Many people still associate Austria with the Grossglockner High Alpine Road, lake Wörthersee and the Vienna Philharmonic Orchestra – with holiday and culture. Despite the fact that Austria – just a quarter the size of the Federal Republic of Germany and with a tenth the population – is a major player among the leading economic nations in Europe and scores big as a location for the headquarters of many international companies.
Since the European Union expanded to the east to become EU-27 in 2004, Austria has moved closer to the centre of Europe not only in geographic terms, but also in political and economic terms. The country is regarded as an ideal stepping stone for exploiting the markets in Eastern and Southern Europe today. More than 300 regional headquarters of renowned international corporations fulfil cross-border functions from their base in Austria. Companies with headquarters in Austria cover all sectors – from the pharmaceutical company Eli Lilly to the electronics giant Siemens to the brand name company Henkel, which is also active around the world.
In addition, around 1,000 international companies coordinate their CEE activities from Austria; some 16,000 Austrian companies have entered into joint ventures with Eastern European companies.
In return, an increasing number of companies are using Austria as a stepping stone to Western Europe, partners with expertise and service providers for the European Union.
The Austrian Business Agency (ABA) has been registering steadily increasing interest from investors from the CEE/SEE region to settle in Austria for years. Roughly 2,100 Eastern European companies have already chosen to settle in Austria.
Central location and a hub function in Europe. The first on the list of the location advantages of Austria is the country’s central location, according to a recent survey conducted by the “Headquarters Austria” initiative. A market of over 50 million people is available within a radius of 400 kilometres and all of Europe can be reached within no more than three hours from Vienna International Airport. Vienna International Airport has positioned itself as the leading hub in the region in recent years, with direct service to 45 destinations in Central and Eastern Europe.
Austria offers strategic advantages for international business in its role as a junction between the North and South and East and West. Banks, tax and corporate advisers, attorneys and advertising agencies have plenty of experience in dealing with international companies and organisations.
Thanks to their knowledge and contacts, they are reliable partners for regional headquarters, which are responsible for emerging markets from Austria.
Purchasing power, stability and favourable corporate taxation.
However, Austria has much more to offer investors: measured in terms of purchasing power, Austria is the fourth-richest country in the EU and its economic growth is higher than the EU average. The economic and political situation is stable, the administration is transparent and when it comes to taxes, company headquarters know exactly where they stand. In Austria, limited liability companies pay only 25 per cent corporate income tax and no property or excise taxes. In addition, a training tax allowance can be claimed or a research grant can be obtained under certain circumstances.
Group taxation is exemplary in Europe and is particularly attractive for holding companies. The profits and losses by affiliates are compiled at the parent company and taxed uniformly there. Loss carry-forwards of the group’s parent company can be offset against all profits. This results in greater competitiveness in the group for the regional headquarters and reduces the risks when establishing new markets.
Turning research into success. An additional plus is the promotion of research and development (R&D) in Austria, which is on the way to being classified among the best in the world according to the EU Commission. wird.
Expenditures for research and development have increased significantly in Austria over the past decade – from 1.94 per cent of GDP in 2000 to 2.79 per cent in 2010.
Should this trend of the past decade continue, Austria will approach a rate of four per cent of GDP, as is stated in the first Innovation Report issued by the EU, presented in June 2011 in Brussels.
This development is considerably higher than the EU average and has made it possible for Austria to come closer to the Lisbon target set by the EU (increasing research expenditures to three per cent of GDP). Research grants for companies pursuing R&D were increased to ten per cent in 2011 and the federal government is promoting cooperation with the sciences. And it has been a success: one-fourth of the regional headquarters have already assumed R&D responsibilities within the corporate groups.
Whether pharmaceutical company, research institution or high-tech start-up: any company’s headquarters can find suitable employees in Austria. The workforce is highly trained and particularly hard-working. This is due in large part to the Austrian education system being focused on practical skills. In addition, a growing number of skilled professionals are moving to Austria from neighbouring countries – primarily from Germany and Eastern European countries.
Room to work and live. Austria is also outstanding when it comes to the quality of living. In a Mercer study, Vienna was named the city with the highest quality of life in the world. Crucial in this were three advantages that top managers particularly value: a high level of security, political stability and an excellent infrastructure.
The author (born in 1959) studied business administration and law (doctorate). He worked in the public affairs office of voestalpine AG, at the Girozentrale (central institute of the credit union) and as department head for marketing and public affairs for Austria’s Arbeitsmarktservice (job market services), among other positions. Dr. Siegl has been the managing director of the Austrian Business Agency (ABA) since 1997.