Dynamic business location with the highest quality of life

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Dynamic business location with the highest quality of life

by René Siegl

With a strong focus on nurturing research and innovation, Austria offers a lucrative business environment and generous tax regulations for foreign investors.

Whoever thinks of Empress Sisi, Sacher cake, skiing or the Vienna Opera Ball first in connection with Austria is not wrong at all, but it is important to not overlook one important factor: Austria is actually an extremely innovative and profitable business location. In addition to highly qualified and motivated employees, Austria always boasts the highest density of world market leaders in relation to the number of inhabitants. Innovative small and medium-sized firms operating as niche players such as ENGEL, Rosenbauer and Doppelmayr manufacture leading-edge products.

In the meantime, as a “strong innovator”, Austria is ranked second in Europe in terms of research investments, with a research to GDP ratio of 3.19 per cent.

Global players such as BMW, Bosch, Infineon and Novartis bundle R&D activities in Austria for good reason. These firms are complemented by innovative spin-offs and a lively start-up scene within the context of a creative, interdisciplinary ecosystem. Clusters and competence centres promote the close collaboration between science and business as well as university and non-university research. Diversity and strong networking characterise the research community: top researchers and “serial entrepreneurs” work side by side. Companies and intellectual property come together via idea portals and incubators promote entrepreneurial visionaries. Precision medicine, artificial intelligence, autonomous driving, alternative drive systems and lightweight construction complement traditional sectors such as mechanical engineering, vehicle manufacturing, plant construction and industrial goods.

Bonus for R&D investments

Research takes place in many locations. That is why small and medium-sized enterprises and large companies are equally supported. Thanks to the generous research tax credit, companies conducting research have been able to can claim a tax deduction for 14 per cent of R&D expenditures since 1 January 2018. The research tax credit comprises an effective complement to direct research funding. Moreover, there is a research tax allowance for migrants working as scientists and researchers accounting for 30 per cent of income from scientific work, which can be claimed for up to five years.

The apprenticeship allowance, tax loss carry-forwards, the possibility to transfer hidden reserves and a corporate tax rate of 25 per cent are among the other tax incentives for companies. Austria is in the middle ranks in Europe with an effective tax burden of 22.4 per cent.

The high level of stability, productive and motivated employees, a strong economy and a market with high purchasing power and a central geographical location are among the commonly known success factors in Austria. It is the fourth most prosperous country in the EU and boasts an excellent infrastructure and an exceptionally high quality of life. For example, the city of Vienna has been named the most liveable city in the world for many years by the well-known Mercer study. The high quality of life not only positively impacts consumer behaviour but productivity as well. Austria has a top position compared to other EU member states with respect to labour productivity per employee. The level of 116.8 per cent of the gross value added per employee puts it ahead of other industrial nations such as France, Italy, Germany and Great Britain.

Foreign companies – an important source of impetus for Austria

Foreign companies in Austria comprise an indispensable economic factor and a significant driving force for research and innovation. They feature higher productivity and average salaries than domestic companies. On balance, close to 4,000 foreign firms have settled in Austria with the support of the national investment promotion company ABA – Invest in Austria since ABA was established in the year 1982. These firms have accounted for investments of about €9 billion and created more than 57,000 new jobs.

ABA – Invest in Austria has registered a positive development in its performance over the last ten years where global economic development has been volatile. Germany is traditionally the most important source of investments followed by Italy. The attractive conditions for companies carrying out research also lure Swiss firms to Austria. Vienna has traditionally been the most popular geographical destination for foreign firms.

Austria – profitable location in Europe

Attractive business environment

  • Austria is the fourth richest country in the EU
  • Above-average purchasing power of Austrian consumers
  • Excellent infrastructure
  • Modern and efficient public administration
  • Highest quality of life


Stability and security

  • Political stability and reliable legal system
  • High personal security
  • Good relations between employers and employees
  • Low strike rate and high level of social peace
  • Outstanding level of energy security


Tax advantages

  • Low corporate tax rate
  • Group taxation scheme
  • No wealth or trade tax
  • Cutting-edge Austrian trust regulations
  • Attractive research promotion incentives


Productivity

  • High labour productivity and low unit labour costs
  • Top motivated and highly qualified employees


Central location

  • Ideal East-West business hub
  • Location for 380 CEE headquarters of multinationals
  • Coordination headquarters for about 1,000 foreign companies
  • Competent consultants with extensive CEE know-how
  • Leading flight and freight logistics hub to Eastern Europe


Business-oriented education

  • Dual education system combines theoretical and practical teaching
  • Optimal cooperation between business and science

René Siegl is the Managing Director of ABA – Invest in Austria.

About the Author: René Siegl