Austria offers a stable and attractive climate for foreign investors, including a well-developed market economy that welcomes foreign direct investment, particularly in technology and R&D. The most popular investment destinations in recent years have been the automotive, pharmaceuticals, and financial sectors. 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 derived from exports, Austria’s economy is closely tied to other EU economies; Germany is its largest trading partner, followed by the United States. The economy features a large service sector and an advanced industrial sector specialized in high-quality component parts, especially for vehicles. 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.
In October 2019 a new digital services tax was signed into law, effective on January 1, 2020. This 5% tax on advertising revenues targets companies with global revenues exceeding €750 million ($848 million) and revenues within Austria of at least 25 million euros, with a carve-out for Austria’s national broadcaster (ORF), which would otherwise be taxed.
Austria also maintains a relatively high overall tax burden and a complex regulatory system with extensive bureaucracy.
Some 300 U.S. companies have investments in Austria, many of whom have expanded over time. U.S. Foreign Direct Investment into Austria totaled approximately EUR 10.5 billion (USD 11.8 billion) at the end of 2019, according to the Austrian National Bank, and U.S. companies support over 17,000 jobs in Austria.
Following solid GDP growth of 1.6% in 2019, leading forecasters anticipate a 7-7.1% decrease in 2020 GDP due to COVID-19. The economy is predicted to make a strong recovery in 2021, ranging from 4.3-5.6% GDP growth.
Austria’s government took quick, decisive measures to combat the spread of COVID-19, closing much of the retail sector and mandating a strict stay-at-home policy on March 16, 2020. As a result of their success in reducing infection rates, Austria was one of the first western countries to reopen their economy in stages starting April 14, 2020. Because the country is highly dependent on both foreign trade and tourism, recovery will ultimately depend on the impact of the virus on global travel, international supply chains, and economic recovery in Austria’s largest export markets.
Austria offers a wide array of investment incentives to attract industry and jobs in high-tech, R&D, and economically disadvantaged regions.
1. Openness To, and Restrictions Upon, Foreign Investment
Policies Towards Foreign Direct Investment
The Austrian government welcomes foreign direct investment, particularly when such investments have the potential to create new jobs, support advanced technology fields, promote capital-intensive industries, and enhance links to research and development.
There are no specific legal, practical or market access restrictions on foreign investment. American investors have not complained of discriminatory laws against foreign investors. However, in October 2019 a new digital services tax was signed into law, effective on January 1, 2020. This 5% tax on advertising revenues targets companies with global revenues exceeding €750 million ($848 million) provided at least €25 million ($28 million) of that sum comes from Austria, with a carve-out for Austria’s national broadcaster (ORF) which would otherwise be taxed. Government officials claim the tax is intended to level the playing field.
The corporate tax rate, a 25 percent flat tax, is above the EU average, and the government has indicated plans to reduce this rate to 21 percent within the current parliamentary term which runs through 2024. U.S. citizens and investors have occasionally reported that it is difficult to establish and maintain banking services since the U.S.-Austria Foreign Account Tax Compliance Act (FATCA) bilateral agreement went into force in 2014, as some Austrian banks have been reluctant to take on this reporting burden.
Potential investors should be aware of Austria’s lengthy environmental impact assessments in their investment decision-making. The mining and transportation sectors are also more heavily regulated than in other economies. The requirement that over 50 percent of energy providers must be publicly owned limits foreign investments in the energy sector. Strict liability and co-existence regulations regarding crop contamination in the agriculture sector virtually outlaw the cultivation, marketing, or distribution of genetically-modified crops.
Austria’s national investment promotion organization, the Austrian Business Agency (ABA), is a useful first point of contact for foreign companies interested in establishing operations in Austria. It provides comprehensive information about Austria as a business location, identifies suitable sites for greenfield investments, and consults in setting up a company. ABA provides these services free of charge.
The Austrian Economic Chamber (WKO) and the American Chamber of Commerce in Austria (Amcham) are also good resources for foreign investors. Both conduct annual polls of their members to measure their satisfaction with the business climate, thus providing early warning to the government of problems identified by investors.
Limits on Foreign Control and Right to Private Ownership and Establishment
In principle there is generally no limitation on establishing and owning a business in Austria. However, a local managing director must be appointed to any newly established enterprise. For non-EU citizens to establish and own a business, the Austrian Foreigner’s Law mandates a residence permit that includes the right to run a business. Many Austrian trades are regulated, and the right to run a business in regulated trade sectors is only granted when certain preconditions are met, such as certificates of competence, and recognition of foreign education.
The requirement that over 50 percent of energy providers must be publicly owned limits foreign investments in the energy sector. Strict liability and co-existence regulations regarding crop contamination in the agriculture sector virtually outlaw the cultivation, marketing, or distribution of genetically-modified crops.
Austria maintains a national security investment screening process to review potential foreign acquisitions of 25 percent or more of a company deemed essential to national security or which is involved in the provision of public services such as energy, water, telecommunications, and educational services. The government plans to reduce the threshold for review to ten percent and expand covered sectors through adoption of a new investment-screening law in 2020. The current screening process has seldom been used since its introduction in 2012. The EU Regulation establishing a framework for the coordination of members’ national security screening of foreign direct investments into the Union entered into force in April 2019. It creates a cooperation mechanism through which EU countries and the European Commission will exchange information and raise concerns related to specific investments which could potentially threaten the national security of EU countries.
Non-EU/EEA citizens need authorization from administrative authorities of the respective Austrian province to acquire land. Provincial regulations vary, but in general there must be a public (economic, social, cultural) interest for the acquisition to be authorized. Often, the applicant must guarantee that he does not want to build a vacation home on the land in order to receive the required authorization.
Other Investment Policy Reviews
While the World Bank Doing Business Index ranked Austria as the 27th in 2020 (www.doingbusiness.org), starting a business takes time and requires many procedural steps (Austria ranks 127 in this category ). The average time to set up a company in Austria is 21 days, compared to just 9.2 days in other high income countries. In order to register a new company or open a subsidiary in Austria, a company must first be listed on the Austrian Companies Register at a local court. The next step is to seek confirmation of registration from the Austrian Economic Chamber (WKO) establishing that the company is really a new business. The investor must then notarize the “declaration of establishment,” deposit a minimum capital requirement with an Austrian bank, register with the tax office, register with the district trade authority, register employees for social security, and register with the municipality where the business will be located. Membership in the WKO is mandatory for all businesses in Austria.
For sole proprietorships, it is possible under certain conditions to use an online registration process via government websites (in German language only) to either found or register a company:
https://www.usp.gv.at/Portal.Node/usp/public/content/gruendung/egruendung/269403.html: or www.gisa.gv.at/online-gewerbeanmeldung. It is advisable to seek information from ABA or the WKO before applying to register a firm.
Austria’s national investment promotion organization, the Austrian Business Agency (ABA), is a useful first point of contact for foreign companies interested in establishing operations in Austria. It provides comprehensive information about Austria as a business location, identifies suitable sites for greenfield investments, and consults in setting up a company. ABA provides these services free of charge. The website of the ABA contains further details and contact information and is intended to serve as a first point of contact for foreign investors in Austria: https://investinaustria.at/en/starting-business/.
With more than 50 percent of its GDP derived from exports, the Austrian government encourages outward investment. Advantage Austria, the “Austrian Foreign Trade Service” is a special section of the WKO that promotes Austrian exports and also supports Austrian companies establishing an overseas presence. Advantage Austria operates six offices in the United States (Washington, DC, New York, Chicago, Atlanta, Los Angeles, and San Francisco.) It also has trade offices in 26 European, 19 Asian, 7 other North- and South American, 6 African countries, and Australia.
2. Bilateral Investment Agreements and Taxation Treaties
There is currently no bilateral investment treaty BIT)between the United States and Austria. Austria has 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 European Commission to terminate its 12 intra-EU BITS (as did the partner Member States), but negotiations on the date of termination are ongoing with these Member States.
Austria and the United States are parties to a bilateral double taxation treaty covering income and corporate taxes, which went into effect in January 1998. A separate bilateral double taxation treaty (covering estates, inheritances, gifts and generation-skipping transfers) has been in effect since 1982 (amended in 1999). Austria and the United States signed an intergovernmental agreement in accordance with the Foreign Account Tax Compliance Act (FATCA) in 2014, covering U.S. citizen bank account holders in Austria. 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 Federation of Industries, and research institutions are invited to provide comments and suggestions for improvement, which may be taken into account before adoption of laws. These comments are publicly available. 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, helping ensure the government follows administrative processes. The government’s compliance with administrative processes is monitored by the courts, primarily the Court of Auditors. Individuals can file proceedings against the government in Austria’s courts, if the government did not act in accordance with the law. Similarly, the public prosecution service can file cases against the government.
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: https://www.parlament.gv.at/PAKT/ (all in German). The parliament also publishes a history of all law-making processes. All final Austrian laws can be accessed through a government database, partly in English: https://www.ris.bka.gv.at/defaultEn.aspx.
The effectiveness of regulations is not reviewed as a regular process, only on an as-needed basis. 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.
Public finances are transparent and easily accessible, through the Finance Ministry’s website, Austria’s Central Bank, and a variety or various economic research institutes. With the possible exception of the newly-implemented digital advertising tax, Austria has no legal restrictions, formally or informally, that discriminate against foreign investors.
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 OECD and adheres to all instruments, including the Codes of Liberalization and Declaration on International Investment, including extending national treatment to all investors. Austria is also a WTO member 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: https://www.ris.bka.gv.at/defaultEn.aspx.
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 branch does not interfere in judicial matters.
The legal 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
Austria has restrictions on investments into industries designated as high risk to national security, critical infrastructure, or public service. The government must approve any foreign acquisition of a 25 percent or higher stake in any of these industries. A new law, seeking to lower this threshold to 10 percent and expand the affected sectors is most likely to be adopted and take effect in 2020.
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. The “Law to Support Investments in Municipalities” (published in the Federal Law Gazette, 74/2017, available in German only on the federal legal information system www.ris.bka.gv.at), allows federal funding of up to 25 percent of the total investment amount of a project if it will “modernize” a municipality.
The Austrian Business Agency serves as a central contact point for companies looking to invest in Austria. It does not serve as a one-stop-shop but can help answer any questions potential investors may have (https://investinaustria.at/en/)
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 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. Austrian courts have also held that shareholders owe a duty of loyalty to each other and must consider the interests of fellow shareholders in good faith.
Expropriation and Compensation
According to the European Convention on Human Rights 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 based on 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.For example, 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.
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.
In 2015, the Austrian government was sued, for the first and only known instance, by the offshore parent company of the Austrian Meinl Bank, Far East. The case was dismissed 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, handling both national and international cases. Legislation is based on the UNCITRAL model law (see above). Austrian courts are consistent in applying the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
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.
If the restructuring plan is not accepted, a bankruptcy proceeding is begun. Bankruptcy proceedings take place in court upon application of the debtor or a creditor; the court appoints a receiver for winding down the business and distributing proceeds to the creditors. Bankruptcy is not criminalized, provided the affected person performed all his documentation and reporting obligations on time and in accordance with the law.
Austria’s major commercial association for the protection of creditors in cases of bankruptcy is the “KSV 1870 Group”, www.ksv.at, 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, revitalization of a community, and promoting startups. Tax allowances for advanced employee training and R&D expenditures are also available, as are financing options for start-ups and cash grants. The Austrian Labor Market Service (AMS) offers grants for job creation and personnel development training.
Austria offers financial and tax incentives within EU regional co-funding schemes to firms undertaking projects in economically underdeveloped and rural areas. In the 2014-2020 funding period, roughly EUR 536 million (USD 638 million) from the European Regional Development Fund (ERDF) is available to Austria for strengthening investments in growth and jobs.
Austria’s Wirtschaftsservice (AWS) is the governmental institution that provides financial incentives for businesses. In April 2020, the government established a EUR 100 million (USD 112 million) COVID-19 assistance package for startups, where it matches one-to-one private (also foreign) investments in Austrian startups, and a EUR 50 million (USD 56 million) venture capital fund (also open for foreign investors), where it guarantees 50% of the fund’s investment.
Various government agencies in Austria offer incentives for research and development (R&D) activities (up to 50 percent of the investment amount). The incentives are also available for foreign-owned enterprises. The agencies providing incentives include: The Austrian Research Promotion Agency (FFG) (https://www.ffg.at/en); the Austrian Science Fund (FWF), which is the country’s central body for the promotion of basic research (https://www.fwf.ac.at/en/ ); and AWS (above). The latter also provides guarantees of up to €25 million over 5 to 10 years for investments in Austria, with a focus on small and medium-sized companies.
Foreign investors in Austria can also benefit from government support measures designed for companies affected by COVID-19, including: a hardship fund for sole proprietorships; a COVID-19 assistance fund which provides EUR 15 billion (USD$16.8 billion) in loan guarantees; banking measures to increase liquidity; and a short-time work (kurzarbeit) program which allows staff working hours to be reduced by up to 90%, with the government paying up to 90% of the salary cost. More information can be found here: https://investinaustria.at/en/blog/2020/03/covid-19-support-measures-companies.php#vier
Foreign Trade Zones/Free Ports/Trade Facilitation
Performance and Data Localization Requirements
If investors want to employ foreign workers from outside the EU in Austria, they need to apply for a work permit with the Austrian Labor Service (AMS). The AMS only grants that permission if there is no comparable person in the pool of registered unemployed persons in Austria. This does not apply to senior management positions, researchers, highly qualified personnel, and a limited set of other categories.
Austria offers several non-immigrant business visa classifications, including intra-company transfers/rotational workers, and employees on temporary duty. Recruitment of long-term, overseas specialists or those with managerial duties is governed by a points-based immigration scheme to attract skilled workers and specialists in individual sectors (points are available for qualification, education, age, and language skills). This Red-White-Red card (RWR) model allows firms to react flexibly to rising demand for talent in different occupations. It is available to highly qualified individuals, qualified specialists/craftsmen in certain understaffed professions (such as qualified labor and registered nurses), and key personnel/professionals. Applicants must have an offer of employment to apply for the RWR. Highly qualified individuals holding U.S. citizenship may apply locally in Austria or opt to find a potential employer from abroad and have the company apply in Austria on their behalf.
Austrian immigration law requires those applying for residency permits in some categories to take German language courses and exams. There is a specific visa category under the RWR model for founders of start-up enterprises to support Austria’s push to expand its innovation economy.
A less bureaucratic alternative is the EU Blue Card, which entitles applicants to a fixed-term stay of 24 months and employment is tied to a specific employer. However, there is a threshold of a gross annual income of at least one and a half times the average gross annual income for full-time employees (in 2020: at least EUR 63,672 (USD 71,313); annual salary plus special payments).
While there is no requirement for foreign IT providers to turn over source code and/or provide access to encryption, EU and Austrian data protection stipulations apply. The EU General Data Protection Regulation (GDPR) as adopted by Austria in 2018, places restrictions on companies’ ability to store and use customer data. It also requires specific user consent, in order for companies to send out promotional materials (previously, implied consent was sufficient). Transmission of customer or business-related data is therefore subject to EU GDPR regulations. Austria’s Data Protection Authority is in charge of enforcing all GDPR-related matters, which include GDPR rules on data storage. In October 2019, the DPA imposed a fine of EUR 18 million (USD 20.2 million) on Austria’s postal service for illegal use of customer data, which included collecting and selling data on party affiliations. The postal service was ordered to delete the data concerned.
The Austrian government may impose performance requirements when foreign investors seek financial or other assistance from the government, although there are no performance requirements to apply for tax incentives. There is no requirement that Austrian nationals hold shares in foreign investments or for technology transfer, and no requirement for foreign investors to use domestic content in the production of goods or technology.
5. Protection of Property Rights
The Austrian legal system protects secured interests in property. The land registry is a reliable system for recording interests in property, and access to the registry is public. 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. 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 (IPR), including patent and trademark laws, a law protecting industrial designs and models, and a copyright law. Austria is a member of the World Intellectual Property Organization (WIPO) and party to several IP treaties, including the Berne Convention, the Paris Convention, the Patent Cooperation Treaty (PCT), the WIPO Copyright Treaty, and the WIPO Performances and Phonograms Treaty. Austria also participates in the Patent Prosecution Highway (PPH) program with the United States Patent and Trademark Office (USPTO), which allows filing of streamlined applications for inventions determined to be patentable in other participating countries.
Austria’s Copyright Act 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. 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 goods. In 2019, Austrian customs authorities confiscated pirated goods worth EUR 16.1 million (USD 18.0 million), which is a six-fold increase from the previous year.
Austria is not listed in USTR’s Special 301 Report, but its trade secrets regime has historically been 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 through the Law Against Unfair Competition which entered into force in February 2019. 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. The new law also defines injunctive relief and claims for damages in case of breach of trade secrets. The 2020 government program includes a plan to improve prosecutions of trade secrets theft and to tackle industrial espionage.
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 62 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. The market capitalization of Austrian listed companies is relatively small compared to the country’s western European counterparts, accounting for 31% of Austria’s GDP, compared to 54% in Germany or 150% in the United States.
Unlike the other market segments in the stock exchange, the Direct Market and Direct Market Plus segments, targeted at SMEs and young, developing companies, are subject only to the Vienna Stock Exchange’s general terms of business, not more stringent 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. Overall, financing is primarily available through banks and government-sponsored funding organizations with very little private venture capital in existence. The Austrian government is aware of this issue but has taken few tangible steps to improve the availability of private venture capital.
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 system ranked 30th in the 2019 World Economic Forum’s Global Competitiveness Report, out of 141 countries examined.
Money and Banking System
Due to U.S. government financial reporting requirements, Austrian banks are very cautious in committing the time and expense required to accept U.S. clients and U.S. investors without established U.S. corporate headquarters.
Austria has one of the densest banking networks in Europe with almost 4,000 branch offices registered in 2019. 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 1.02 trillion (USD 1.1 trillion) in 2019 approximately 2.5 times the country’s GDP. Approximately EUR 400 million of these are held by Austria’s two largest banks, Erste Group and Raiffeisen Bank International (RBI). The Austrian banking sector is considered to be one of the most stable in the world. Austria’s banking sector is managed and overseen by the Austrian National Bank (OeNB) and the Financial Market Authority (FMA). Four 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, as well as Volksbank Wien AG, due to its importance for the economy. 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. Foreign banks are allowed to establish operations in the country with no legal restrictions that place them at a disadvantage compared to local banks.
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 (http://www.oebag.gv.at)
The government has direct representation in the supervisory boards of its companies (commensurate with its ownership stake) and OeBAG has the authority to buy and sell company shares, as well as purchase minority stakes in strategically relevant companies. Such purchases are subject to approval from an 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 264 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.
Austrian laws require advance approval by the Austrian Ministry for Digital and Economic Affairs for foreign acquisitions of a relevant stake ) in enterprises in certain strategic industries (with sales over EUR 700,000, USD 784.000 per year), comprising a wide range of sectors (see Chapter 1).
The government has not privatized any public enterprises since 2007. Austrian public opinion is skeptical regarding further privatization and there are no indications of any government privatizations on the horizon. 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. In March 2020, the government chose not to intervene when the Czech Sazka group increased its stake in the partially state-owned gambling group Casinos Austria to a majority share.
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 Organization for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises and has established a National Contact Point to field concerns about any companies not conforming to these Guidelines. In such an instance, the NCP may facilitate mediation between the parties to resolve any relevant dispute.
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.
Austrian NCP for the OECD Guidelines for Multinational Enterprises
Federal Ministry for Digital and Economic Affairs
Telephone: (+43) 1 711 00-805240 or 805050
Fax: (+43) 1 711 00-8045050 http://www.oecd-leitsaetze.at/
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 12th (out of 180 countries) in Transparency International’s latest Corruption Perceptions Index.
Bribery of public officials, their family members and political parties, is prohibited under the Austrian Criminal Code, and investors do not report corruption as significantly affecting business in Austria. However, the 2017 Ibiza scandal in which then-Vice Chancellor Heinz Christian Strache and Freedom Party FPOe chairman Johann Gudenus were filmed discussing the provision of government contracts in exchange for favors and party donations shook the public’s belief in the integrity of the political system. This was compounded by further revelations in 2019 that the FPOe had promised gambling licenses to Casinos Austria in exchange for placing a party loyalist on the company’s executive board. When this was made public, it led to a vote of no-confidence for the government, the resignation of the Chancellor and his cabinet, and snap elections. It also led to public questioning of the process of appointment of candidates to high-ranking positions in state-owned enterprises, but so far there has been no change to the law.
Bribing members of Parliament is considered a criminal offense, and accepting a bribe is a punishable offense with the sentence varying depending on the amount of the bribe. The 2018 Austrian Federal Contracts Act implements EU guidelines prohibiting participating in public procurement contracts if there is a potential conflict of interest and requires measures to be put in place to detect and prevent such conflicts of interest. This required public authorities to set up compliance management systems or amend their existing structures accordingly. Virtually all Austrian companies have internal codes of conduct governing bribery and potential conflicts of interest.
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 ranging from six months to ten years , depending on the severity of the offence. 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 2,500 (USD 2,800). No donor is allowed to give more than EUR 7,500 (USD 8,400) and total donations to one political party may not exceed EUR 750,000 (USD 840,000) in a single year. Foreigners are prohibited from making donations to political parties. 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).
To date, U.S. companies have not reported any instances of corruption inhibiting FDI.
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 4.1 million, of whom 3.6 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 June 30, 2020.
The COVID-19 crisis has led to a spike in unemployment. The Economic Research Institute (WIFO) forecasts an unemployment rate of 5.5% by the end of 2020 (compared to 4.5% in 2019) and a gradual recovery in 2021. Foreigners account for almost one-fifth of Austria’s labor force; around 800,000 foreign workers are employed in Austria. Migrant workers come largely from the CEE region, but there are also many workers who arrived during the Syrian refugee crisis who have entered the labor market. Migrant workers often occupy lower-paying jobs and make up a large percentage of workers in the tourism and healthcare sectors.
Youth unemployment is not a major problem. Austria has a successful dual-education apprenticeship system that combines on-the-job training with classroom instruction in vocational schools. It includes guaranteed placement by the Public Employment Service for those 15-24 year-olds who cannot find an apprenticeship. Austria has a well-balanced labor market but, like many of its neighbors, suffers from a shortage of skilled IT personnel, particularly in the banking and financial sector.
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 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. Additionally, the closure of borders due to the COVID-19 crisis has led to an acute shortage of personnel in the home healthcare sector, most of whom are from Eastern Europe. Due to its generous social welfare system, Austria has a high rate of employer non-wage labor costs, amounting to approximately 30% of gross wages. Labor laws are commonly adhered to and strictly enforced.
Labor-management relations are relatively harmonious in Austria, which traditionally enjoys a low incidence of industrial unrest. Strikes are uncommon with only two notable incidents over the past decade (2011, 2018). Additionally, all employees are automatically members of the Austrian Labor Chamber.
Collective bargaining revolves mainly around wages and fringe benefits. Approximately 90 percent of the labor force works under a collective bargaining agreement. In 2017, Austria implemented a national minimum wage of EUR 1,500 (approx. USD 1,700) per month, with monthly wages paid 14 times per year. 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.
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 is at the company level. Overtime is paid at an additional 50 percent of the employee’s salary and, in some cases, such as work on public holidays, 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 13 workdays annually.
12. U.S. International Development Finance Corporation (DFC) and Other Investment Insurance Programs
DFC programs are not available for Austria.
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
Host Country Gross Domestic Product (GDP) ($M USD)