Austria: Investing

FDI in Figures

Austria has traditionally attracted a significant amount of FDI owing to its geographical location as an intersection of Eastern and Western Europe. According to UNCTAD's 2022 World Investment Report, FDI in Austria returned positive in 2021, at USD 5.8 billion, after a negative flow of USD 15 billion one year earlier. FDI stock reached USD 198.3 billion in the same year.
Germany, Russia, and Switzerland account for more than half of Austria's FDI stock. The U.S., Italy, the Netherlands and the UAE are other major investors. Investments are mainly oriented towards professional, technical and scientific activities, finance and insurance, trade, real estate, chemistry and pharmacy (data National Bank of Austria). According to the latest figures from OECD, in the first half of 2022 FDI inflows reached USD 2.3 billion.

Austria's strengths are its stable economy, its location at the centre of Europe and its skilled and highly productive workforce. In order to encourage foreign investment, Austria provides welcoming conditions for foreign companies that want to invest in capital-intensive industries and in research and development, for which considerable tax breaks are available. Financial incentives and business subsidies are provided by Austrian federal, state, and local governments to promote investments and include tax incentives, preferential loans, loan guarantees, and grants. Furthermore, the 2022 tax reform foresees a new 10-15% eco-investment tax allowance for purchasing new commodities or business assets that have a positive ecological impact and a life span of at least four years. In 2020 the Austrian Parliament adopted a new FDI screening act (Investitionskontrollgesetz, "ICA"), following the EU Regulation (2019/452) setting a new framework for foreign investment screening. The law introduces a review of foreign investment in business activities including R&D of pharmaceuticals, vaccines, medical devices and personal protective equipment and critical infrastructure in the healthcare sector. The threshold at which government approval of the transaction is required has been lowered to 10% foreign ownership for sensitive sectors. Austria ranks 63th out of 82 countries in the Economist Business Environment ranking. The country stands at 20th place in the Foreign Direct Investment Confidence Index 2022,losing one position compared to one year earlier.

Foreign Direct Investment	2020	2021	2022
FDI Inward Flow (million USD)	-9,351	13,494	1,947
FDI Stock (million USD)	205,762	212,889	203,974
Number of Greenfield Investments*	96	91	82
Value of Greenfield Investments (million USD)	1,537	2,040	3,541

Source: UNCTAD, Latest data available.

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

FDI STOCKS BY COUNTRY AND INDUSTRY

Main Investing Countries	2020, in %
Germany	30.8
Russia	13.4
Switzerland	7.0
USA	6.5
Italy	5.8
Netherlands	3.5
Uinted Arab Emirates	2.8
United Kingdom	2.8
France	2.7
Japan	2.5

Main Invested Sectors	2020, in %
Professional, scientific and technical service activities	50.9
Financial intermediation	14.6
Trade	12.5
Real estate activities	5.3
Chemicals, petroleum products, pharmaceuticals	2.6
Manufacture of transport equipment	1.8
Administrative and support service activities	1.7

Source: National Bank of Austria, Latest data available.

Form of Company Preferred By Foreign Investors: Gesellschaft mit beschraenkter Haftung (GmbH Limited Liability Company)
Main Foreign Companies: Boeing, BAE Systems, Toyota, General Motors, Ford, Mitsubishi, BASF, DuPont, McLanahan, Siemens, etc.

What to consider if you invest in Austria

Strong Points

Advantages for FDI in Austria:

Austria ranks 27th out of 190 economies with regard to ease of doing business in the World Bank's Doing Business 2020 ranking
Well-developed infrastructure
Skilled and competent work force and high productivity
Austria also has a significant pharmaceutical industry, thus developing a focus of biotechnological skills and attracting the big companies of this sector
Good quality of life (Vienna is in first position in the world ranking established by Mercer)
Good regional (European Union) and international integration. Austria benefits in particular from its strategic geographical location between western, central and eastern Europe
Substantial current account surplus
Austria is a desirable tourist destination
High level of public investment in R&D
Political stability and personal security are especially strong in Austria

Weak Points

Austria’s weak points for FDI are:

Rigid labour practices and complex regulations
A lack of risk taking in capital finance
Restrictive immigration laws
Trade dependence on Germany
The country is strongly dependent on central and eastern Europe, where numerous investments have been made, which has weakened the banking sector
Small domestic market

Government Measures to Motivate or Restrict FDI

Export incentives, political stability and low telecommunication costs make the Austrian business climate favourable. Generally, the Austrian government favours FDI targeting the high-tech sector. Federal, state, and local governments provide investment incentives at the same conditions to local and foreign investors, including tax incentives, preferential loans, loan guarantees, and grants. Tax incentives are available for projects in economically underdeveloped and rural areas, for job-creation and for investment in R&D. The governmental institution that provides financial incentives for businesses is the Wirtschaftsservice (AWS). Foreign investors may also claim government support measures designed for companies affected by the COVID-19 epidemic.
For further information, refer to the portal InvestInAustria.

Protection of Foreign Investment

Bilateral Investment Conventions Signed By Austria: Visit the UNCTAD website.
International Controversies Registered By UNCTAD: Please consult UNCTAD's Investment Dispute Settlement Navigator.
Organizations Offering Their Assistance in Case of Disagreement: ICSID , International Center for settlement of Investment Disputes
ICCWBO , International Chamber of Commerce
Member of the Multilateral Investment Guarantee Agency: Yes

Country Comparison For the Protection of Investors	Austria	OECD	United States	Germany
Index of Transaction Transparency*	5.0	6.5	7.0	5.0
Index of Manager’s Responsibility**	5.0	5.3	9.0	5.0
Index of Shareholders’ Power***	7.0	7.3	9.0	5.0

Source: The World Bank - Doing Business, Latest data available.

Procedures Relative to Foreign Investment

Freedom of Establishment: There are no specific legal, practical or market access restrictions on foreign investment. Nevertheless, a national security investment screening process is in force for potential foreign acquisitions of at least 25% of a company considered essential to national security or which is involved in the provision of public services such as energy, water, telecommunications, and education.
Acquisition of Holdings: A majority holding interest in the capital of a local company is legal in Austria. However, a local managing director must be appointed to any newly established enterprise.
Obligation to Declare: In order to be able to run a company in Austria, professional ability proofs are required in nearly all activities, listed in a regulatory test: Gewerbeordnung, renewed by the law number 194 of 1994.
Competent Organisation For the Declaration: Austrian Economic Chamber (WKO)
Requests For Specific Authorisations: Licenses are required in sectors like banking and insurance. A national security investment screening process is in force for potential foreign acquisitions of at least 25% of a company considered essential to national security or which is involved in the provision of public services such as energy, water, telecommunications, and education. Moreover, the federal and state governments maintain at least a 51% share in all energy generation and supply companies.

Office Real Estate and Land Ownership

Possible Temporary Solutions: Ready to use office spaces (on rent) are available in the country. They offer complete infrastructure to start business operations.
Some options include: OfficerentInfo, InstantOffices, Regus.
The Possibility of Buying Land and Industrial and Commercial Buildings: Yes, there is no discrimination between local and foreigners.
Risk of Expropriation: It happens very rarely and only in case of "public interest". However, the concerned party is fairly compensated.
The expropriation process is non-discriminatory toward foreigners

Investment Aid

Forms of Aid: Austria offers tax incentives, preferential loans, loan guarantees, and grants within EU parameters to firms undertaking projects in economically depressed and underdeveloped areas on Austria’s eastern and southern borders, as well as for company investing in high-tech industries and R&D.
Privileged Domains: Tax incentives, preferential loans, loan guarantees, and grants may be provided under specific circumstances, according to the sector and geographical location of the investment.
Privileged Geographical Zones: Research and development, infrastructure building (expanding and improving the road, rail, energy and telecom infrastructures), and sectors helping in jobs creation.
Free-trade zones: Austria does not have any free zones.
However in some regions (the economically underdeveloped areas on Austria's eastern and southern borders and rural areas), the government offers special facilities and services ("cluster packages") to foreign investors.
Public aid and funding organisations: Austria Wirtschaftsservice (AWS) (Austrian promotional bank) is the government’s “one-stop shop” institution providing financial help.

Investment Opportunities

The Key Sectors of the National Economy: Pharmaceutical and chemical, industries automotive, food-processing, financial services, steel and mechanical engineering, wood pulp and paper industry, electricity (especially hydroelectricity), health sector, tourism, information and communication technologies sector.
High Potential Sectors: Renewable energy, wine, multifunctional security solutions and security software, e-commerce.
Privatization Programmes: There are no indications of any government privatizations in the near future (no public enterprise has been privatized since 2007).
Tenders, Projects and Public Procurement: Tenders Info, Tenders in Austria
TED - Tenders Electronic Daily, Business opportunities in the EU
DgMarket, Tenders Worldwide

Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors: Gambling (although in March 2020 the Czech Sazka group increased its stake in the partially state-owned gambling group Casinos Austria to a majority share)

Finding Assistance For Further Information

Investment Aid Agency: Invest in Austria (national investment promotion agency)
Advantage Austria
Other Useful Resources: Vienna Business Agency
Doing Business Guides: Doing Business - Austria

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