Austria: Investing in Austria
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 2023 World Investment Report, FDI to the country totalled only USD 1.9 billion in 2022, down from almost 13.5 billion one year earlier. FDI stock reached USD 203.9 billion in the same year. Data from the National Bank of Austria show that Germany is by far the main investing country (30.8%), ahead of Russia (11.4%), Switzerland (8%), the U.S. (6.6%), Italy (5.7%), and the UAE (%4.6). Overall, the EU accounts for 52.9% of the total investment stock. Investments are mainly oriented towards professional, technical and scientific activities (56.8%), finance and insurance (12.2%), trade (7.8%), real estate (6.5%), chemistry and pharmacy (2.7%). According to the latest figures from OECD, in the first half of 2023, FDI inflows stood at only USD 931 million.
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 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 introduced a review of foreign investment in business activities including R&D of pharmaceuticals, vaccines, medical devices, 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. The corporate tax rate was lowered from a 25% flat tax to 24% in 2023, with a further reduction to 23% starting in 2024. Austria ranks 63rd out of 82 countries in the Economist Business Environment ranking, 18th among 132 on the Global Innovation Index 2023 and 33rd out of 184 countries on the 2023 Index of Economic Freedom.
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 available data
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.
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: Doing Business, Latest available data
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.
Advantages for FDI in Austria:
Austria’s weak points for FDI are:
Any Comment About This Content? Report It to Us.
© eexpand, All Rights Reserved.
Latest Update: November 2024