD 112 million) COVID-19 assistance package for startups, where it matches one-to-one private (also foreign) investments in Austrian startups, and a EUR 50 million (USD 56 million) venture capital fund (also open for foreign investors), where it guarantees 50% of the fund’s investment.
Additional information on targeted investment incentives is available at https://www.aws.at/en/ . More detailed information on investment incentives in English language is available on the ABA website (see chapter 2) at http://investinaustria.at/en/
Various government agencies in Austria offer incentives for research and development (R&D) activities (up to 50 percent of the investment amount). The incentives are also available for foreign-owned enterprises. The agencies providing incentives include: The Austrian Research Promotion Agency (FFG) (https://www.ffg.at/en ); the Austrian Science Fund (FWF), which is the country’s central body for the promotion of basic research (https://www.fwf.ac.at/en/ ); and AWS (above). The latter also provides guarantees of up to €25 million over 5 to 10 years for investments in Austria, with a focus on small and medium-sized companies.
Foreign investors in Austria can also benefit from government support measures designed for companies affected by COVID-19, including: a hardship fund for sole proprietorships; a COVID-19 assistance fund which provides EUR 15 billion (USD$16.8 billion) in loan guarantees; banking measures to increase liquidity; and a short-time work (kurzarbeit) program which allows staff working hours to be reduced by up to 90%, with the government paying up to 90% of the salary cost. More information can be found here: https://investinaustria.at/en/blog/2020/03/covid-19-support-measures-companies.php#vier
Foreign Trade Zones/Free Ports/Trade Facilitation
Performance and Data Localization Requirements
If investors want to employ foreign workers from outside the EU in Austria, they need to apply for a work permit with the Austrian Labor Service (AMS). The AMS only grants that permission if there is no comparable person in the pool of registered unemployed persons in Austria. This does not apply to senior management positions, researchers, highly qualified personnel, and a limited set of other categories.
Austria offers several non-immigrant business visa classifications, including intra-company transfers/rotational workers, and employees on temporary duty. Recruitment of long-term, overseas specialists or those with managerial duties is governed by a points-based immigration scheme to attract skilled workers and specialists in individual sectors (points are available for qualification, education, age, and language skills). This Red-White-Red card (RWR) model allows firms to react flexibly to rising demand for talent in different occupations. It is available to highly qualified individuals, qualified specialists/craftsmen in certain understaffed professions (such as qualified labor and registered nurses), and key personnel/professionals. Applicants must have an offer of employment to apply for the RWR. Highly qualified individuals holding U.S. citizenship may apply locally in Austria or opt to find a potential employer from abroad and have the company apply in Austria on their behalf.
Austrian immigration law requires those applying for residency permits in some categories to take German language courses and exams. There is a specific visa category under the RWR model for founders of start-up enterprises to support Austria’s push to expand its innovation economy.
A less bureaucratic alternative is the EU Blue Card, which entitles applicants to a fixed-term stay of 24 months and employment is tied to a specific employer. However, there is a threshold of a gross annual income of at least one and a half times the average gross annual income for full-time employees (in 2020: at least EUR 63,672 (USD 71,313); annual salary plus special payments).
While there is no requirement for foreign IT providers to turn over source code and/or provide access to encryption, EU and Austrian data protection stipulations apply. The EU General Data Protection Regulation (GDPR) as adopted by Austria in 2018, places restrictions on companies’ ability to store and use customer data. It also requires specific user consent, in order for companies to send out promotional materials (previously, implied consent was sufficient). Transmission of customer or business-related data is therefore subject to EU GDPR regulations. Austria’s Data Protection Authority is in charge of enforcing all GDPR-related matters, which include GDPR rules on data storage. In October 2019, the DPA imposed a fine of EUR 18 million (USD 20.2 million) on Austria’s postal service for illegal use of customer data, which included collecting and selling data on party affiliations. The postal service was ordered to delete the data concerned.
The Austrian government may impose performance requirements when foreign investors seek financial or other assistance from the government, although there are no performance requirements to apply for tax incentives. There is no requirement that Austrian nationals hold shares in foreign investments or for technology transfer, and no requirement for foreign investors to use domestic content in the production of goods or technology.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
|Host Country Statistical source*||USG or international statistical source||USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
|Host Country Gross Domestic Product (GDP) ($M USD)||2019||$446,345||2018||$455,286||https://data.worldbank.org/country/
|Foreign Direct Investment||Host Country Statistical source*||USG or international statistical source||USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other
|U.S. FDI in partner country ($B USD, stock positions)||2019||$11.81||2018||$8.58||BEA data available at
|Host country’s FDI in the United States ($B USD, stock positions)||2019||$14.02||2018||$12.64||BEA data available at
|Total inbound stock of FDI as % host GDP||2019||$45.9||2018||45.7%||UNCTAD data available at
* Source for Host Country Data:
*Statistics Austria (GDP) https://www.statistik.at/web_de/statistiken/wirtschaft/volkswirtschaftliche_gesamtrechnungen/index.html
*Austrian National Bank (Investments) https://www.oenb.at/en/Statistics/Standardized-Tables/external-sector/foreign-direct-investment.html
|Direct Investment from/in Counterpart Economy Data|
|From Top Five Sources/To Top Five Destinations (US Dollars, Millions)|
|Inward Direct Investment||Outward Direct Investment|
|Total Inward||246,083||100%||Total Outward||280,254||100%|
|United Arab Emirates||11,884||5%||Country #5||13,458||5%|
|“0” reflects amounts rounded to +/- USD 500,000.|
Austria’s inward investment figures show significant lower numbers for the Netherlands and Luxembourg. Special Purpose Entities (SPEs) may be used to avoid corporate taxes.
|Portfolio Investment Assets|
|Top Five Partners (Millions, current US Dollars)|
|Total||Equity Securities||Total Debt Securities|
|All Countries||358,953||100%||All Countries||147,308||100%||All Countries||211,644||100%|
|United States||33,260||9%||Ireland||16,270||11%||United States||17,167||8%|
14. Contact for More Information
U.S. Embassy Vienna, Vienna 1090, Boltzmanngasse 16
+43 1 31339-2206