AUSTRIA GUIDE
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Expanding into Austria – which is characterised by a highly-qualified and talented workforce, multifaceted employment and tax laws, a developing infrastructure network linking to the rest of Europe, and leading sectors in mining, industry, agriculture, and tourism – can bring excitement to the possibilities, but also significant stress to ensuring the entity with the country’s rigorous legal structures and laws.
Global expansion is a step for any business, regardless of your goal. The opportunities that can come with an expansion can be inspiring as well as intimidating and confusing, especially when you consider all the registration procedures that need to be done and the documentation required.
Each new market brings new challenges. These can be worked through more efficiently and cost-effectively with the support of a Professional Employer Organisation (PEO) such as Bradford Jacobs, primarily through our Employer of Record (EOR) framework. This can be best utilised when businesses are just beginning their expansion process and require more information before incorporating an entity and fully establishing themselves in that market.
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Austria – The Economy
The economy of Austria is a developed social market economy, with the country being the 17th richest in the world in terms of GDP (gross domestic product) per capita. Until the 1980s, many of Austria’s most prominent industry firms were nationalised. In recent years, privatisation has reduced state holdings to a level comparable to other European economies.
Germany has historically been the leading trading partner of Austria, making the Austrian economy vulnerable to rapid changes in the German economy. However, since Austria became a member of the European Union, it has gained closer ties to other European Union economies. This development reduced its economic dependence on Germany. In addition, Austria’s membership in the EU has drawn an influx of foreign investors. Austria’s access attracted them to the European Single Market and the country’s proximity to the aspiring economies of the European Union.
Austria’s nominal Gross Domestic Product (GDP) of US$479 billion in 2021 ranked it 33rd in the world, with a growth of 4.9% predicted through 2022. Austria’s highly developed and steadily growing economy is built on a firm manufacturing base topped by a thriving tourism sector.
Next to a highly developed industry, international tourism is essential to the national economy. In southern Central Europe, Austria’s geographical location and membership in the European Union (EU) place it at the heart of a trading bloc with close to 500 million citizens and huge consumer potential.
Manufacturing industries include food production, mechanical engineering, steel construction, chemicals and the automotive sector. The luxury goods market includes hand-crafted articles, costume jewellery, ceramics and glassware.
The luxury goods market includes hand-crafted articles, costume jewellery, ceramics and glassware. Manufacturing features basic processes and complex, labour-intensive production processes combining technological know-how and operational expertise. Incoming companies can draw on a highly-skilled, well-educated workforce with comparatively low unemployment.
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Capital |
Vienna |
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No. of States/Provinces |
9 federal regions: Voralberg, Tirol, Salzburg, Upper Austria, Lower Austria, Vienna, Styria, Carinthia, Burgenland |
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Principal Cities |
Vienna, Graz, Linz, Salzburg, Innsbruck, Klagenfurt, Villach, Wels, St. Pölten |
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Language |
German |
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Local Currency |
Euro (EUR) |
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Major Religion |
Catholicism |
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Date Format |
dd/mm/yyyy |
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Time Zone |
Central European Time (CET/GMT+1) |
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Country Dial Code |
+43 |
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Population |
9.028 million |
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Border Countries |
Germany, Czech Republic, Slovakia, Hungary, Slovenia, Italy, Switzerland and Liechtenstein |
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Tax Year |
Calendar Year (1st January - 31st December) |
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VAT & |
20% |
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Minimum Wage |
EUR 1,500/month |
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Taxpayer Identification Numbers |
9 digits: 99-999/9999 / depending on the taxpayer’s area of residence. |
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Leading Sectors |
(approx.) 70% tourism and 28% manufacturing industries (food production, mechanical engineering, steel construction, chemicals, automotive sector). |
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Main imports |
Machinery, computers, vehicles, mineral fuels inc. oil, pharmaceuticals, plastics |
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Main exports |
Computers, electrical machinery and equipment, pharmaceuticals, plastics, iron and steel, wood, optical and medical apparatus, paper products |
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Main trading partners |
Germany, Italy, USA, Switzerland, Poland, Slovakia, France, Hungary, Czech Republic, China, UK, Slovenia |
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Government Type |
Federal and parliamentary Republic |
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Current President |
Alexander Van der Bellen |
The Main Sectors of the Austrian Economy
- Tourism – Tourism is the strongest pillar of the Austrian economy, attracting not only visitors to the culture and architecture of Vienna but also to Mozart’s birthplace, Salzburg, and the spectacular capital of the Tyrol, Innsbruck. Austria recorded 15 million tourists in 2020, ranking 18th in the world in absolute terms. Through 2021-22 Austria was on the fringe of the world’s top 10 most-visited tourist nations.
- Engineering – Thanks to highly-skilled workers, sustainable solutions and a strong sense of cooperation, engineering is one of the top leading sectors of the country’s economy. Seven thousand seven hundred engineering offices are active in Austria. Those firms are present in more than 50 fields: building physics, electrical engineering, interior design, installation technology, civil engineering, water management, landscape planning and architecture, mechanical engineering, etc.
- Metal industry – In 2021, 14,689 persons were employed in the Austrian iron and steel industry. There were 1,200 companies registered in the metal-working technology industry that produced a 43.8 billion euros total turnover. Austria’s metal-working technology industry exports count for 24% of the overall Austrian foreign trade. Austrian most important sales markets are the German, French, Italian and Swiss neighbours, plus the USA and China.
- Vehicle manufacturing – Austria has established itself as a highly qualified driving force behind automotive developments. It features a high level of attractiveness for international automotive companies thanks to its optimally trained, skilled employees. The automotive manufacturing sector, including the component supplier industry, ranks among Austria’s three top industrial sectors and secures every ninth job in the country.
- Energy production – Hydroelectric power generation is constantly expanding, making Austria the leader in the European Union’s hydroelectric power field. Austria has its resources of petroleum and natural gas. It also has natural resources of iron ore, non-ferrous metals, essential minerals and earth.
- Chemicals – The chemical industry is responsible for close to ten per cent of all industrial research and development expenditures in Austria, with approximately 245 companies and a workforce of 44,000 persons.
- Agriculture – Austria is witnessing a strong trend towards organic farming. With an overall share of 22%, organic farms in Austria occupy a leading position among the EU Member States.
Tax and Labour Authorities
- Central Management of the Federal Ministry of Finance – headquartered in Vienna.
- Tax Authority Austria – The Tax Authority Austria is set up as an Austria-wide tax authority, service authority, and budget-managing body. Some 6,000 employees work at the Tax Authority Austria at 67 locations all over the nation. The Tax Authority Austria has comprehensive and nationwide responsibility for all tasks not assigned to another tax authority. The Tax Authority Austria is headed by a Managing Director and has its headquarters in Linz.
- Anti-Fraud Office – In the Anti-Fraud Office, the tax and social fraud units of the Federal Ministry of Finance are consolidated. This ensures a coordinated and efficient strategic and nationwide operational control of the preventive and repressive fight against fraud in the Ministry of Finance. The Anti-Fraud Office consists of the following business units: fiscal offences, financial police, tax investigation and Central Office for International Cooperation.
- Tax Authority for Large Traders – The Tax Authority for Large Traders is a tax authority with nationwide responsibility over large traders, financial service providers, groups of companies, foundations and funds, and non-profit building associations. The Tax Authority for Large Traders is in Vienna.
- Federal Tax Court – The Tax Authority for Large Traders is a tax authority with nationwide responsibility over large traders, financial service providers, groups of companies, foundations and funds, and non-profit building associations. The Tax Authority for Large Traders is in Vienna.
- Federal Ministry of Labour – The Federal Ministry of Labour comprises three Directorates: The Executive Directorate, the Labour Law and Central Labour Inspectorate and the Labour Market.
- Labour Inspectorate –It is a subordinate agency of the Federal Ministry and the largest legally mandated organization to combat safety and health protection deficits at work in Austria.
Labour Contracts Law
- Employment contracts are not legally required under the Labour Contract Law (AVRAG), but they are commonly in force and strongly recommended
- Employees must at least be given written details of the agreement, including full title and address details of the employer’s business; start date with end date if it is a fixed-term agreement; job description; salary and payment schedule; working hours, breaks and paid vacations.
- Employers must comply with legally binding Collective Bargaining Agreements (CBAs)
- Probation periods can be entered into the first month of employment
- There is no time limit on fixed-term contracts or the number of fixed-term agreements before the work is deemed open-ended and permanent. However, if there is no reasonable justification for their renewal, they could be considered to as becoming permanent
- Although there is no statutory requirement for written contracts, they are advisable and should be in a language understood by the employee. The contract should confirm that the German version prevails in a dual-language contract (German plus one other).
Small and Medium-Sized Companies
A high proportion of medium-sized companies characterizes Austria’s industrial and commercial sectors. Austrian industry covers every manufacturing branch, from essential goods to the labour-intensive production of highly processed products. The construction of plants and systems is making up an increasingly important share.
Austria has a strong manufacturing base in the regions of Styria, Lower and Upper Austria, which accounted for 18% of GDP in 2020 with its major products for export including vehicle parts, packaged medication, human and animal blood, flavoured water, combustion engines, transformers and other machinery. Advance manufacturing seems to be the choice for companies looking to be more competitive, leading to increased production, especially in small to medium enterprises (SMEs).
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