Austria Economy Overview

Currency

€ Euro (EUR)

Working hours

40 hours/week

Public/bank holidays

14 public holidays

Capital

Vienna

Languages

German

Population

9.11 million

Minimum hourly salary

No minimum wage

Tax year

1st Jan – 31st Dec

Date format

DD/MM/YYYY

Misclassification penalties

Penalties for misclassification may include back-payment of minimum wage, overtime, paid vacation, pension and employment insurance contributions.

Fun fact

Dating back to 1230, the Austrian flag is among the oldest national symbols still used by a modern country.

Austria is a landlocked country that is located in Central Europe. It has a strong economy and a high standard of living. With a population of approximately 8.9 million, Austria has a well-educated and skilled labor force.

The nation’s main industries include manufacturing, machinery, steel, and chemicals, with an ever-growing emphasis on technology and innovation. Austria’s strategic location in Europe makes it the perfect place for businesses looking to access both Western and Eastern European markets.

Vienna is the capital known for its high quality of life and acts as the economic hub of the country. The economy is known for having a high GDP per capita and a strong export-oriented sector, making Austria a highly attractive destination for international businesses that are looking to expand or invest in a new market.

Overview of Austria’s Economy

Austria has a prosperous economy and is one of the wealthiest countries in the European Union. The economy is diverse, with strong industrial and service sectors. Key industries include machinery, chemicals, automotive, steel, and tourism.

Austria’s economic history is known for being resilient and being able to maintain a steady growth rate. After World War II, the country focused on rebuilding its economy which resulted in both rapid industrialization and modernization. Austria joined the European Union in 1995, which further boosted its economic integration and enhanced its trade opportunities.

Economic SectorContribution to GDP
Service SectorAbout 70%
ManufacturingAround 29%

The service sector is the largest contributor to Austria’s GDP and accounts for about 70% of the GDP total. Banking, insurance, and tourism are particularly significant services and Austria is known for its high-quality healthcare and education systems, which contribute to the country’s high standard of living.

Manufacturing is another important part of Austria’s economy, representing around 29% of the GDP. The country is a leading producer of machinery and steel, and its automotive industry is also large, with several major international companies operating here.

Economic Indicator Status
Unemployment Rate Low, around 4.9%
Standard of Living High
Political Environment Very stable, attractive to investors

In terms of trade, Austria has a strategic location in Europe. It has strong economic ties with Germany, which is its largest trading partner, and other EU countries as well. Austria exports machinery, vehicles, and chemicals while importing mainly raw materials and components for its manufacturing sector.

Taxes

Employer tax: 29.70% – 29.78%

Health Insurance

3.87%

Unemployment Insurance

2.95%

Old-Age Pension Insurance

12.55%

Accident Insurance

1.10%

Chamber of Commerce

0.34% to 0.42% (varies by province)

Severance Payment fund

1.53%

Employee tax: 17.07%

Health Insurance

3.87%

Unemployment Insurance

2.95%

Old-Age Pension Insurance

10.25%

Gross Income

Up to €12,816

€12,816 – €20,818

€20,818 – €34,513

€34,513 – €66,612

€66,612 – €99,266

€99,266 – €1,000,000

More than €1,000,000

Tax Rate

0%

20%

30%

40%

48%

50%

55%

Overview of Austria's Business Regulation

Austria’s business regulations ensure a stable and efficient environment for companies. Here’s a look at the main legal and employment laws that businesses must follow.

Business Compliance Requirements

Companies in Austria must register with the Commercial Register (Firmenbuch). This includes providing detailed information about the business, its owners, and its operations. All businesses must comply with Austria’s strict data protection laws, particularly the General Data Protection Regulation (GDPR).

Income Tax on Companies

Austria has a corporate income tax rate of 24%. All resident companies are taxed on their worldwide income, while non-resident companies are taxed only on income earned within Austria. Companies must file annual tax returns and make quarterly prepayments based on their estimated tax liability.

Employment Laws

Austria has comprehensive employment laws that protect workers’ rights. These laws cover minimum wage, working hours, and conditions of employment. The standard workweek is 40 hours, and overtime must be compensated. Employees are entitled to 25 days of paid leave per year. Austria also has strong laws against discrimination and mandates equal pay for equal work.

Austrian Labor Law (Arbeitsrecht)

This law regulates the relationship between employers and employees. It covers contracts, termination procedures, and working conditions. Employers must provide written contracts that outline the terms of employment, including salary, job duties, and working hours.

Austrian Social Security Act (ASVG)

Employers must contribute to Austria’s social security system. This includes health insurance, unemployment insurance, and pension contributions. The Social Security contributions are shared between employers and employees.

Trade Regulations

Austria adheres to the trade regulations set by the European Union. This includes customs duties, import/export regulations, and product standards. Businesses must ensure their products meet EU standards and must all acquire the necessary certifications.

Austrian Commercial Code (UGB)

The UGB outlines the legal framework for commercial activities in Austria. It includes regulations on accounting, financial reporting, and auditing requirements. Companies must keep accurate financial records and submit annual financial statements.

Benefits of Doing Business in Austria

For businesses who are considering entering the Austrian market, there are many advantages that the country has to offer. Here are some of the main benefits to take into consideration:

Strategic Location

Austria’s central location in Europe provides easy access to both Western and Eastern European markets. This makes it an ideal place for trade and business expansion.

Stable Economy

Austria has a stable and prosperous economy with low inflation and steady growth. This stability provides a reliable environment for business operations.

Skilled Workforce

Austria has a highly educated and skilled workforce. The country’s robust education system ensures a continuous supply of qualified professionals.

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High Quality of Life

Austria offers a high standard of living, with excellent healthcare, education, and public services. This attracts talent and supports employee well-being.

Strong Infrastructure

Austria has a well-developed infrastructure, including efficient transportation networks, advanced telecommunications, and reliable utilities. This supports smooth business operations.

International Expansion into Austria

Expanding into Austria offers businesses access to a stable and growing market. Here are some of the methods to consider for international expansion:

Austria Employer of Record (EOR)

An EOR in Austria takes on the legal responsibilities of employing staff in Austria on behalf of a company. This includes managing payroll, taxes, and compliance. This option is great for quickly hiring employees without having to establish a legal entity.

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Recruitment Agencies

Recruitment agencies in Austria help businesses expand by connecting them with skilled local talent across various industries.

Remote People provides recruitment solutions that simplify hiring and ensure compliance with Austrian labor laws.

For businesses looking to grow in Austria, Remote People offers the expertise and resources needed to build a local workforce quickly and effectively, making it a practical solution for market expansion.

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Austria Professional Employer Organization (PEO)

Using a PEO allows companies to hire employees in Austria without setting up a local entity. The PEO handles payroll, benefits, and compliance with local labor laws, simplifying the process for businesses.

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Subsidiary Incorporation

Setting up a subsidiary in Austria is the process of creating a separate legal entity for your business. This method offers liability protection and potential tax benefits. Subsidiaries must comply with Austrian corporate laws and regulations.

Branch Registration

Establishing a branch office in Austria allows a foreign company to operate in the country without the need for creating a separate legal entity. The branch is subject to Austrian laws and must register with the Commercial Register.

Joint Ventures

Partnering with a local business through a joint venture can provide market entry and local expertise. This method allows shared risks and resources while benefiting from the local partner’s knowledge.

Representative Office

Setting up a representative office is another option that is great primarily for market research and networking. It cannot conduct commercial activities but can help to establish a presence in the country.

Business Opportunities in Austria

Austria offers a range of attractive business opportunities for investors and entrepreneurs, thanks to its stable economy, highly skilled workforce, and strategic location in the heart of Europe.

The country’s strong focus on innovation, coupled with its supportive business environment and high quality of life, make it an appealing destination for companies looking to expand their operations. Some of the most promising sectors include:

Business Opportunity Reason
Renewable Energy and Sustainability Austria’s commitment to reducing carbon emissions and its expertise in green technologies create opportunities for investments in renewable energy projects, energy efficiency solutions, and sustainable products.
High-Tech Manufacturing Austria’s highly skilled workforce, strong R&D capabilities, and established supply chains make it an attractive location for advanced manufacturing, particularly in the automotive, aerospace, and electronics sectors.
Tourism and Hospitality With its stunning natural landscapes, rich cultural heritage, and high-quality tourism infrastructure, Austria offers potential for investments in eco-tourism, wellness tourism, and luxury travel experiences.
Life Sciences and Biotechnology Austria’s world-class research institutions, highly educated workforce, and supportive government policies create opportunities for investments in pharmaceutical research, medical devices, and biotechnology startups.
Information and Communication Technology (ICT) Austria’s growing tech ecosystem, combined with its strong focus on cybersecurity and digital innovation, present opportunities for investments in software development, AI, and IoT solutions.

The tourism industry is especially lucrative, thanks to Austria’s rich cultural heritage and scenic landscapes, which attract millions of tourists every year. The technology sector is also growing, especially in software development and IT services, making it a great place for tech startups and innovation.

Manufacturing is another strong area, with Austria’s industrial base excelling in machinery, automotive, and chemical production. Also, Austria’s commitment to sustainability and renewable energy provides many opportunities in solar, wind, and hydroelectric power.

The healthcare industry also holds significant potential for businesses, due to the country’s high-quality healthcare system. There are numerous opportunities for businesses in medical devices, pharmaceuticals, and healthcare services.

Austria’s stable economy, strategic location, and skilled workforce make it a very attractive destination for business. Exploring these opportunities can lead to significant growth and success in the Austrian market.