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Executive Summary

The Austrian government welcomes foreign direct investment, particularly those investments with the potential to create jobs in high technology fields, support capital-intensive industries, and enhance research and development activities.

Austria has a well-developed market economy, skilled labor force, and high standard of living, but also expensive public, social security, and health sectors. The country is closely tied to other EU economies, especially Germany’s. Its economy features a large service sector, a sound industrial sector, and a small, but highly developed agricultural sector.

Following years of relatively weak economic growth, Austria’s GDP registered a solid 1.5 percent growth rate in 2016, with a similar growth rate expected for 2017. Austria’s 5.9 percent unemployment rate, while low by European standards, is at its highest rate since the end of World War II, as solid job creation is outpaced by the high growth rate of the labor force.

The country’s geopolitical location between Western European industrialized nations and the 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 320 U.S. companies have investments in Austria; many have expanded their original investment over time. Altogether, Austria offers a stable, advantageous, and attractive climate for foreign investors.

The government’s new economic reform package seeks to reduce non-wage labor costs and allow for an early write-down of 30 percent of investments made by companies with more than 20 employees, while Finance Minister Schelling is seeking to lower the corporate tax rate from currently 25 to 20 percent. Each of these measures has the aim of making Austria relatively more attractive to foreign companies, promoting further investment.

The Austrian government in March 2017 introduced a law that promises to introduce a specific visa category under the RWR model for founders of start-up enterprises to make Austria a more entrepreneur-friendly country. The draft law is expected to go into effect in 2017.

The most positive aspects of Austria’s investment climate include:

  • Relatively high political stability and harmonious labor-management relations, low incidence of labor unrest;
  • Skilled labor in many sectors;
  • High degree of productivity and international competitiveness;
  • Excellent quality of life, personal security, high-quality health, telecommunications, and energy infrastructure.

Negative aspects of Austria’s investment climate include:

  • A high overall tax burden (despite an attractive corporate tax model and lower income taxes as of 2016);
  • Low-to-moderate innovation dynamics;
  • A large public sector and a complex regulatory system with extensive bureaucracy for new and established businesses.

Key sectors that have historically attracted significant investment in Austria:

  • Automotive;
  • Pharmaceuticals;
  • Financial.

Table 1

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2016 17 of 176 http://www.transparency.org/
research/cpi/overview
World Bank’s Doing Business Report “Ease of Doing Business” 2016 19 of 190 doingbusiness.org/rankings
Global Innovation Index 2016 20 of 128 https://www.globalinnovationindex.org/
analysis-indicator
U.S. FDI in partner country ($M USD, stock positions) 2015 USD 17,275 http://www.bea.gov/
international/factsheet/
World Bank GNI per capita 2015 USD 47,410 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 in high technology fields, promote capital-intensive industries, and enhance links to research and development (for which special tax incentives are available). Officials are also conscious of ensuring that investments avoid any negative impact on the environment. Austria is a high-tax country overall with a heavy personal income tax burden and non-salary labor costs. However, due to a relatively low 25 percent corporate tax rate, it can be attractive as a business headquarters location. Including tax base adjustments, experts estimate the effective corporate tax burden at no more than 22 percent.

Austria has no wealth tax, trade tax, or inheritance/gift tax.

A tax reform package implemented in 2016 is intended to stimulate the economy by reducing income taxes by €5 billion annually; however, most of this amount will be made up through a reduction of tax deductions, an increased land-transfer tax, a higher value-added tax on selected products, an increased withholding tax on dividends, unspecified administrative savings, and stepped-up efforts against tax fraud. Thus, while the idea of stimulating the economy may prove successful, the tax reform will only have a minimal impact on Austria’s high tax quota of around 44 percent of GDP, which is unlikely to decrease significantly in the near term.

There are no sectorial or geographic restrictions on foreign investment. In some regions, the government offers special facilities and services (“cluster packages”) to foreign investors. For example, these can include incentives for automotive producers, manufacturers of high-tech products, or environmental technologies.

American investors have not complained of discriminatory laws or practices against foreign investors. However, potential investors should factor in Austria’s strict environmental regulations and environmental impact assessments into their investment decision-making. Austria’s Energy Efficiency Law of 2014, which requires energy providers to create incentives for customers to implement energy savings measures, creates a potential, additional burden for investments in the energy sector. Strict liability and co-existence regulations sharply 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 is owned and operated by the Austrian government.

Limits on Foreign Control and Right to Private Ownership and Establishment

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, which in many sectors is only granted when preconditions are met, such as certificates of competence, and recognition of foreign education. There are no limitations to ownership of private businesses.

Other Investment Policy Reviews

There have been no recent investment policy reviews conducted in Austria.

Business Facilitation

While Austria ranks among the top 20 countries in the World Bank’s “Doing Business” Index (www.doingbusiness.org ), starting a business takes time and requires many steps. One has to obtain the confirmation from the business organization “Economic Chamber” (WKO) that a startup company is, in fact, a new business, notarize the declaration of establishment, deposit a minimum capital requirement with an Austrian bank, register the company at a local court, 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, it is mandatory that the business become a member of the WKO, which represents some 450,000 companies and views itself as “the voice of Austrian business”. This membership process can take several weeks and includes compulsory dues; the Chamber plays an administrative role in some areas (including retailing, tourism, and certification of skilled labor).

The “Invest in Austria” promotion agency (ABA) intends to serve as first point of contact and one-stop-shop for investors. It provides information about Austria as a business location, and proactively approaches potential investors. In addition, ABA provides consulting services to firms interested in establishing business operations in Austria, focusing on all issues relevant to selecting an appropriate location. There are several forms of companies that can be set up in Austria. The ABA website contains further details and contact information: https://investinaustria.at/en/starting-business/ 

Outward Investment

The Austrian government encourages outward investment. There is no special focus on specific countries, but the United States is seen as attractive target country. The “Aussenwirtschaft Austria” is a special section of the WKO promoting outward foreign investment and exports alike. They run six offices in the United States. The Ministry of Economy and the WKO run a joint program, called: “go international.” It provides services to 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 “soft subsidies,” such as counselling, legal advice, and marketing support. https://www.wko.at/service/Austrian-Economic-Chambers.html 

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, India, Iran, Jordan, Kazakhstan, Republic of Korea, Kuwait, Latvia, Lebanon, Libya, Lithuania, 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, Viet Nam, and Yemen. Signed, but not yet in force are BITs with Cambodia, Kyrgyzstan, Nigeria, and Zimbabwe. See the UNCTAD Navigator for a complete list of active investment agreements: http://investmentpolicyhub.unctad.org/IIA/CountryBits/12#iiaInnerMenu 

The EU Commission is currently reviewing the legality of the (12) Intra-EU BITs between EU Member States. Those relating to Austria will remain in force until an EU-wide investment protection mechanism has been negotiated so supersede these. In 2016, Austria and other EU Member States outlined such a mechanism in a “non-paper.”

Austria and the United States are parties to a bilateral double taxation convention covering income and corporate taxes, which went into effect on January 1, 1999. 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 taxation treaties in force with other countries.

Two other important 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 owned by Austrian citizens in these countries.

3. Legal Regime

Transparency of the Regulatory System

Austria’s legal, regulatory, and accounting systems are transparent and consistent with international norms. Ministries generally publish draft laws and regulations for public comment prior to their adoption by Austria’s cabinet (Ministerrat) and/or Parliament. In addition, relevant stakeholders such as the “Social Partners” (Economic Chamber, Agriculture Chamber, Labor Chamber, and Trade Union Association) and the Industrial Association are invited to provide comments and suggestions for improvement, which may be taken into account before adoption of laws. This mechanism encompasses investment laws, as well. The judicial system is independent from the executive branch, thus helping to ensure the government follows administrative processes.

The government has made progress in streamlining its complex and cumbersome requirements for issuing business licenses and permits. It claims to have reduced the processing time for permits to less than three months, except for large projects requiring an environmental impact assessment. The government’s “one-stop shop” for business permits does not include factory and building permits. All licensed businesses in Austria (including foreign-owned enterprises) must be members of Austria’s Economic Chamber and pay compulsory dues; the Chamber plays an administrative role in some areas (including retailing, tourism, and certification of skilled labor).

The government does not influence the allocation of investments among sectors. It uniformly applies tax and labor laws as well as health and safety standards. Austrian regulations governing accounting provide U.S. investors with internationally standardized financial information. In line with pertinent 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 and as such, its laws are compliant with EU directives. Austria is subject to the European Court of Justice’s (ECJ) jurisdiction. Austria is a member of the WTO and follows all WTO requirements.

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 instrument. The full text of each legislative act is available online. 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 judiciary matters.

The system provides an effective means for protecting property and contractual rights of both nationals and foreigners. Sensitive cases must be reported to the Minister of Justice who 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 at a Regional Court and ultimately at the Supreme Court.

Laws and Regulations on Foreign Direct Investment

There is no discrimination against foreign investors, but businesses are required to follow numerous regulations. Although there is no requirement for participation by Austrian citizens in ownership or management, at least one manager must meet Austrian residency and other legal requirements. Non-residents must appoint a representative in Austria. Expatriates are allowed to deduct certain expenses (costs associated with moving, maintaining a double residence, education of children) from Austrian-earned income. Austrian immigration law requires those applying for residency permits to take German language courses/exams, but a university degree automatically fulfills this requirement.

Competition and Anti-Trust Laws

Austria’s Anti-Trust Act is in line with EU 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 Cartel Prosecutor (FCP) are responsible for administering anti-trust laws. The FCA can conduct investigations and request information from firms. Private parties are enabled to file damage claims based on an infringement of Austrian and European anti-trust rules.

Companies must inform the FCA of mergers and acquisitions (M&A). Special M&A regulations apply to media enterprises. A cartel court is competent to rule on M&A notifications 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. An independent energy regulator separately examines antitrust concerns in the energy sector, but must also submit cases to the cartel court.

Austria’s Takeover Law applies to both 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 squeeze 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 is inviolable in Austria. Expropriation of private property in Austria is rare and may proceed only on the basis of special legal authorization for public purposes, primarily for infrastructure projects. The government can initiate it only in the absence of any other alternative to satisfy the public interest; when the action is exclusively in the public interest; and when the owner receives just compensation. The expropriation process is non-discriminatory toward foreigners, including U.S. firms. There is no indication that significant expropriations will take place in the foreseeable future.

Dispute Settlement

ICSID Convention and New York Convention

Austria is a member of both the ICSID and the New York Convention on the Recognition and Enforcement of Foreign Arbitral Law, meaning local courts must enforce applicable foreign arbitration awards in Austria. There is no specific domestic legislation in this regard.

Investor-State Dispute Settlement

Austrian 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.

There has been no experience with investment disputes against Austria in the last several decades. In 2015, for the first time, the Austrian government was sued by the offshore parent company of the Austrian Meinl Bank, Far East, in New York before an ICSID tribunal because of alleged damages arising from domestic prosecution.

https://icsid.worldbank.org/en/Pages/cases/casedetail.aspx?CaseNo=ARB/15/32 

International Commercial Arbitration and Foreign Courts

The Vienna International Arbitral Centre of the Austrian Federal Economic Chamber acts as Austria’s main arbitration institution and legislation is modeled after the UNCITRAL model law (see above). The New York Convention overrides most of Austria’s domestic provisions, where applicable, and Austrian courts are consistent in applying it. There are no notable complaints about court proceedings.

Bankruptcy Regulations

The Austrian Insolvency Act contains provisions for business reorganization and bankruptcy proceedings. Reorganization requires a restructuring plan from the still solvent debtor. The plan must offer a quota of at least 20 percent of the debtor’s obligation and be adopted by a majority of all creditors, including those 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 conducted all his documentation and reporting in accordance with the law.

4. Industrial Policies

Investment Incentives

Austria offers financial and tax incentives (within EU competition policy limits) to firms undertaking projects in economically underdeveloped areas. In most of these areas, eligibility for co-financing subsidies under EU regional and cross-border programs has gradually declined under the EU’s financial frameworks, but might still account for around €200 million per year (mainly for rural areas) within the new EU “Common Strategic Framework” for the period 2014 to 2020.

Financial incentives 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 of these incentives are available only in the event that the investment meets specified criteria, including employment creation and use of high technology. Tax allowances for advanced employee training and R&D expenditures are also available, as are pre-seed and seed financing options for start-ups and cash grants up to 80 percent for later-stage companies.

Austria’s Wirtschaftsservice (AWS) is the government’s institution that provides financial incentives. Additional information on targeted investment incentives (German language only) is available at http://www.awsg.at . Information on investment incentives in English language is available on the website of the ABA (see chapter 2) at http://investinaustria.at/en/ 

Various government agencies in Austria offer attractive incentive system for research and development (R&D) activities. They are available for foreign-owned enterprises, as well. ABA (see above) is a good starting point. The agencies 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 (see above), which is the funding bank for corporate business development

Foreign Trade Zones/Free Ports/Trade Facilitation

Austria does not have any free trade zones.

Performance and Data Localization Requirements

There are virtually no restrictions on foreign investment in Austria; foreign investors receive national treatment. 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 goods or technology.

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 (RWR) model has been designed to react flexibly to rising demand for talent in different occupations and 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 may apply locally in Austria, or opt to find a potential employer from abroad and have the company apply in Austria on their behalf. Once the application is approved, the visa office authorizes the Austrian Embassy or consulate to issue the visa to enter Austria and to pick up the RWR card. Austrian immigration law requires those applying for residency permits to take German language courses and exams.

While principal RWR applicants are exempt from any language requirement, family members of RWR applicants must submit proof of basic language proficiency (“A1 level”) when first applying for residence permits and need to take advanced proficiency German language courses/exams (“A2 level”) within a two-year time frame. Family members of highly qualified individuals (“Besonders Hochqualifizierte”) are exempt from the A1, but not from the A2 requirement. A university-degree automatically fulfills the A2 requirement.

The Austrian government in March 2017 introduced a law that promises to introduce a specific visa category under the RWR model for founders of start-up enterprises to make Austria a more entrepreneur-friendly country. The draft law is expected to go into effect in 2017.

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. Transmission of customer or business related data are subject to authorization of Austria’s Data Protection Authority, unless the data are permissibly published in Austria, are transmitted with the permission of the data holder or are necessary to fulfill contract regulations. The transfer of data is also permitted if it is in line with the U.S.-EU Privacy Shield, which provides a waiver for certified U.S. companies.

5. Protection of Property Rights

Real Property

The Austrian legal system protects secured-interests in property. For any real estate agreement to be effective, owners must register with the land registry. 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 for land acquisition. The provincial regulations differ, but in general there must be a public (economic, social, cultural) interest for the acquisition. Often, the applicant must guarantee that he does not want to establish a vacation home.

Intellectual Property Rights

Austria has effective laws 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, including the European Patent Convention, the Universal Copyright Convention and the “Paris Union” International Convention for the Protection of Industrial Property. American investors are entitled to the same protection under Austrian patent legislation as Austrian nationals. Austria is also participating in the Global Patent Prosecution Highway (Global PPH) pilot program, which started in January 2014, and allows filing of streamlined applications for inventions determined to be patentable in other participating countries. The program is expected to reduce average processing time for patents.

Austria’s Copyright Act is in conformity with EU directives on intellectual property rights. It grants authors the 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. In July 2015, the Austrian High Court confirmed the European Court of Justice (ECJ) ruling from 2014 that Austrian Internet providers must prevent access to illegal music and streaming platforms once made aware of a copyright violation. Another ruling in 2016 made clear that the providers must also block workaround websites from these platforms. In line with EU requirements, Austria also has a law against trade in counterfeit articles. In 2015 (latest figures), Austrian customs authorities confiscated pirated goods worth €10.7 million ($11.8 million).

Austria is not listed in the USTR’s Special 301 report, but Austria’s trade secrets regime is a concern for some U.S. businesses. While Austria offers protection for trade secrets, some U.S. companies complain that gaps in the system make it unlikely that confidential information will be safe from malign actors. For instance, if a party trusted with a “non-technical” secret, such as a go-to-market strategy or a list of customers, discloses it, there is no criminal liability. Similarly, a competitor can make use of confidential information he receives, as long as the party providing it originally received it legitimately. On the occasion of having to implement the 2016 EU Directive on Trade Secrets, the Austrian government along with industry representatives, is currently also reevaluating its trade secrets regime in order to address concerns; an new law should enter into force in the first half of 2018 at the latest.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

6. Financial Sector

Capital Markets and Portfolio Investment

Austria has modern and sophisticated financial markets, to which foreign investors have access without restrictions. Austria is fully compliant with IMF Article VIII, all financial instruments are available, and there are no restrictions on payments. Credit is available at market-determined rates. Credit standards for loans have been tightened as banks work to improve the quality of their loan portfolios and align with European Central Bank regulations. As a result, access to finance is an area that Austria can improve on. Overall, Austria’s financial market development ranked 47th in the most recent World Economic Forum’s Global Competitiveness Report out of 140 countries examined.

Austria has its own stock exchange which currently includes 65 companies. The Austrian Traded Index (ATX) is the most important stock market index of Austria’s stock market and is a price index consisting of the 20 largest stocks on the market. The size of the companies listed on the ATX is roughly equivalent with the MDAX in Germany.

Money and Banking System

Austria has one of the densest banking networks in Europe, with over 750 credit institutions operating more than 4,100 banking offices. Only Ireland and Luxembourg have fewer inhabitants per bank. 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 amount to €1,062 billion ($1,124 billion), approximately three times the country’s GDP.

Austria’s banking sector is primarily managed by the Austrian National Bank (OeNB) and, to a lesser extent, the Financial Market Authority (FMA). Six Austrian banks with assets in excess of €30 billion ($32 billion) are subject to the Eurozone’s Single Supervisory Mechanism (SSM), plus Sberbank Europe, AG, and VTB Bank (Austria), AG, which are Russian bank subsidiaries headquartered in Austria. All other Austrian banks continue to be subject to Austria’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 reporting requirements, some private banks do not accept personal accounts from U.S. citizens, though locally incorporated businesses belonging to U.S. investors have not reported problems in this regard.

Foreign Exchange and Remittances

Foreign Exchange

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.

Remittance Policies

Austria does not have any policies in place that restrict remittances.

Sovereign Wealth Funds

Austria has no sovereign wealth funds.

7. State-Owned Enterprises

Austria has two major wholly owned state-owned enterprises (SOEs): The ÖBB (Austrian Federal Railways) and Asfinag (highway financing, building, maintenance and administration). Other government industry holding companies are bundled in the government holding company ÖBIB: http://www.oebib.gv.at/en/  , including a 53 percent stake in the Post Office, 33 percent in the Austrian Casinos, 31.5 percent in the energy company OMV, 28 percent in the Telekom Austria Group, 33 percent in the gambling group Casinos Austria, and a few other minor ventures (more information on these enterprises can be downloaded from the website). The federal government also owns 51 percent of the energy company Verbund AG. State governments own the majority of utilities and Vienna Airport and several hospitals.

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. However, SOEs in the past have used political ties to prolong dispute resolution and appeal procedures and/or delay implementation of remedies. For example, a few years ago, a new private railway provider had to fight discriminatory track charges and elimination from public timetables against the incumbent state-owned ÖBB. While most SOEs must finance themselves under terms similar to private enterprises, some large SOEs (such as ÖBB) benefit from state-subsidized pension systems. As member of the EU, Austria is also a party to the Government Procurement Agreement (GPA) of the WTO, and the SOEs are at least indirectly covered (as far as they are entities monitored by the Austrian Court of Auditors).

Since many public enterprises are outsourced and organized as stock corporations, senior management usually 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 of Economic Affairs for foreign acquisitions of a relevant stake (25 percent) in enterprises in certain strategic industries (with sales over €700,000 per year), comprising a wide range of sectors. The government believes that only by such a restriction on FDI can it guarantee national security and provide public services safely. 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.

Privatization Program

The government has not privatized any public enterprises since 2007. Austrian public opinion is skeptical regarding further privatization and the senior governing coalition partner Social Democratic Party (SPÖ) is on record opposing additional privatizations. The current government program has not identified any public enterprises for privatization, but the government may reduce some of its shareholdings while retaining a blocking minority share. In past 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 telecommunications, banking, steel, and infrastructure.

8. Responsible Business Conduct

Austrian Responsible Business Conduct (RBC)/Corporate Social Responsibility (CSR) standards are 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 in line with the UN Guidelines on Business and Human Rights. 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. CSR Europe (the leading European business network for CSR) has a local partner organization respACT (short for “responsible action”).

Austria adheres to the OECD Guidelines for Multinational Enterprises; the Austrian national contact point has an office in the Federal Ministry of Science, Research and Economy and actively promotes the Guidelines to companies, universities and other stakeholders.

https://mneguidelines.oecd.org/ncps/austria.htm 

The Austrian export credit agency, likewise promotes information on CSR issues, principles and standards, including the Guidelines, on its website.

http://www.oekb.at/en/about-oekb/sustainability/Pages/Sustainability.aspx 

9. Corruption

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. More than one third of businesses believe nepotism to be widespread within the public administration.

Anti-corruption laws are generally implemented effectively although procedures are slow with some high-level cases lasting several years. Bribery of Members of Parliament was criminalized broadly in 2013; accepting a bribe is a punishable offence with the sentence varying depending on the amount of the bribe.

According to the most recent EU Anti-Corruption Report of 2014, Austria has strengthened its fight against corruption through efforts in prevention and prosecution. However, the European Commission recommends that Austria makes access to bank account information easier in cases of suspected corruption, as banking secrecy laws frequently impede investigations. Polls by the Commission show that 66 percent of Austrians (compared to 76 percent of Europeans) agree that corruption is widespread in their home country and that 5 percent of Austrians (4 percent of Europeans) have been asked or are expecting to pay a bribe in the past year.

In 2016, there were two prominent cases involving corruption of public officials. In one instance, a Member of the Austrian Parliament was accused of using a sham bill issued to partially state-owned Telekom Austria AG to illegally transfer €120,000 to an Austrian political party. The defendant was sentenced to a nine-month prison sentence, but released on probation for a period of three years. Another case involved the privatization of the BUWOG, an Austrian real-estate company, featuring 16 defendants including former Finance Minister Karl-Heinz Grasser. Grasser was accused of having demanded a bribe of €9.6 million for himself and his friends; judicial proceedings are currently ongoing.

There are no rules on managing conflicts of interest for parliamentarians and no framework to deal with gifts and other benefits. This was highlighted as a key area for improvement in the latest report by the Council of Europe’s Group of States against Corruption (GRECO). Austria is a member of GRECO and also ratified the UN Convention against Corruption and the OECD Anti-Bribery Convention.

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, and domestic members of Parliament, government members, and mayors. The term corruption includes the following: 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 10 years for all parties involved. The jurisdiction of 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 and requires domestic and foreign organizations to register with the Austrian Ministry of Justice. Financing of political parties requires disclosure of donations exceeding €3,500 ($3,705). 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 €1.8 million ($1.9 million).

Resources to Report Corruption

Contacts at government agencies responsible for combating corruption:

Wirtschafts- und Korruptionsstaatsanwaltschaft
(Central Public Prosecution for Business Offenses and Corruption)
DampfschiffstraSe 4
1030 Vienna, Austria
+43-(0)1-52 1 52 0
wksta.leitung@justiz.gv.at

BAK – Bundesamt zur Korruptionspravention und Korruptionsbekampfung
(Federal Agency for Preventing and Fighting Corruption)
PO Box 100
1014 Vienna, Austria
+43-(0)1-531 26 – 6800
BMI-IV-BAK-SPOC@bak.gv.at
http://www.bak.gv.at 

Contact at “watchdog” organization:

Transparency International – Austrian Chapter
Berggasse 7
1090 Vienna, Austria
+43-(0)1-960 760
office@ti-austria.at

10. Political and Security Environment

There have been no incidents of politically motivated damage to foreign businesses. Civil disturbances are very rare and the overall security environment in the country is considered to be extremely safe.

11. Labor Policies and Practices

Austria has a highly educated and productive labor force of about 4 million, of whom 3.5 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 unemployment rate ranked among the lowest in the EU for many years. The unemployment rate of between 4.9–5.9 percent in 2011-2016 (in all five years among the lowest in the EU-28) may increase to around 6.1 percent in 2017 due to a growing labor force. Currently, around 500,000 foreign workers are employed in Austria. Migrant workers are largely from the CEE region though the recent refugee crisis has 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 otherwise would likely 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 place.

The Austrian government has discussed several labor market reforms to be launched this year. In order to tackle rising unemployment among people aged 50+, the government is rolling out a trial program that provides a job guarantee in public services for 20,000 unemployed aged 50+ workers to support them finding a new job. The government is also planning to limit non-wage labor cost subsidies for the hiring of new workers to workers already established in Austria, which may effectively disadvantage migrants seeking to move to Austria. Legal experts agree that this measure is contentious and may be non-compliant with EU law. In this case it would be within the power of the European Court of Justice (ECJ) to strike it down.

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 personnel to care for the increasing number of elderly, and escalating costs for long-term care. Due to employer contributions to the social insurance for employees, paid leave, paid sick leave, fringe benefits, etc., additional wage costs in Austria add up to about 70 percent of gross pay.

Labor-management relations are relatively harmonious in Austria, which has enjoyed a low incidence of industrial unrest. No major work stoppages have occurred since 2005. Approximately 35 percent of the work force belongs to a union.

Collective bargaining revolves mainly around wages and fringe benefits. Approximately 80 percent of the labor force works under a collective bargaining agreement. Austria does not have an official minimum wage. Most collective bargaining agreements now provide for a minimum wage of at least €1,300 (approx. $1,366) per month, though wages may be as low as €1,000 (approx. $1,050) per month. The Austrian government has recently called for a nationwide minimum wage of €1,500 (approx. $1,576) per month with further details regarding implementation expected by July 2017.

Austrian law stipulates a maximum workweek of 40 hours, but collective agreements also provide for a workweek of 38 or 38.5 hours per week for more than half of all employees. Flexible work hour regulations allow firms to increase the maximum regular hours from 40 to 50 per week in special cases (and for a limited period up to 60 hours). Responsibility for agreements on flextime or reduced workweeks resides at the company level. 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).

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Austria’s Gross Domestic Product (GDP) ($B USD) 2016 $384.4 2015 $377.0 www.worldbank.org/en/country 
Foreign Direct Investment Host Country Statistical source USG or international statistical source USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in Austria ($M USD, stock positions) 2015 $13,895 2015 $17,275 BEA data available at http://bea.gov/international/direct_investment_
multinational_companies_comprehensive_data.htm
 
Austria’s FDI in the United States ($M USD, stock positions) 2015 $10,880 2015 $7,116 BEA data available at http://bea.gov/international/direct_investment_
multinational_companies_comprehensive_data.htm
 
Total inbound stock of FDI as % host GDP 2015 53.4 2015 N/A N/A

*Statistics Austria (GDP)
http://www.statistik.at/web_de/statistiken/wirtschaft/ volkswirtschaftliche_gesamtrechnungen/index.html 

Austrian National Bank (Foreign Direct Investments)
https://www.oenb.at/isaweb/report.do?lang=EN&report=9.3.31 

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 261,349 100% Total Outward 309,993 100%
Germany 41,696 16% Germany 26,324 8%
Netherlands 27,916 11% Netherlands 19,140 6%
Russia 20,976 8% Czech Republic 13,812 4%
Italy 18,693 7% Luxembourg 10,261 3%
Luxembourg 15,975 6% United States 9,687 3%
“0” reflects amounts rounded to +/- USD 500,000.

Table 4: Sources of Portfolio Investment

Portfolio Investment Assets
Top Five Partners (Millions, US Dollars)
Total Equity Securities Total Debt Securities
All Countries 318,047 100% All Countries 99,916 100% All Countries 218,131 100%
Germany 51,603 16% Luxembourg 33,608 32% Germany 29,049 13%
Luxembourg 41,892 13% Germany 22,554 23% France 23,776 11%
United States 30,081 9% United States 10,710 11% Italy 20,141 9%
France 28,449 9% Ireland 8,617 9% United States 19,370 9%
Italy 20,605 6% Switzerland 3,983 4% Netherlands 16,444 7%

14. Contact for More Information

Alexander Schratt
Economic Specialist
16 Boltzmanngasse, Vienna 1090
+43 1 31339 2206
schrattax@state.gov

2017 Investment Climate Statements: Austria
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