Companies planning on entering the Austrian market, either with investment or by establishing their corporate presence in the country, can enjoy many opportunities.
Austria is situated in the heartland of Europe and is part of the Single Market. It has easy access to the other 27 countries of the European Union, plus Iceland, Liechtenstein, Norway and Switzerland, for the free movement of people, capital, goods and services. It is one of Europe’s wealthiest countries with a stable economic and political landscape. It also provides companies using Austria as a foothold for further expansion into Europe, with around 450 million consumers to target. Its highly developed and steadily growing economy is built on a firm manufacturing base topped by a thriving tourism sector. A key statistic highlights the attraction for foreign companies: the per capita income of US$53,973 is the 13th in the world and makes Austria the sixth-richest nation in the EU.
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. 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. Tourism is another strong pillar of the Austrian economy; through 2021-22, Austria was on the fringe of the world’s top 10 most-visited tourist nations.
Foreign companies entering the Austrian market for their International Expansion plans must establish a legal entity before hiring staff and operating their payroll. The typical choice is to open a subsidiary as a private limited liability company, known in Austria as a GmbH. It incorporates through the Commercial Register, operates under the Austrian Company Act and follows the Code of Corporate Governance regarding management regulations.
Procedures for incorporation include the following steps:
Opening a subsidiary when entering the Austrian market can create challenges. Moving staff across the world involves complications surrounding immigration documentation and work permits. When employees are in place, who will handle payroll? How will your company deal with regulations on taxation, entitlements and benefits, termination and severance? Drawing up an expansion blueprint is not enough. By partnering with a Professional Employment Organisation (PEO) and Employer of Record (EOR) such as Bradford Jacobs, companies can plot a time-efficient and cost-effective route to locating and employing staff in Austria.
Austria is an attractive target for foreign investment, with many incentives. Still, there are always considerations regarding compliance with relevant legislation, including the General Civil Code (AGBG) and various employment statutes that lay down the obligations of employers and protect the rights of their employees. There are other issues, too. Where will you find manufacturers, offices and distributors?
Where to locate within the country?
There are nine regions within Austria, all offering opportunities to go-getter entrepreneurs in the business community:
Vienna is Austria’s capital, economic hub and research centre, housing over 200 multinational headquarters. It is a hive of commercial activity for foreign businesses with more than 100,000 employees and an estimated investment of €75 million. This city provides routes to the CEE (Central and Eastern Europe) countries, top-quality international airports and universities with excellent infrastructure.
Lower Austria offers science, technology, medical research locations and Business Clusters for food, plastics, mechatronics and the green construction industry, with 16 state-of-the-art business parks throughout the area with over 1,100 domestic and international companies, employing nearly 24,000 staff.
Burgenland is an essential route to Slovakia, Slovenia and Hungary, has premium road and rail networks, and is within 100 km of three international airports. It boasts six technology centres.
Styria is the place for launching new products. It enjoys a dynamic education system, several research institutions and an innovative community with five Business Clusters in mobilities, materials, eco-world, wood and human technology with 18 Competence Centres.
Considerations when locating your office in the midst of what Austria has to offer:
As of 2022, Austria does not have any Free Trade Zones.
Some advantages of entering the Austrian market include the following:
Some challenges of entering the Austrian market include:
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