Austria’s robust economy is 28th in the world, with a nominal Gross Domestic Product of US$481.21 billion in 2021, predicted to grow by 4.9% in 2022. Further, Austria is a wealthy nation, ranked 13th in the world with a per capita GDP of US$53,973 and sixth in the European Union (EU). Foreign companies planning to expand their international horizons by moving into Austria can capitalise on its location in Southern Central Europe.
The economy is a stable mix of industry and manufacturing, a strong service sector, agriculture and a tourism market that places Austria on the fringe of the world’s top 10 most-visited holiday destinations. The potential is clear but making a move comes with challenges and pitfalls. Initially, these will revolve around payroll, employment legislation and taxes, whether companies move their staff into the country or recruit locally.
Making mistakes will be costly in time and money. The demands are even more significant when foreign companies establish a subsidiary as their route into Austria – a legal requirement before hiring staff and operating payroll. When launching a subsidiary, investors usually open the equivalent of a private limited liability company, known as a GmbH. It is incorporated through the Commercial Register, operates under the Austrian Company Act and follows the Code of Corporate Governance, which sets out the management rules.
Once the company incorporation process moves, employers must prepare to register employees. The procedure includes the following:
- The employer must obtain a contributions account number with the Association of Austrian Social Insurance Institutions (HVB) via’ ELDA’, the electronic data exchange.
- The employees must be registered with the HVB to obtain, or verify they possess, their social security number (SV) and designate their category of employment, such as white-collar or manual, for example.
- The employers must also register the employee’s date of birth, start date, level of insurance (full or partial), and occupational pension plan start date if there is a formal contract.
- The employees must be registered with the relevant local office of the Tax Authority Austria (TAA).
Note: Nationals from European Union (EU) nations and those from the European Economic Area (EEA) nations of Iceland, Norway and Liechtenstein, plus Switzerland, have free access to the Austrian employment market and do not require authorisation from labour market authorities in most cases.
