Austria - A Profitable Destination for International Companies
Austria provides interesting opportunities for international companies and investors that wish to establish a European headquarter. In addition to its geographic advantage of proximity to the emerging markets in Central and Eastern Europe, there are other compelling reasons for investors to select Austria as a business location. In an interview with Austrian Information, Gisbert T. Mayr, Director of the Austrian Business Agency’s North America Office, explains its activities in the U.S. and Canada.
Gisbert T. Mayr, Director of the Austrian Business Agency's North America Office
AI: You have assumed the position of the Director of the Austrian Business Agency’s North America Office in New York in June this year. Could you give us an overview of your agency’s main activities in the U.S. and Canada?
The Austrian Business Agency is owned by the Austrian Federal Ministry for Economic Affairs and Labor and is a government agency supporting international investors interested in acquisitions or establishing business in Austria. We inform investors of the advantages of choosing Austria as a business location in terms of taxes, incentives, labor regulations, infrastructure, public services, workforce, and educational system. Once a decision is made to establish an office or facility in Austria, we advise them of the relevant details concerning registration procedures, tax issues, labor regulations, visas and work permits and where necessary approvals must be obtained.
Another service is helping investors apply for incentives. Austria offers excellent incentives for research and development. Such incentives are in the form of subsidies or cash grants offered by development funds from the European Union and matched through co-financing by Austrian funds or Austrian institutions. We cooperate very closely with the economic development agencies of every Austrian province. They promote the economic development in their province by providing excellent advice on the local level, including the best places to set up an office or facility and detailed information on the local transportation network, local suppliers and service providers, etc.
AI: What are some of the reasons why American companies locate in Austria?
One major reason is that it is important to be centrally located and within easy reach of clients throughout Europe. Austria lies in the heart of Europe at the center of major transportation networks and from Vienna one can reach all major European cities within two or three hours by air, whether it be Dublin, Helsinki, Moscow, Athens or Lisbon. Many leading companies have discovered this advantage. Major companies, such as Coca Cola, Eli Lilly, Hewlett-Packard, and McDonald’s, have established their network in Eastern Europe, using Vienna as the operational center.
Comparatively, taxes in Austria are considerably lower than those of neighboring countries. For example, Germany’s corporate income tax is 34% and when trade tax is added, it is almost 39%. In comparison, Austria’s corporate income tax is 25% (trade tax no longer exists in Austria), and, accounting for possible deductions, the effective corporate tax rate is a low 22%.
Austria provides a very competitive and flexible labor market. Compared to many other European countries where long periods of prior notice are necessary, it is much easier to hire workers and terminate employment contracts in Austria. Flexibility is very important to any investor, since they cannot predict if their investment will be profitable in the long run.
Austria also offers substantial incentives for research and development. Incentive quotas of 50%, 60% or even 75% are offered to the investor in the form of cash grants from public, R & D funds to offset their initial investment and recurring costs.
Salary levels are very competitive. Salaries of white-collar workers and executives in Austria are 15% to 20% lower than in Germany. Compared to the salaries of top executives in France, the UK or Italy, salaries are 30% lower in Austria. Executive search firms tell us that they have difficulties relocating top executives from Prague to Vienna because they would earn less in Vienna. One reason is that top executives working in Eastern European countries are paid a premium because business is often considered risky there. As a very well established and politically stable country with very low strike rates and a reliable legal system, Austria is in a position to offer business a more predictable environment. Labor contracts are also negotiated on a federal level where reaching a consensus and resolving conflicts is usually accomplished at the negotiating table.
AI: You mentioned some U.S. investments in Austria. Which branches of industry and business are the main target groups of your activities in the U.S.?
We focus on key industries such as the automotive industry, tourism, telecommunication, IT, and more recently, biotechnology and nanotechnology. We frequently attend their conferences and trade shows.
AI: What does your day-to-day work consist of, and how do you find companies that might be interested in investing in Austria?
Our work is twofold: One aspect is marketing Austria as a prime business location, offering information to potential investors, multipliers, etc., all of which might be summed up as outreach. When we sense that an investor wants to locate in Europe but is unaware of the fact that Austria is an excellent location for business, we appeal to them directly. A second aspect is helping and supporting investors once they have decided to establish a physical presence in Austria.
By attending trade shows and conferences, we meet with CEOs and executives in R&D, marketing and business development. Personal contact allows us to be successful in networking and promoting the advantages of business investment in Austria.
It is very important to talk to people involved in the decision-making process. By having consultants do telephone interviews for us, we are able to target certain types of industries or companies, usually high-growth companies. Last year, for example, we called the Top 1,000 NASDAQ companies ranked by market capitalization. We usually have to call several times and leave precise voice mail messages with the executives. If they are really interested, they will return the call. After discussions with the VP for International or Business Development, they will tell us of their current plans. We then have an opportunity to tell them of the advantages of investing in Austria.
NASDAQ companies are high-profile companies listed on the most important technology exchange in the world and they are constantly expanding into new regions. Once they have accomplished their goals in the U.S., they go elsewhere - usually, to Europe and/or Asia. This provides us with a potential opportunity to offer Austria as an attractive location for establishing an office or a facility.
Another approach we use is systematic database research. We work closely with consultant companies who research news releases and look for any indication that a company might be interested in establishing a physical presence in Austria. We are then able to target them directly.
AI: What are the main differences between Austria and the U.S. when establishing a company? For instance, when confronted with bureaucratic hurdles?
In some ways it can be more bureaucratic setting up a company in Austria than in the U.S., especially in regard to registering. One needs a notary in Austria to file the necessary forms when registering a limited liability company (LLC). And if one plans a larger facility, approvals for this facility can sometimes be time consuming. The request must be in conformance with environmental standards, for example.
It is very important for the Austrian Business Agency to support investors while taking these initial steps. For that reason, our agency offers free advice on selecting a site, registering a business, labor and tax regulations, assuring site approvals, making incentives available, etc. We also provide a network of notaries, tax advisors, lawyers, incentive specialists and other experts.
Working together with the notaries, tax advisors and lawyers, allows the investor to clear any administrative hurdles. Compared to many other countries where strict regulations prevail, the Austrian bureaucratic system is to some degree more flexible and authorities are often willing to accommodate individual needs.
- Austrian Business Agency
North America Office
120 West 45th Street, 9th Floor
New York, NY 10036
For further information, visit: http://www.aba.gv.at