Austria
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Doing Business Doing Business in Austria
03 October 2011
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The information on doing business in Austria was supplied by www.DoingBusiness.org, an initiative of the International Finance Corporation, a member of the World Bank Group.
Market Overview
Austria, with a population of 8.4 million, is a dynamic European Union member country offering export opportunities for companies of all sizes.
For firms looking to expand in Southeast Europe, Austria offers attractive features as regional headquarters location, and recent Austrian governments have sought to encourage this through economic reforms and by highlighting Austria's historical and economic ties to the surrounding region.
At present, approximately 350 U.S. firms have subsidiaries, affiliates, franchisees, and licensees in Austria. About 150 of these companies have regional responsibilities for Central European, Eastern European, or Balkan countries.
For firms looking to expand in Southeast Europe, Austria offers attractive features as regional headquarters location, and recent Austrian governments have sought to encourage this through economic reforms and by highlighting Austria's historical and economic ties to the surrounding region.
At present, approximately 350 U.S. firms have subsidiaries, affiliates, franchisees, and licensees in Austria. About 150 of these companies have regional responsibilities for Central European, Eastern European, or Balkan countries.
Market Opportunities
To overlook Austria would be to overlook one of the world's most prosperous nations (on a per capita basis). Doing business in and from Austria presents certain advantages.
First, Austria is at an international crossroad, bordering on eight European countries: Germany, Italy, Switzerland, Slovenia, Hungary, Slovakia, Czech Republic, and Liechtenstein. This gives it a logistical advantage over the other countries in the region.
Four of Austria's neighbours joined the EU in May 2004 (Czech Republic, Slovakia, Slovenia, and Hungary), transforming Austria geographically from a country on the eastern frontier of the EU to one occupying a more central position within the enlarged EU. The addition of two other Eastern European countries to the EU at the beginning of 2007, Romania and Bulgaria, strengthened Austria's central position.
Austria is a member of the Schengen agreement and offers companies access to growing markets in Eastern and Southeastern Europe.
Some question whether Austria will continue to play a role as a gateway to the East in attracting U.S. exports and investment, or whether U.S. firms will bypass Austria and go directly to the more growth-oriented and often more pro-business new EU members.
Many businesses continue to view Austria as a prime location and distribution hub. The country has financial and transportation links to the Eastern European and Balkan region, and its banks and service providers understand regional business practices.
Partnerships with Austrian firms who have a presence in regional markets may be an attractive option for some international companies.
A second advantage for Austria is its well-diversified and relatively resilient economy. The Austrian government has sought to remain competitive by pursuing investment in high-potential industries such as telecommunications, non-agricultural biotechnology, medical and pharmaceutical research, and electronics. For companies in these industry sectors, Austria represents a good opportunity for export, joint ventures, and investment.
Excellent school systems and a very high standard of living, make Austria even more attractive to expatriate business managers.
A third plus for Austria is its membership in the EU and the Euro currency zone. The Euro has been the common currency for Austria since 2002. It has already facilitated trade and promoted economic stability for external companies, helping them to manage pricing, balance accounts, and move products within Austria and throughout EU member countries.
It should be noted that some firms have found Austria's implementation of EU rules unnecessarily burdensome, bureaucratic and non-transparent, and have threatened to cut back on their investment in Austria as a result.
The United States is Austria's fifth largest trading partner and its largest trading partner outside of Europe.
Austria is a very attractive market demanding high product quality, excellent after sales service, and competitive prices.
Although Austrian buyers may give preference to the supplier who is closest geographically and speaks German, many external products and services can compete well with those from Germany and other EU member countries.
First, Austria is at an international crossroad, bordering on eight European countries: Germany, Italy, Switzerland, Slovenia, Hungary, Slovakia, Czech Republic, and Liechtenstein. This gives it a logistical advantage over the other countries in the region.
Four of Austria's neighbours joined the EU in May 2004 (Czech Republic, Slovakia, Slovenia, and Hungary), transforming Austria geographically from a country on the eastern frontier of the EU to one occupying a more central position within the enlarged EU. The addition of two other Eastern European countries to the EU at the beginning of 2007, Romania and Bulgaria, strengthened Austria's central position.
Austria is a member of the Schengen agreement and offers companies access to growing markets in Eastern and Southeastern Europe.
Some question whether Austria will continue to play a role as a gateway to the East in attracting U.S. exports and investment, or whether U.S. firms will bypass Austria and go directly to the more growth-oriented and often more pro-business new EU members.
Many businesses continue to view Austria as a prime location and distribution hub. The country has financial and transportation links to the Eastern European and Balkan region, and its banks and service providers understand regional business practices.
Partnerships with Austrian firms who have a presence in regional markets may be an attractive option for some international companies.
A second advantage for Austria is its well-diversified and relatively resilient economy. The Austrian government has sought to remain competitive by pursuing investment in high-potential industries such as telecommunications, non-agricultural biotechnology, medical and pharmaceutical research, and electronics. For companies in these industry sectors, Austria represents a good opportunity for export, joint ventures, and investment.
Excellent school systems and a very high standard of living, make Austria even more attractive to expatriate business managers.
A third plus for Austria is its membership in the EU and the Euro currency zone. The Euro has been the common currency for Austria since 2002. It has already facilitated trade and promoted economic stability for external companies, helping them to manage pricing, balance accounts, and move products within Austria and throughout EU member countries.
It should be noted that some firms have found Austria's implementation of EU rules unnecessarily burdensome, bureaucratic and non-transparent, and have threatened to cut back on their investment in Austria as a result.
The United States is Austria's fifth largest trading partner and its largest trading partner outside of Europe.
Austria is a very attractive market demanding high product quality, excellent after sales service, and competitive prices.
Although Austrian buyers may give preference to the supplier who is closest geographically and speaks German, many external products and services can compete well with those from Germany and other EU member countries.
Market Challenges
When establishing a business in Austria, international companies may encounter some troublesome bureaucratic barriers.
However, some Austrian provinces have established one-stop-shops for investors, and they are competing with each other in an effort to eliminate red tape.
Most business activities in Austria are regulated and require that a separate application be made for a business license and registration in the commercial register.
Evidence of proficiency in running a business is required for most businesses. Usually a passing score on an examination or evidence of prior experience in the field is sufficient.
For those business activities that do not require proof of proficiency, the business license is granted automatically upon registration of the business.
Austria welcomes foreign direct investment that does not have a negative impact on the environment. The Government particularly welcomes those investments that create new jobs in high technology fields, promote capital-intensive industries, and have links to R&D activities, for which special tax incentives are available.
However, some Austrian provinces have established one-stop-shops for investors, and they are competing with each other in an effort to eliminate red tape.
Most business activities in Austria are regulated and require that a separate application be made for a business license and registration in the commercial register.
Evidence of proficiency in running a business is required for most businesses. Usually a passing score on an examination or evidence of prior experience in the field is sufficient.
For those business activities that do not require proof of proficiency, the business license is granted automatically upon registration of the business.
Austria welcomes foreign direct investment that does not have a negative impact on the environment. The Government particularly welcomes those investments that create new jobs in high technology fields, promote capital-intensive industries, and have links to R&D activities, for which special tax incentives are available.
Market Entry Strategy
The best strategy for an international exporter into Austria is usually to select one distributor or agent for the entire Austrian market.
Some companies appoint distributors in Germany who cover all of German-speaking Europe, including Germany, Austria, and most of Switzerland. But this works best for exporters with a limited number of customers and end-users in Austria. In such cases, a distributor might be located in Munich instead of Vienna.
Austrian buyers are sensitive to agents or distributors based elsewhere and may give priority to competitors with a more dedicated Austrian presence.
Some companies appoint distributors in Germany who cover all of German-speaking Europe, including Germany, Austria, and most of Switzerland. But this works best for exporters with a limited number of customers and end-users in Austria. In such cases, a distributor might be located in Munich instead of Vienna.
Austrian buyers are sensitive to agents or distributors based elsewhere and may give priority to competitors with a more dedicated Austrian presence.
Web Resources
There are innumerable web resources available in Austria and the EU, some of which have some English content.
Following are the most important sites:
The official Austrian government source of information on Austria.
http://www.austria.org/
The website of the U.S. Commercial Service in Vienna, containing market research on Austria in English, as well as contact points, a list of business service providers, upcoming events, and information on CS services.
http://www.buyusa.gov/austria/en
American Chamber of Commerce in Austria is a good source of information on U.S. companies operating in Austria. The AmCham also lists information about upcoming events.
http://www.amcham.or.at/
The website of the Austrian Federal Economic Chamber, containing information on the Chamber and contact points in German, and basic information in English
http://portal.wko.at/
A website in English designed for expatriates living in Austria and for prospective transferees to Austria, introducing the reader to life in Austria.
http://www.virtualvienna.net/
EC Directive on Commercial Agents
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31986L0653:EN:HTML
Agreements of Minor importance which do not appreciably restrict Competition under Article 81(1) of the Treaty establishing the European Community
http://eur-lex.europa.eu/LexUriServ/site/en/oj/2001/c_368/c_36820011222en00130015.pdf
European Ombudsman
http://www.ombudsman.europa.eu/home/en/default.htm
EU's general data protection Directive (95/46EC)
http://ec.europa.eu/justice_home/fsj/privacy/index_en.htm
Information on contracts for transferring data outside the EU
http://ec.europa.eu/justice_home/fsj/privacy/modelcontracts/index_en.htm
Following are the most important sites:
The official Austrian government source of information on Austria.
http://www.austria.org/
The website of the U.S. Commercial Service in Vienna, containing market research on Austria in English, as well as contact points, a list of business service providers, upcoming events, and information on CS services.
http://www.buyusa.gov/austria/en
American Chamber of Commerce in Austria is a good source of information on U.S. companies operating in Austria. The AmCham also lists information about upcoming events.
http://www.amcham.or.at/
The website of the Austrian Federal Economic Chamber, containing information on the Chamber and contact points in German, and basic information in English
http://portal.wko.at/
A website in English designed for expatriates living in Austria and for prospective transferees to Austria, introducing the reader to life in Austria.
http://www.virtualvienna.net/
EC Directive on Commercial Agents
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31986L0653:EN:HTML
Agreements of Minor importance which do not appreciably restrict Competition under Article 81(1) of the Treaty establishing the European Community
http://eur-lex.europa.eu/LexUriServ/site/en/oj/2001/c_368/c_36820011222en00130015.pdf
European Ombudsman
http://www.ombudsman.europa.eu/home/en/default.htm
EU's general data protection Directive (95/46EC)
http://ec.europa.eu/justice_home/fsj/privacy/index_en.htm
Information on contracts for transferring data outside the EU
http://ec.europa.eu/justice_home/fsj/privacy/modelcontracts/index_en.htm
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