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Austria - Market Entry & Business Opportunities

June 26, 2023 | Corporate & Commercial Law

Austria's economy is mostly driven by investment & private consumption. The factors that augment the confidence of individuals, investors, and businesses is the political stability of the country, a reliable legal system, and liberal trade policies.

Austria is a robust and stable economy backed by one of the strong currencies, a high-income population, and trade openness. Austria provides market opportunities for investors, business leaders, and entrepreneurs alike. The R&D supporting policies of the government has boosted innovation in the industries, thus making them future-ready.

Economic Overview

Austria's economy is highly developed and prosperous, characterized by a high standard of living and a well-developed social market economy. It boasts a diverse industrial sector, including machinery, electronics, automotive, and tourism, supported by a highly skilled workforce. The country benefits from a stable banking system, favourable business environment, and strong infrastructure, contributing to its continued economic growth and high living standards.

Market Overview

Austria has a strong and growing economy, with a GDP of $445.13 billion in 2021 and a steady annual growth rate of around 2.5%. The country boasts the 13th highest GDP per capita globally and has a significant services sector, accounting for 62.5% of its GDP. Austria's commercial ties to the Central and Eastern Europe (CEE) region, particularly in banking and insurance, have greatly contributed to its economic success. Traditional, electronic, and mobile payment methods are widely used in the country, and consumer spending is primarily focused on housing, water, and electricity. E-commerce in Austria is experiencing an average net growth of 7%, with clothing being a popular purchase among females and consumer electronics among males. Austrians prioritize low-cost product categories over premium ones. Smartphones are the most commonly purchased devices online. Networking plays a crucial role in Austria, as Austrians prefer buying from businesses run by acquaintances or those with existing relationships. Trust is highly valued, and once a customer is acquired, there is a strong likelihood of maintaining their loyalty for an extended period.

Taxation and Subsidies offered by Austria

Austria has an investment-friendly tax system with a 25% corporate tax rate and tax credits for research investment. The country focuses on sustainable development and green growth, utilizing fiscal policy measures and subsidies for thermal retrofitting, water management improvements, and wastewater management. Lower fuel prices have led to fuel tourism, and transport-related taxes contribute significantly to environmental tax revenues. Austria implements waste charging systems and extended producer responsibility for various waste streams. Subsidies are primarily directed towards transport and energy, with limited direct support payments.

Financing Business in Austria

Austria has a growing and professional support network for early-stage investors, incubators, and business angels, evident through initiatives like the Austrian Angel Investors Association. Crowdfunding has experienced significant growth since the implementation of the Crowdfunding Act. The country has a differentiated funding system, with the Austrian Research Promotion Agency and Austria Wirtschaftsservice GmbH offering specific programs and funds to support high-tech start-ups. Funding requests are processed efficiently through a 24-hour quick check and the Global Incubator Network. Although the Austrian start-up scene is relatively small, it is characterized by agility, innovation, access to highly educated developers, and active business angel involvement, making it an attractive prospect for investors.

Top 10 Companies in Austria – 2018

Rank    Company    Industry    Total Revenue (in 2018) in Million $US
1 OMV AG Oil and Gas $ 27,091.60
2 STRABAG SE Construction     $ 17,984.40
3 Voestalpine AG Steel industry $ 15,229.80
4 Vienna Insurance Group AG BFSI     $ 11,735.50
5 Erste Group Bank AG BFSI     $ 11,373.40
6 Raiffeisen Bank International AG BFSI     $ 8,936.80
7 Andritz AG Manufacturing    $ 7,126.10
8 UNIQA Insurance Group AG BFSI     $ 6,221.70
9 PORR AG Construction     $ 5,859.10
10 Telekom Austria AG Telecom $ 5,240.40

Top 10 E-Commerce Stores in Austria - 2019

Rank    E-commerce Store Category    Net Sales in M $US, 2018 Market Share
1 Electronics & Media $ 854 15%
2 Fashion    $ 405 7%
3 Fashion    $ 148 3%
4 Furniture $ 100 2%
5 Electronics & Media $ 77 1%
6 Food & Personal care $ 73 1%
7 Electronics & Media $ 67 1%
8 Electronics & Media $ 65 1%
9 H& Fashion    $ 65 1%
10 Electronics & Media $ 63 1%

Top 10 Start-Ups in Austria – 2019

S.No Start-up Name Domain    Net Revenues (in M $US 2020) Founding Year
1 Bsurance    BFSI    $ 935.5 2017
2 ToolSense    Software Development and Design $ 5 2017
3 Blockpit    FinTech $ 4.5 2017
4 Mostly AI Analytics    $ 4 2017
5 Kaleido AI Software Development and Design $ 4 2017
6 Newsadoo    Software Development and Design $ 4 2017
7 Music Traveler Music Tech (Sharing economy) $ 3.8 2017
8 Storyblok    Software Development and Design $ 2.7 2017
9 Trality    FinTech    $ 2.3 2019
10 Morpher    FinTech    $ 2 2017

Business Clusters in Austria

Austria has established research and development clusters in various industries, attracting foreign companies and start-ups. These clusters are focused on promoting innovation and collaboration.

  • Automobile, Railroad, Transport, Aerospace: Clusters such as AAI, AC Styria, and Automotive Cluster facilitate innovation in the automotive and aerospace sectors
  • Materials, Packaging: Plastic clusters in Burgenland, Lower Austria, and Upper Austria, along with materials clusters like Materials Cluster Styria and Network Metal, promote advancements in materials and packaging industries.
  • Wood, Furniture, Living, House Building: Clusters like Holzcluster Salzburg and Holzcluster Styria drive innovation in wood, furniture, and housing construction sectors.
  • Health, Life Sciences, Wellness: Clusters such as BioNanoNet Forschungsgesellschaft and Life Sciences Tyrol focus on research and development in health, life sciences, and wellness fields.
  • Food: AAC, Food Cluster Lower Austria, and Food Cluster Upper Austria foster advancements in the food industry.
  • Mechatronics, Electronics, IT, Sensor Technology: Clusters like Mechatronics Cluster Tyrol, Silicon Alps, and Software Internet promote innovation in mechatronics, electronics, IT, and sensor technology.

How to Set Up a Business in Austria?

To start a business in Austria, first step should be, get a residence permit or visa then forming Company in Austria. Business owner has to be at least 18 years old and must not have a criminal record. Then apply for a trade license from the local district authority. Personal details, like, business name and location, and the type of business are required to be provided. You will also need to register the business with the Austrian Commercial Register. Here are the key steps to setting up the business in Austria:

  • Memorandum and Cash Contribution
  • Entry into the Commercial Register
  • Business Registration
  • Registration with the Tax Office and Registering your Employees

To know more about our services and how we can help you in Austria – CLICK HERE

Best Locations to Set Up Business in Austria

Austria offers several cities and regions that are considered ideal for doing business. Here are some of the best locations in Austria for business:

  • Vienna: Austria's capital and largest city, Vienna, offers a strong economy with a focus on finance, technology, research, and innovation.
  • Graz: Located in the southeast, Graz is known for its technology and research sector, specializing in automotive engineering, environmental technology, and advanced manufacturing.
  • Linz: Situated in Upper Austria, Linz is a hub for industrial and manufacturing sectors, including steel, machinery, renewable energy, and information technology.
  • Salzburg: Famous for its cultural heritage, Salzburg has a diverse economy, encompassing tourism, creative industries, manufacturing, and services.
  • Innsbruck: Nestled in the Alps, Innsbruck is renowned for tourism, winter sports, and is a centre for research in alpine technology, life sciences, and environmental engineering.

Visa and Immigration

Austria offers a citizenship by investment option whereby foreign applicants invest actively in the Austrian economy. Under the citizenship-by-investment provisions, an applicant is required to invest actively in the Austrian economy, for example in the form of a joint venture or direct investment in a business that creates jobs or generates new export sales. Significant direct investment is generally required.  In addition to standard documentary requirements (such as passports, birth, and marriage certificates), a completely clean personal record (certificate of no criminal record), a comprehensive CV, and business background information, as well as references must be provided by all applicants.

Red-White-Red Card - The easiest and fastest way to obtain a work visa for Austria is to apply for a Red-White-Red Card. Austria favors high-skilled immigration, that is why it has created a point-based system that ranks prospective immigrants based on their merits. The validity of work visas varies depending on the type of visa. Usually, they are valid for periods over six months up to 12 months.

To conclude, in addition to stable business environment, Austria also has a well-developed start-up ecosystem, with access to early-stage investors, incubators, and business angels. The country has a strong commitment to sustainable development and green growth, with significant investments in environmental protection and renewable energy. Overall, Austria provides opportunities for both foreign companies and start-ups to thrive and contribute to its vibrant economy.

Over the past two decades, India Law Offices has built a strong international presence and formed alliances with premier law firms that enable us to serve our clients from around the world. In Austria, we work very closely with Leitner & Hirth Rechtsanwälte, a reputable law firm headquartered in Graz, Austria that provides comprehensive legal support to corporates and individuals in Austria as well as cater to international clients looking to enter the Austrian market.

If you are from Austria seeking legal assistance in India or an India national or corporate planning to enter the Austria market, our firm can provide the necessary legal guidance and support you require.

To know more about the Austrian market, request a Free Detailed Austria Market Entry Report by submitting a query below.

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