Austria has a well-developed market economy that welcomes foreign direct investment, particularly in technology and R&D. The country benefits from a skilled labor force, and a high standard of living, with its capital Vienna consistently placing at the top of global quality-of-life rankings.
With more than 50 percent of its GDP attributed to exports, Austria’s economy is closely tied to other EU economies, especially Germany’s, its largest trading partner, followed by the U.S. The economy features a large service sector and an advanced industrial sector specialized in high-quality component parts, especially for vehicles. The agricultural sector is small but highly developed.
Austria’s economy grew from 2017-18. GDP increased by 2.7 percent in 2018, leading to a decrease in the unemployment rate to 4.8 percent. However, positive momentum has slowed since then, with GDP growth forecast to reach only 1.7 percent in 2019 and 1.6 percent in 2020.
The country’s location between Western European industrialized nations and growth markets in Central, Eastern, and Southeastern Europe (CESEE) has led to a high degree of economic, social, and political integration with fellow European Union (EU) member states and the CESEE.
Some 300 U.S. companies have investments in Austria, and many have expanded their original investment over time. U.S. Foreign Direct Investment into Austria totaled approximately EUR 14.5 billion (USD 16.5 billion) in 2018, according to the Austrian National Bank, and U.S. companies support over 20,000 jobs in Austria. Altogether, Austria offers a stable and attractive climate for foreign investors.
The most positive aspects of Austria’s investment climate include:
- Relatively high political stability;
- Harmonious labor-management relations and low incidence of labor unrest;
- Highly skilled labor across sectors;
- High levels of productivity and international competitiveness;
- Excellent quality of life through high levels of personal security and high-quality health, telecommunications, and energy infrastructure.
Negative aspects of Austria’s investment climate include:
- A high overall tax burden;
- A large public sector and a complex regulatory system with extensive bureaucracy;
- Low-to-moderate innovation dynamics.
Key sectors that have historically attracted significant investment in Austria:
Key issue to watch:
- Austria’s government has announced a comprehensive tax-reform plan for the coming years. This plan includes lowering the corporate tax rate from 25 percent to around 20 percent in 2022, reducing personal income tax in 2021, and increasing the permissible amount of hours worked per week from 50 to 60. The government is hoping to increase Austria’s attractiveness as a business location by reducing bureaucracy, reducing labor market protections and lowering non-wage labor costs.
Table 1: Key Metrics and Rankings
|TI Corruption Perceptions Index||2018||14 of 175||http://www.transparency.org/research/cpi/overview|
|World Bank’s Doing Business Report||2019||26 of 190||http://www.doingbusiness.org/en/rankings|
|Global Innovation Index||2018||21 of 126||https://www.globalinnovationindex.org/analysis-indicator|
|U.S. FDI in partner country ($M USD, stock positions)||2017||$7,800||http://www.bea.gov/international/factsheet/|
|World Bank GNI per capita||2018||$45,440||http://data.worldbank.org/indicator/NY.GNP.PCAP.CD|
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. Corporate taxes are relatively low (25 percent flat tax), and the government plans to reduce them further in a tax reform to be implemented by 2022. U.S. citizens and investors have reported that it is difficult to establish and maintain banking services since the U.S.-Austria Foreign Account Tax Compliance Act (FATCA) Agreement went into force in 2014, as some Austrian banks have been reluctant to take on this reporting burden.
Potential investors should also factor in Austria’s lengthy environmental impact assessments in their investment decision-making. The requirement that over 50 percent of energy providers must be publicly-owned creates a potential additional burden for investments in the energy sector. Strict liability and co-existence regulations in the agriculture sector restrict research and virtually outlaw the cultivation, marketing, or distribution of biotechnology crops.
Austria’s national investment promotion company, the Austrian Business Agency (ABA), is the first point of contact for foreign companies aiming to establish their own business 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 its services free of charge.
Austrian agencies do not press investors to keep investments in the country, but the Federal Economic Chamber (WKO), and the American Chamber of Commerce in Austria (Amcham) carry out annual polls among their members to measure their satisfaction with the business climate, thus providing early warning to the government of problems investors have identified.
Limits on Foreign Control and Right to Private Ownership and Establishment
There is no principal limitation on establishing and owning a business in Austria. A local managing director must be appointed to any newly-started 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 many trades sectors is only granted when certain preconditions are met, such as certificates of competence, and recognition of foreign education. There are no limitations on ownership of private businesses. Austria maintains an investment screening process for takeovers of 25 percent or more in the sectors of national security and public services such as energy and water supply, telecommunications, and education services, where the Austrian government retains the right of approval. The screening process has been rarely used since its introduction in 2012, but could pose a de facto barrier, particularly in the energy sector. In April 2019, the EU Regulation on establishing a framework for the screening of foreign direct investments into the Union entered into force. It creates a cooperation mechanism through which EU countries and the EU Commission will exchange information and raise concerns related to specific investments which could potentially threaten the security of EU countries.
Other Investment Policy Reviews
While the World Bank ranks Austria as the 26th best country in 2019 with regard to “ease of doing business” (www.doingbusiness.org), starting a business takes time and requires many procedural steps (Austria ranked 118 in this category in 2019).
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 Federal 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. Finally, membership in the WKO is mandatory for all businesses in Austria.
For companies with sole proprietorship, it is possible under certain conditions to use an online registration process via government websites in German to either found or register a company: or . It is advisable to seek information from ABA or the WKO before applying to register a firm.
According to the World Bank, the average time to set up a company in Austria is 21 days, well above the EU average of 12.5 days.
The Austrian government encourages outward investment. There is no special focus on specific countries, but the United States is seen as an attractive target country given the U.S. position as the second biggest market for Austrian exports. 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 in Washington, DC, New York, Chicago, Atlanta, Los Angeles, and San Francisco. 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 in form of contributions to “market access costs,” and also provides “soft subsidies,” such as counselling, legal advice, and marketing support.
2. Bilateral Investment Agreements and Taxation Treaties
There is no current investment agreement between the United States and Austria. Austria has Bilateral Investment Treaties (BITs) in force with: Albania, Algeria, Argentina, Armenia, Azerbaijan, Bangladesh, Belarus, Belize, Bosnia and Herzegovina, Bulgaria, Chile, China, Croatia, Cuba, Czech Republic, Egypt, Estonia, Ethiopia, Georgia, Guatemala, Hong Kong, Hungary, Iran, Jordan, Kazakhstan, Republic of Korea, Kuwait, Latvia, Lebanon, Libya, Lithuania, North Macedonia, Malaysia, Malta, Mexico, Moldova, Mongolia, Montenegro, Morocco, Namibia, Oman, Paraguay, Philippines, Poland, Romania, Russia, Saudi Arabia, Serbia, Slovakia, Slovenia, Tajikistan, Tunisia, Turkey, Ukraine, United Arab Emirates, Uzbekistan, Vietnam, and Yemen. BITs with Cambodia, Kyrgyzstan, Nigeria, and Zimbabwe have been signed, but have not yet entered into force.
On March 16, 2018, the European Court of Justice determined that arbitration clauses in Member State BITs are incompatible with EU law; subsequently, Austria agreed with the EU Commission to terminate its 12 bilateral intra-EU BITS (as did the other Member States), but negotiations on the date of termination are ongoing.
Austria and the United States are parties to a bilateral double taxation convention covering income and corporate taxes, which went into effect in January 1998. Another bilateral double taxation convention (covering estates, inheritances, gifts and generation-skipping transfers) has been in effect since 1982 (amended in 1999). Austria and the United States signed the Foreign Account Tax Compliance Act (FATCA) Agreement on April 29, 2014, covering U.S. citizen account holders in Austria. The FATCA Agreement went into force December 9, 2014.
Austria has 90 additional double taxation treaties in force with other countries.
Two other Austrian agreements, with Switzerland and Liechtenstein, on cooperation in the areas of taxation and financial markets (which entered into force in January and April 2013 respectively) cover the treatment of anonymous accounts from Austrian citizens in those countries.
3. Legal Regime
Transparency of the Regulatory System
Austria’s legal, regulatory, and accounting systems are transparent and consistent with international norms.
Federal ministries generally publish draft laws and regulations, including investment laws, for public comment prior to their adoption by Austria’s cabinet and/or Parliament. Relevant stakeholders such as the “Social Partners” (Economic Chamber, Agricultural Chamber, Labor Chamber, and Trade Union Association), the Industrial Association, and research institutions are invited to provide comments and suggestions for improvement, which may be taken into account before adoption of laws. However, over the past year, the government has increasingly moved towards excluding outside parties from its decision-making process by either ignoring suggestions provided, or by making the time period for commenting unreasonably short. Austria’s nine provinces can also adopt laws relevant to investments; their review processes are generally less extensive, but local laws are less important for investments than federal laws. The judicial system is independent from the executive branch, thus helping ensure the government follows administrative processes.
Draft legislation by ministries (“Ministerialentwürfe”) and resulting government draft laws and parliamentary initiatives (“Regierungsvorlagen und Gesetzesinitiativen”) can be accessed through the website of the Austrian Parliament: (all in German). The parliament also publishes a history of all law-making processes. All final Austrian laws can be accessed through a government data base, partly in English:
The government has simplified the process for issuing business licenses and permits. It can take up to three months to receive a business permit but the business may commence operations as soon as all the relevant documentation has been submitted and verified.
Austrian regulations governing accounting provide U.S. investors with internationally standardized financial information. In line with EU regulations, listed companies must prepare their consolidated financial statements according to the International Financial Reporting Standards (IAS/IFRS) system.
International Regulatory Considerations
Austria is a member of the EU. As such, its laws must comply with EU legislation and the country is therefore subject to European Court of Justice (ECJ) jurisdiction. Austria is a member of the WTO and largely follows WTO requirements. Austria has ratified the Trade Facilitation Agreement (TFA), but has not taken specific actions to implement it.
Legal System and Judicial Independence
The Austrian legal system is based on Roman law. The constitution establishes a hierarchy, according to which each legislative act (law, regulation, decision, and fines) must have its legal basis in a higher legislative instrument. The full text of each legislative act is available online for reference. All final Austrian laws can be accessed through a government data base, partly in English: .
Commercial matters fall within the competence of ordinary regional courts except in Vienna, which has a specialized Commercial Court. The Commercial Court also has nationwide competence for trademark, design, model, and patent matters. There is no special treatment of foreign investors and the executive does not interfere in judicial matters.
The system provides an effective means for protecting property and contractual rights of nationals and foreigners. Sensitive cases must be reported to the Minister of Justice, which can issue instructions for addressing them. Austria’s civil courts enforce property and contractual rights and do not discriminate against foreign investors. Austria allows for court decisions to be appealed, first to a Regional Court and in the last instance, to the Supreme Court.
Laws and Regulations on Foreign Direct Investment
There is no discrimination against foreign investors, but businesses are required to follow numerous local regulations. Although there is no requirement for participation by Austrian citizens in ownership or management of a foreign firm, at least one manager must meet Austrian residency and other legal requirements. Expatriates are allowed to deduct certain expenses (costs associated with moving, maintaining a double residence, education of children) from Austrian-earned income.
The “Law to Support Investments in Municipalities” (published in the Federal Law Gazette, 74/2017, available online in German only on the federal legal information system ), allows federal funding of up to 25 percent of the total investment amount of a project to “modernize” a municipality.
Austria has restrictions on investments into industries that could affect national security, critical infrastructure or public services. The government has to approve any foreign acquisition of a 25 percent or higher stake in any of these industries.
Competition and Anti-Trust Laws
Austria’s Anti-Trust Act (ATA) is in line with European Union anti-trust regulations, which take precedence over national regulations in cases concerning Austria and other EU member states. The Austrian Anti-Trust Act prohibits cartels, anticompetitive practices, and the abuse of a dominant market position. The independent Federal Competition Authority (FCA) and the Federal Antitrust Prosecutor (FAP) are responsible for administering anti-trust laws. The FCA can conduct investigations and request information from firms. The FAP is subject to instructions issued by the Justice Ministry and can bring actions before Austria’s Cartel Court. Additionally, the Commission on Competition may issue expert opinions on competition policy and give recommendations on notified mergers. The most recent amendment to the ATA was in May, 2017. This amendment facilitated enforcing private damage claims, strengthened merger control, and enabled appeals against verdicts from the Cartel Court.
Companies must inform the FCA of mergers and acquisitions (M&A). Special M&A regulations apply to media enterprises, such as a lower threshold above which the ATA applies, and the requirement that media diversity must be maintained. A cartel court is competent to rule on referrals from the FCA or the FCP. For violations of anti-trust regulations, the cartel court can impose fines of up to the equivalent of 10 percent of a company’s annual worldwide sales. The independent energy regulator E-Control separately examines antitrust concerns in the energy sector, but must also submit cases to the cartel court.
Austria’s Takeover Law applies to friendly and hostile takeovers of corporations headquartered in Austria and listed on the Vienna Stock Exchange. The law protects investors against unfair practices, since any shareholder obtaining a controlling stake in a corporation (30 percent or more in direct or indirect control of a company’s voting shares) must offer to buy out smaller shareholders at a defined fair market price. The law also includes provisions for shareholders who passively obtain a controlling stake in a company. The law prohibits defensive action to frustrate bids. The Shareholder Exclusion Act allows a primary shareholder with at least 90 percent of capital stock to force out minority shareholders. An independent takeover commission at the Vienna Stock Exchange oversees compliance with these laws.
Expropriation and Compensation
According to the European Convention of Human Rights (applicable in Austria) and the Austrian Civil Code, property ownership is guaranteed in Austria. Expropriation of private property in Austria is rare and may be undertaken by federal or provincial government authorities only on the basis of special legal authorization “in the public interest” in such instances as land use planning, and infrastructure project preparations. The government can initiate such a procedure only in the absence of any other alternatives for satisfying the public interest; when the action is exclusively in the public interest; and when the owner receives just compensation. In 2017-18, the government expropriated Hitler’s birth house in order to prevent it from becoming a place of pilgrimage for neo-Nazis, paying the former owner €1.5 million (USD 1.8 million) in compensation. The expropriation process is non-discriminatory toward foreigners, including U.S. firms. There is no indication that further expropriations will take place in the foreseeable future.
ICSID Convention and New York Convention
Austria is a member of both the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID) and the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, meaning local courts must enforce foreign arbitration awards in Austria. There is no specific domestic legislation in this regard, but local courts must enforce arbitration decisions where the affected companies have their business locations.
Investor-State Dispute Settlement
Austria is a member of the UN Commission on International Trade Law (UNCITRAL). Its arbitration law largely conforms to the UNCITRAL model law. The main divergence is that an award may only be set aside if the arbitral procedure is not in accordance with Austrian public policy.
Austria does not have a BIT or FTA with the United States. There is no special domestic arbitration body.
In 2015, the Austrian government was sued, for the first time ever, by the offshore parent company of the Austrian Meinl Bank, Far East. The case was brought before the ICSID in New York because of alleged damages arising from domestic prosecution in Austria; the ICSID dismissed the case in November 2017.
International Commercial Arbitration and Foreign Courts
The Vienna International Arbitral Center of the Austrian Federal Economic Chamber acts as Austria’s main arbitration institution. Legislation is modeled after the UNCITRAL model law (see above). The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (NYC) overrides most of Austria’s domestic provisions, where applicable, and Austrian courts are consistent in applying it.
The Austrian Insolvency Act contains provisions for business reorganization and bankruptcy proceedings. Reorganization requires a restructuring plan and the debtor to be able to cover costs or advance some of the costs up to a maximum of €4,000 (USD 4,520). The plan must offer creditors at least 20 percent of what is owed, payable within two years of the date the debtor’s obligation is determined. The plan must be approved by a majority of all creditors and a majority of creditors holding at least 50 percent of all claims. Bankruptcy proceedings take place in court and are opened upon application of the debtor or a creditor; the court appoints a receiver for winding down the business and distributes proceeds to the creditors. Bankruptcy is not criminalized, provided the affected person performed all his documentation and reporting obligations in accordance with the law.
Austria’s major commercial association for the protection of creditors in cases of bankruptcy is the “KSV 1870 Group”, , which also carries out credit assessments of all companies located in Austria. Other European-wide credit bureaus, particularly “CRIF” and “Bisnode”, also monitor the Austrian market.
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, 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. Eligibility for co-financing subsidies has already shown a decline within the EU “Common Strategic Framework” for the period 2014 to 2020, compared to previous funding periods.
Austria’s Wirtschaftsservice (AWS) is the government’s institution that provides financial incentives for businesses. Additional information on targeted investment incentives is available at . More detailed information on investment incentives in English language is available on the ABA website (see chapter 2) at
Various government agencies in Austria offer attractive 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) ( ); the Austrian Science Fund (FWF), which is the country’s central body for the promotion of basic research ( ); 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.
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 (qualified labor and registered nurse jobs), 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. The Austrian government in 2017 passed a law that introduces 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 draft law aimed at making Austria more attractive to qualified specialists is expected to go into effect in 2019. This law addresses problematic visa application requirements regarding minimum salary and housing that have been making it hard for applicants to qualify.
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) was adopted by Austria in May 2018 and 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 February 2019, the DPA initiated proceedings against 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.
5. Protection of Property Rights
The Austrian legal system protects secured-interests in property. For any real estate agreement to be effective, owners must register with the land registry. Mortgages and liens must also be registered. As a rule, property for sale must be unencumbered. In case of rededication of land, approval of the land transfer commission or the office of the state governor is required. The land registry is a reliable system for recording interests in property, and access to the registry is public.
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.
Intellectual Property Rights
Austria has a strong legal structure to protect intellectual property rights, including patent and trademark laws, a law protecting industrial designs and models, and a copyright law. Austria is a party to the World Intellectual Property Organization (WIPO) and several international property conventions. Austria also participates in the Patent Prosecution Highway (PPH) program with the USPTO (started in 2014), which allows filing of streamlined applications for inventions determined to be patentable in other participating countries.
Austria’s Copyright Act conforms to EU directives on intellectual property rights. It grants authors exclusive rights to publish, distribute, copy, adapt, translate, and broadcast their work. The law also regulates copyrights of digital media (restrictions on private copies), works on the Internet, protection of computer programs, and related damage compensation. Infringement proceedings, however, can be time-consuming and costly. Between 2015 and 2017, the Austrian High Court confirmed that Austrian Internet providers must prevent access to illegal music and streaming platforms once they are made aware of a copyright violation. They must also block workaround websites from these platforms.
Austria also has a law against trade in counterfeit articles. In 2018, Austrian customs authorities confiscated pirated goods worth EUR 2.6 million (USD 3.1 million).
Austria is not listed in USTR’s Special 301 report, but its trade secrets regime is a concern for some U.S. businesses. Austrian and U.S. companies have voiced specific concerns about both the scope of protection and the difficulty of adjudicating breaches. Following years of steady U.S. government advocacy, and because Austria was required to implement the 2016 EU Directive on Trade Secrets, the country improved its trade secrets regime in the Law Against Unfair Competition (entered into force in February 2019) to address these concerns. The most relevant change in the law is a requirement for safeguarding the confidentiality of trade secrets (and other business confidential information) in court procedures. Under the old law, the opposing party could learn confidential trade secrets during court hearings, so companies often avoided taking legal action against offenders. The new law requires a party to only “credibly demonstrate that the violation of a trade secret exists,” without having to disclose it to other parties during the court proceedings. The court is required to ensure full confidentiality of the proceedings. The new law also defines injunctive relief and claims for damages in case of breach of trade secrets.
6. Financial Sector
Capital Markets and Portfolio Investment
Austria has sophisticated financial markets that allow foreign investors access without restrictions. The government welcomes foreign portfolio investment. The Austrian National Bank (OeNB) regulates portfolio investments effectively.
Austria has a national stock exchange that currently includes 63 companies on its regulated market and several others on its multilateral trading facility (MTF). The Austrian Traded Index (ATX) is a price index consisting of the 20 largest stocks on the market, and forms the most important index of Austria’s stock market. The size of the companies listed on the ATX is roughly equivalent to those listed on the MDAX in Germany. In order to combat declining interest from investment bankers and brokers, the stock exchange introduced two new market segments in 2018: Direct Market, which replaces the Mid-Market segment, and Direct Market Plus. These segments target SMEs and young, developing companies. The move comes in response to ongoing criticism that the stock exchange does not accurately reflect Austria’s business landscape, which largely consists of small- to medium-sized companies. The market capitalization of Austrian listed companies is small compared to its western European counterparts, accounting for 36 percent of Austria’s GDP, compared to 62 percent in Germany or 166 percent in the United States.
Unlike the other market segments in the stock exchange, Direct Market and Direct Market Plus are only subject to the Vienna Stock Exchange’s general terms of business, but not EU regulations. These segments also have lower reporting requirements but also greater risk for investors, as prices are more likely to fluctuate, due to the respective companies’ low level of market capitalization.
Austria has robust financing for product markets, but the free flow of resources into factor markets (capital, raw materials) could be improved. The Austrian government hopes that the recent opening of the stock exchange to small, innovative companies will help serve that purpose.
Austria is fully compliant with IMF Article VIII, all financial instruments are available, and there are no restrictions on payments. Credit is available to foreign investors at market-determined rates. Austria’s financial market ranked 28th in the 2018 World Economic Forum’s Global Competitiveness Report, out of 140 countries examined, compared to 30th place in 2017 and 47th in 2016.
Money and Banking System
Austria has one of the densest banking networks in Europe with almost 4,200 branch offices registered in 2018. The banking system is highly developed, with worldwide correspondent banks and representative offices and branches in the United States and other major financial centers. Large Austrian banks also have extensive networks in Central and Southeast European (CESEE) countries and the countries of the former Soviet Union. Total assets of the banking sector amounted to EUR 986 billion (USD 1.2 trillion) in 2018 approximately three times the country’s GDP. The Austrian banking sector is considered to be one of the most stable in the world. In 2018, Standard & Poor’s raised Austria’s industry country risk assessment from 3 to 2, making the domestic banking system one of the 13 most stable systems worldwide (no country has a rating of 1). Moody’s also improved its outlook for the Austrian banking system in 2018, improving its outlook from positive to stable.
Austria’s banking sector is managed and overseen by the Austrian National Bank (OeNB) and the Financial Market Authority (FMA). Five Austrian banks with assets in excess of EUR 30 billion (USD 34 billion) are subject to the Eurozone’s Single Supervisory Mechanism (SSM), as is Sberbank Europe AG, a Russian bank subsidiary headquartered in Austria, due to its significant cross-border assets. All other Austrian banks continue to be subject to the country’s dual-oversight bank supervision system with roles for the OeNB and the FMA, both of which are also responsible for policing irregularities on the stock exchange and for supervising insurance companies, securities markets, and pension funds.
Due to U.S. government financial reporting requirements, Austrian banks are very cautious in accepting U.S. clients, whose access to banking services here is consequently restricted. Locally incorporated businesses belonging to U.S. investors have also reported problems in finding banking services.
Foreign Exchange and Remittances
Austria has no restrictions on cross-border capital transactions, including the repatriation of profits and proceeds from the sale of an investment, for non-residents and residents. The Euro, a freely convertible currency and the only legal tender in Austria and 18 other Euro-zone member states, shields investors from exchange rate risks within the Euro-zone.
Sovereign Wealth Funds
Austria has no sovereign wealth funds.
7. State-Owned Enterprises
Austria has two major wholly state-owned enterprises (SOEs): The OeBB (Austrian Federal Railways) and Asfinag (highway financing, building, maintenance and administration). Other government industry holding companies are bundled in the government holding company OeBAG (new website under construction):
The government reformed its holding company in 2018, changing its name from OeBIB to OeBAG, incorporating energy provider Verbund AG and the state-owned real estate holding company BIG into its portfolio and increasing its oversight powers. Under the new regulation, the government will gain direct representation in the supervisory boards of its companies (commensurate with its ownership stake), and the new holding company will be given the power to buy and sell company shares, as well as purchase minority stakes in strategically relevant companies. Such purchases will be subject to approval from a newly-established audit committee consisting of government-nominated independent economic experts.
OeBAG holds a 53 percent stake in the Post Office, 51 percent in energy company Verbund, 33 percent in the gambling group Casinos Austria, 31.5 percent in the energy company OMV, 28 percent in the Telekom Austria Group, and a few other minor ventures. Local governments own the majority of utilities, Vienna International Airport, and more than half of Austria’s 268 hospitals and clinics.
Private enterprises in Austria can generally compete with public enterprises under the same terms and conditions with respect to market access, credit, and other such business operations as licenses and supplies. While most SOEs must finance themselves under terms similar to private enterprises, some large SOEs (such as OeBB) benefit from state-subsidized pension systems. As a member of the EU, Austria is also a party to the Government Procurement Agreement (GPA) of the WTO, which indirectly also covers the SOEs (since they are entities monitored by the Austrian Court of Auditors).
The five major OeBAG companies (Postal Service, Verbund AG, Casinos Austria, OMV, Telekom Austria), are listed on the Vienna stock exchange. In these cases, senior management does not directly report to a minister, but to an oversight board. However, the government often appoints management and board members, who usually have strong political affiliations.
The Austrian Foreign Trade Act (FTA) requires advance approval by the Austrian Ministry for Digital and Economic Affairs for foreign acquisitions of a relevant stake (25 percent) in enterprises in certain strategic industries (with sales over EUR 700,000 per year), comprising a wide range of sectors. Strategic sectors include not only internal and external security services, but also public order and safety, procurement, and crisis services. The latter include hospitals, ambulance and emergency medical services; fire fighters and civil protection services; energy and gas supply; water supply; telecoms; railways; road traffic; universities; schools of various types; and pre-schooling institutions.
The government has not privatized any public enterprises since 2007. Austrian public opinion is skeptical regarding further privatization. The current government consisting of the center-right People’s Party (OVP) and right-populist Freedom Party (FPO) is decidedly more pro-market than the previous government, but there is no plan for further privatization.
In prior privatizations, foreign and domestic investors received equal treatment. Despite a historical government preference for maintaining blocking minority rights for domestic shareholders, foreign investors have successfully gained full control of enterprises in several strategic sectors of the Austrian economy, including in telecommunications, banking, steel, and infrastructure.
8. Responsible Business Conduct
Austrian Responsible Business Conduct (RBC)/Corporate Social Responsibility (CSR) standards are laid out in the Austrian Corporate Governance Codex, which is based on the EU Commission’s 2011 “Strategy for Corporate Social Responsibility.” The Austrian Standards Institute’s ONR 192500 acts as the main guidance for CSR and is based on the EU Commission’s published Strategy, which is also compliant with UN guidelines. Major Austrian companies follow generally accepted CSR principles and publish a CSR chapter in their annual reports; many also provide information on their health, safety, security, and environmental activities.
Austria adheres to the OECD’s Guidelines for Multinational Enterprises. The Ministry for Labor, Social Affairs, Health, and Consumer Protection is represented in national and international CSR-relevant associations and supports CSR initiatives while working closely together with the Austrian Standards Institute.
The Austrian export credit agency promotes information on CSR issues, principles and standards, including the OECD Guidelines, on its website.
Austria is a member of the Council of Europe’s Group of States against Corruption (GRECO) and also ratified the UN Convention against Corruption (UNCAC) and the OECD Anti-Bribery Convention. As part of the UNCAC ratification process, Austria has implemented a national anti-corruption strategy. Central elements of the strategy are promoting transparency in public sector decisions and raising awareness of corruption. Corruption generally is not a major issue in Austria, which ranked 14th (out of 180 countries) in Transparency International’s latest Corruption Perceptions Index.
Bribery of public officials is covered by the Austrian Criminal Code and corruption does not significantly affect business in Austria. However, there is a small risk of corruption in public procurement, most commonly in the form of criteria that are tailor-made for certain participants.
Anti-corruption cases are often characterized by slow-moving trials that drag on for years. Bribing members of Parliament is considered a criminal offense, and accepting a bribe is a punishable offence with the sentence varying depending on the amount of the bribe. There are no rules on managing conflicts of interest for parliamentarians and no framework for dealing with gifts and other benefits.
Austria is in the midst of a prominent corruption case involving former Finance Minister Karl-Heinz Grasser and the privatization of BUWOG, an Austrian real-estate company, in 2003. The case, which began in 2010 and went to trial in 2017, features 16 defendants. Grasser is accused of having demanded a bribe of EUR 9.6 million (USD 11 million) in exchange for privatization advantages, and judicial proceedings are ongoing. There were no major new corruption cases uncovered in 2018.
Corruption provisions in Austria’s Criminal Code cover managers of Austrian public enterprises, civil servants, and other officials (with functions in legislation, administration, or justice on behalf of Austria, in a foreign country, or an international organization), representatives of public companies, members of parliament, government members, and mayors. The term “corruption” includes the following in the Austrian interpretation: active and passive bribery; illicit intervention; and abuse of office. Corruption can sometimes include a private manager’s fraud, embezzlement, or breach of trust.
Criminal penalties for corruption include imprisonment of up to ten years for all parties involved. Jurisdiction for corruption investigations rests with the Austrian Federal Bureau of Anti-Corruption and covers corruption taking place both within and outside the country. The Lobbying Act of 2013 introduced binding rules of conduct for lobbying. It requires domestic and foreign organizations to register with the Austrian Ministry of Justice. Financing of political parties requires disclosure of donations exceeding EUR 3,500 (USD 3,960). Private companies are subject to the Austrian Act on Corporate Criminal Liability, which makes companies liable for active and passive criminal offences. Penalties include fines up to EUR 1.8 million (USD 2.0 million).
Resources to Report Corruption
Contacts at government agencies responsible for combating corruption:
Wirtschafts- und Korruptionsstaatsanwaltschaft
(Central Public Prosecution for Business Offenses and Corruption)
1030 Vienna, Austria
Phone: +43-(0)1-52 1 52 0
BAK – Bundesamt zur Korruptionsprävention und Korruptionsbekämpfung
(Federal Agency for Preventing and Fighting Corruption)
Ministry of the Interior
1010 Vienna, Austria
Phone: +43-(0)1-531 26 – 6800
Contact at “watchdog” organization:
Transparency International – Austrian Chapter
1090 Vienna, Austria
Phone: +43-(0)1-960 760
10. Political and Security Environment
There have been no incidents of politically motivated damage to foreign businesses. Civil disturbances are rare and the overall security environment in the country is considered to be safe.
11. Labor Policies and Practices
Austria has a well-educated and productive labor force of about 4.3 million, of whom 3.8 million are employees and 500,000 are self-employed or farmers. In line with EU regulations, the free movement of labor from all member states is allowed, except for Croatia, which joined the EU in July 2013 and is subject to a transition period until 2020.
Austria’s strong economy has led to a drop in the unemployment rate, from 5.5 percent in 2017 to 4.8 percent in 2018. Austria’s economy is forecast to grow at a slower rate in 2019 and 2020 (around 1.7 percent compared to 2.7 percent in 2018), which may result in an increase in the unemployment rate. Foreigners account for almost one-fifth of Austria’s labor force; around 700,000 foreign workers are employed in Austria. Migrant workers are largely from the CEE region but the 2015 Syria refugee crisis led to a stream of asylum-seekers from the Middle East entering the country and gradually becoming active on the labor market. Migrants from Eastern Europe frequently accept low-paid jobs and fill crucial vacancies in the tourism and healthcare sectors, which generally experience shortages.
Youth unemployment is much less of a problem in Austria than in other EU member states, due in large measure to Austria’s successful dual-education apprenticeship system. That system combines on-the-job training with classroom instruction in vocational schools, and includes guaranteed placement by the Public Employment Service for those 15-24 year olds who cannot find an apprenticeship.
The Austrian government continues to adopt changes to existing labor market policies in an effort to make Austria a more attractive business location. The most controversial reform in 2018 was increasing the maximum allowable number of hours worked per week from 50 to 60, and from 10 to 12 hours per day. The government is also planning to make the maximum duration of unemployment benefits payments more dependent on the length of time spent working, and to increase the base rate of pay from 55 percent of the last net income to 65 percent in the first months of unemployment.
Social insurance is compulsory in Austria and is comprised of health insurance, old-age pension insurance, unemployment insurance, and accident insurance. Employers and employees contribute a percentage of total monthly earnings to a compulsory social insurance fund. Austrian laws closely regulate terms of employment, including working hours, minimum vacation time, holidays, maternity leave, statutory separation notice, severance pay, dismissal, and an option for part-time work for those parents with children under the age of seven. Problematic areas include increased deficits in the pension and health insurance systems, the shortage of healthcare personnel to care for the increasing number of elderly, and escalating costs for retirement and long-term care. Due to its generous social welfare system, Austria has a high rate of employer non-wage labor costs, amounting to approximately 30 percent of gross wages.
Labor-management relations are relatively harmonious in Austria, which traditionally enjoys a low incidence of industrial unrest. However, 2018 lead to several contentious collective bargaining negotiations, with the metalworkers and railway sectors issuing several warning strikes before reaching a new collective bargaining agreement. Approximately 32 percent of the work force belongs to a union. Additionally, all employees are automatically members of Austria’s Worker’s Chamber.
Collective bargaining revolves mainly around wages and fringe benefits. Approximately 90 percent of the labor force works under a collective bargaining agreement. In June 2017, Austria decided to implement a national minimum wage of EUR 1,500 (approx. USD 1,700) per month. This equates to an hourly wage of EUR 10.09 (approx. USD 11.50), placing Austria in the upper tier among European countries with a minimum wage, ahead of France, Germany and the UK. Sectors where wages are currently below this threshold have until 2020 to amend their collective bargaining agreements accordingly.
Austrian law stipulates a 40-hour workweek, but collective bargaining agreements also allow for a workweek of 38 or 38.5 hours per week. Firms may increase the maximum regular hours from 40 to 60 per week in special cases, with no more than 12 hours in a single day. Responsibility for agreements on flextime or reduced workweeks resides at the company level. Overtime is paid at an additional 50 percent of the employee’s and, in some cases, such as work on public holidays, even 100 percent. Austrian employees are generally entitled to five weeks of paid vacation (and an additional week after 25 years in the workforce); the rate of absence due to illness/injury averages 12 workdays annually.
12. OPIC and Other Investment Insurance Programs
OPIC programs are not available for Austria. Austria is a member of the World Bank Group’s Multilateral Investment Guarantee Agency (MIGA). Austria is a significant donor to EDGE, the International Finance Corporation’s (IFC) green building certification program, with which OPIC started to collaborate in 2018.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Austrian National Bank (Investments)
Differences between Austrian and U.S. statistics can arise from different allocations of investments to countries (headquarters versus subsidiaries) and different survey methods
Table 3: Sources and Destination of FDI
|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||$246,359||100%||Total Outward||$291,090||100%|
|“0” reflects amounts rounded to +/- USD 500,000.|
Austria’s domestic investment figures show significant lower numbers for the Netherlands and Luxembourg. Special Purpose Entities (SPEs) may be used to avoid corporate taxes.
Table 4: Sources of Portfolio Investment
|Portfolio Investment Assets|
|Top Five Partners (Millions, US Dollars)|
|Total||Equity and Investment Fund Shares||Total Debt Securities|
|All Countries||$348,992||100%||All Countries||$138,369||100%||All Countries||$210,623||100%|
|United States||$33,122||9%||United States||$14,434||10%||United States||$18,689||9%|
14. Contact for More Information
U.S. Embassy Vienna
+43 1 31339-2206