Austria

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A member of the eurozone since it began, Austria is one of the countries most committed to the European ideal. In economic terms, its economy is closely linked to that of Germany. More flexible labour laws, a package of recent tax cuts, and, in recent years, a more buoyant economy, are prompting the country to market itself as “the better Germany”.

Most industry is concentrated in the lowlands in the east of the country. Good transalpine road and rail links ensure that even the mountainous western part of the country is no bar to transporting goods, and the Danube is a major artery linking countries all the way to the Black Sea. At present, the service sector accounts for 67% of the economy, manufacturing for 29%, and agriculture for the remaining 4%. Tourism, in particular winter sports, plays an important role in the mountainous west of the country.

Why Austria?

The Austrian Industrievereinigung, a panel of leading figures from the industrial, financial services and sciences, has identified the following points as particular strengths of Austria as a business location:

• High level of political support;
• Excellent infrastructure;
• Strong co-operation between universities and business;
• High productivity;
• Strong capital markets with good infrastructure.

Strong industrial base

Although Austria’s economy is now mainly service-based, it has retained a strong industrial and manufacturing sector concentrated on high-value, hightech production. Total industrial output in 2004 was € 100 billion. The most important sectors were machine and steel manufacturing, the automotive industry, electrical and electronics, chemicals, and other metals.

Tax reforms

The new tax measures have cut corporate tax to 25%, putting Austria in the bottom third of OECD members by taxation. There are no property taxes, and no trade tax. Further tax breaks are available for certain sectors.

Promoting investment and research

In particular, foreign-based companies whose business is defined as “research intensive” can apply to pay tax at the same rate as that of their home country, where this is lower than the Austrian taxation rate. Austria is aiming to make the R&D sector form 3% of its economy by 2010. In order to achieve this target, the government has created a billion dollar fund to support R&D programmes within the country. Environmental protection is another sector which the government is keen to promote.

SMEs

Small and medium-sized enterprises (SMEs) make up a significant part of the Austrian economy, and the government is keen to promote this sector. Government support and subsidies are available to both indigenous and foreign start-ups that come into the following categories. For these purposes, a small business is one that employs 50 persons or less, and has an annual turnover of €50 million or less. A medium sized enterprise is one that employs up to 250 people, and has an annual turnover of up to €20 million. However, no larger company may hold a stake of more than 25%.

Business culture

Culture in Austria is rather on the formal side, as in most Germanic countries. Business dress is formal. Above all, stick to the use of title and surname until invited to do otherwise.

Facts in brief

Austria’s location is Central Europe, north of Italy and Slovenia. Landlocked; strategic location at the crossroads of Central Europe with many easily traversable Alpine passes and valleys; major river is the Danube; population is concentrated on eastern lowlands because of steep slopes, poor soils, and low temperatures elsewhere

Millennium Tower, Millennium City (Vienna), tallest building in Austria

Its climate is temperate: continental, cloudy; cold winters with frequent rain and some snow in lowlands and snow in mountains; moderate summers with occasional showers

Natural resources include oil, coal, lignite, timber, iron ore, copper, zinc, antimony, magnesite, tungsten, graphite, salt, hydropower

Agriculture products are grains, potatoes, sugar beets, wine, fruit, dairy products, cattle, pigs, poultry, lumber

Industries include construction, machinery, vehicles and parts, food, metals, chemicals, lumber and wood processing, paper and paperboard, communications equipment, tourism

Diplomatic representation in the US — Chief of mission: Ambassador Eva Nowotny Diplomatic representation from the US — Chief of mission: Ambassador Susan R McCaw

Contact Information

American Chamber of Commerce in Austria
Porzellangasse 35
A-1090 Vienna
Austria
Tel: +431 319 5751
E-mail: office@amcham.or.at
Website: www.amcham.or.at

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