Business location - Austria- Interview

Austria: Good Framework conditions for Industry

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Which benefits does Austria offer as a location for industry in comparison to the countries in Eastern Europe and in comparison to the established industrial countries in EU, particularly Germany and Italy?

Companies that want to tap into the market in Eastern Europe often face uncertainties in the language barriers and political or legal instability. An additional factor just for positioning as an employer brand is the quality of life on-site. Vienna was voted the most liveable city in the world for the sixth consecutive time. Austria also offers a good mix owing to the geographical location (from Vienna you can get to any location in Europe within three hours by plane) and due to the close historical ties to many Eastern European nations. Hence, more than 1000 multinational companies and international companies are co-ordinating their East European business from locations in Austria. For example, Siemens, Robert Bosch, Beiersdorf, Allianz and Henkel. Austria is one of the Top 5 in EU-28 as for the work productivity in the manufacturing industry; Germany and Italy have barely managed to enter the Top 10 on the other hand. The improved productivity in Austria nearly compensates for the increase in labour costs in recent years. It therefore follows that, the unit labour costs have been more favourable in Austria than the EU average over the past few years. Between 2010 and 2014, the unit labour costs increased only by 1.5 % annually in Austria whereas in most other EU-countries these costs increased significantly.

How does the Austrian government support the companies for investments?

Certainly, the most important aspect here is the tax benefits. In Austria business tax, wealth tax, inheritance tax or gift tax are not incurred. Only a common corporate tax of 25 % is imposed and the group taxation option (the credit from losses of foreign subsidiaries on overall profit) can be exercised. The support given to R&D is especially of great significance. In March the government announced that it will raise the research grant for companies from 10 to 12% starting 2016 in the framework of the tax reform. This bonus on own expenses or research contracts will be handed out to the companies in cash or as tax credit.

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Which approach would you recommend for developing a business location in Austria?

In principle, there are many issues a company faces when it comes to searching a location: The issues can range from the unit labour costs, availability of skilled labour, taxes and duties on “soft” factors like cultural and linguistic compatibility. However, we cannot underestimate these very factors as they can significantly contribute to the success or failure of setting-up a location. As settlement advisors we can provide support in this matter. We are delighted that more companies have used our services than ever before in the last year. We were able to set-up 276 international investors in Austria and thus generate an investment of 371 million Euros. This is a very significant increase as compared to the previous year. The willingness of German companies to invest has also increased again greatly, closely followed by Italy.

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About the author

 Stéphane Itasse

Stéphane Itasse

MM MaschinenMarkt