Situated in the centre of Europe, the federal republic of Austria not only bridges the powerful and valuable economies of eastern and western Europe but is also a renowned economic, cultural and political international platform. Inhabiting a population of approximately 8.6 million (expected to grow to 9 million by 2020), Austria attracts more and more businesses and individuals each year. The consecutive ranking of the country's capital, Vienna, for nine years in a row, as the city with the highest quality of life worldwide (Quality of Living Survey 2018 by the Mercer Group) bears testimony to this fact.

Austria is well-known for its stable and successful economy, combining free market capitalism and laws against unfair competition in the market. These laws protecting employees and against unfair competition help create a stable investment environment, which is also based on the amicable co-operation between employer and employee organisations. Austria has one of the lowest strike rates worldwide and the work force is highly trained, disciplined and encourages this co-operation.

Based on the performance of businesses in Austria in 2018, the World Bank ranks Austria number 22 of 181 of the easiest economies to do business in, number one regarding trade across borders and number six in enforcing contracts. This favourable business climate is illustrated by export incentives, political stability and low telecommunication costs.

A corporation tax of 25%, the existence of group taxation and the pro-investor legislation make Austria and Austrian companies popular targets for domestic and international investors.

Austria's economy is driven by the services sector (approximately 68%), the industrial sector (approximately 30%) and the agricultural and forestry industry (approximately 2%). In addition, the tourism industry with a per-head-income of approximately EUR1,700 is highly valuable to the country's economy.

Key sectors include the nutrition and luxury food industry, the machinery and steel engineering industry, the chemical and automotive industry and the wood pulp and paper industries.

Due to Austria's geographical location in the centre of Europe, foreign investment has always been significant. In addition, due its proximity to and historical links with central and eastern Europe, the country has remained a hub for international companies operating in that region, with many of them being headquartered in Austria.

Although Austria is a relatively stable economy, it suffered during the late years of the global financial crisis (2010–2014) due to a decrease in investments in central and eastern Europe (CEE) and to international companies reducing their presence in the region. However, as Europe appears to have overcome the recession, the outlook for the economy in both Austria and CEE is positive again, with Austria's GDP expected to grow substantially in both 2018 and 2019.

One of Austria's most innovative and emerging sectors is the renewable energy sector. Due to several international treaties foreseeing the successive reduction of energy consumption and requiring the change from traditional to renewable energy sources, Austria has established a comprehensive subsidy structure, ensuring increased investments in this sector.

Austria is becoming a European leader in the start-up world. Having increased its financial support to start-ups and cut costs for founders, the number of newly established companies in Austria has almost tripled within the last two decades, rising from approximately 15,000 newly founded companies in 1995 to approximately 40,000 in 2015. This significant increase of start-ups coupled with business transactions, such as the sale of Runtastic to Adidas, have contributed to Austria's success.

Austria is constituted as a parliamentary representative democracy. The federation (Bund) consists of nine federal states (Bundesländer), including the capital Vienna. The legislation and the executive power are split between the federation and the federal states. The head of Austria is the president (Bundespräsident), but his powers are mostly limited to the representation of the country. The federal government (Bundesregierung) is led by the federal chancellor (Bundeskanzler).

The Austrian legal system is a civil law system, based on the separation of powers of legislation, jurisdiction and administration. On joining the EU, Austria adopted the European legal framework (acquis communautaire), which partly prevails Austria's laws. Austria's statutory basis for civil and contractual law, the General Civil Code, is one of the world's oldest codes on civil law and has acted as starting point for basic civil legislations in many countries.

The Austrian court system is made up of the following institutions:

National laws are applicable without affecting the autonomy of the acquis communautaire (EU law) and of the Court of Justice of the European Union.

The mains laws governing investments in Austria are the:

Additionally, sector laws may apply to specific (regulated) industries, such as (see Question 17):

Austrian law does not contain general restrictions for investments by foreign individuals or entities save for investments in the areas of public security and public order (see Question 11 to Question 16.)

Austria has been a member of the EU since 1 January 1995. In addition, Austria is also member of the following international bodies:

Austria has entered into bilateral investment treaties with more than 60 countries worldwide. 12 of these investment treaties (referred to as Intra-EU BITs) were concluded with other EU member states (Estonia, Latvia, Lithuania, Bulgaria, Romania, Hungary, Poland, Czech Republic, Slovakia, Slovenia, Malta and Croatia). Although the European Commission considers them to be contrary to the acquis communautaire, these contracts are widely considered advantageous for the EU's investment climate.

Austria has also entered into double tax treaties with important trade partners worldwide. A list of all double tax treaties is published on the website of the Austrian foreign ministry at www.bmf.gv.at/steuern/int-steuerrecht/oesterreichische-doppelbesteuerungsabkommen.html.

Austria is in the process of negotiating free trade agreements with Canada (Comprehensive Economic and Trade Agreement) and the USA (Transatlantic Trade and Investment Partnership). These agreements have been met with heavy public criticism and resistance from individuals as well as some corporations, in particular in relation to the rules on investor-state dispute settlements.

Depending on the duration of their stay, citizens of countries outside the EEA and Switzerland require either a visa for short term visits or a residence permit. The maximum length for a visa entry is three to six months, depending on the case and the citizenship of the applicant. The visa must be applied for in the country of residence of the person wishing to enter Austria. Individuals requiring a longer stay may need to apply for a simple residence permit or a permanent residence permit. This application must be made with the domestic Austrian consulate abroad.

The right of residence does not automatically entitle foreign individuals to take up employment but applicants must provide evidence of sufficient funds to cover the costs of living, a potential employment in Austria and residence and medical insurance coverage. Further conditions depend on the nationality of the applicant and a system of quotas applies. The following employment permits may be granted based on the conditions met:

EEA and Swiss nationals generally have an unlimited right to enter and remain in Austria for a prolonged period of time. However, they must register with the Austrian authorities if they stay longer than three months and this registration must be filed within four months of entering Austria.

In 2011, Austria implemented the following fast-track immigration systems to ensure that highly qualified individuals are not stopped or put back in the visa/permit process:

These programmes entitle non-EEA and -Swiss nationals to residence and employment in Austria. The admission requirements vary for highly qualified workers, skilled workers in professions with a short supply of workers and other key workers. The most important requirements are qualifications, work experience, age, language skills and an offer of employment paying at least the minimum wage.

According to Austrian tax regulations, persons are liable to pay tax in Austria if they either:

If Austrian tax regulations apply, the tax liability applies to the global income. However, if natural persons have neither their place of residence nor their normal residence in Austria, tax liability is limited to their Austrian income only.

To avoid the same income from being taxed in two or more countries, Austria has concluded double tax treaties with many countries (most of them based on the OECD model) (see Question 7).

The Foreign Trade Act provides that prior approval by the Austrian Ministry of Economy, Research and Science is required for the acquisition of a controlling shareholding (resulting in a shareholding of the acquirer of 25% (or more) of the voting rights) by:

The purpose is to maintain public order and security.

In addition, EU merger clearance provisions apply if an investment meets one of the following thresholds:

The sectors with specific rules in relation to investments are, amongst others, the financial (credit institutions, insurances and other companies active in the financial industry) and public interest sectors. The Austrian Banking Business Act, the Insurance Supervision Act and other acts specific to companies active in the financial industry, provide notification requirements relating to acquisitions and mergers and permit the Financial Market Authority to review the new shareholders (fit and proper tests).

The Austrian government has been transferring its participations into private ownership since the beginning of the liberalisation of the Austrian markets in the 1960s.

Most of the remaining state-controlled assets are strategic participations in important Austrian undertakings, which are held indirectly through the Austrian Industry Holding ÖBIB, which is a 100% state-owned company. They include the Austrian main post service provider Österreichische Post (a 52.85% participation), Austria's biggest oil and gas company OMV (31.5%) and Austria's main telecom provider Telekom Austria (a 28.42% participation). Direct ownership by the federal state is currently rare with the exception of ASFINAG, a company which is responsible for constructing, financing and running the motorway and expressway networks in Austria, all shares in ÖBB, the main railway company of Austria as well as interests in the tobacco and gambling sector.

The purchase of real estate can (depending on the province that the real estate is located in) be subject to the prior notification or approval of the respective real estate commission (Grundverkehrsbehörde). For individuals or entities controlled by EU entities or individuals, this approval is typically granted. However, non-EU individuals and entities controlled by non-EU entities or individuals must provide evidence of appropriate economic, social or cultural interest in the acquisition of the real estate. While most provinces only require disclosure of the new owner, some provinces require that in case of the acquisition of the real estate by an entity, the ultimate shareholder is disclosed.

The land register charges 1.1% of the purchase price for registration of the ownership of the real estate and the transfer tax for real estate ranges from 0.5% to 3.5% of the value of the real estate.

Austrian corporate law does not distinguish between Austrian and foreign entities in relation to capital requirements of companies.

The minimum capital requirement of a limited liability company, which is the most common legal form used by foreign investors, is EUR35,000 (or EUR10,000 in case of "GmbH light"), of which half must be paid in. Stock companies, for which establishment and corporate governance costs are slightly higher, have a minimum capital requirement of EUR70,000, of which half must be paid in.

The most important non-corporate legal forms of business undertakings are the sole entrepreneurship (Einzelunternehmer), the civil law partnership (GesbR), the general partnership and the limited partnership, all of which have no minimum capital requirements.

All persons entering (from a non-EU country) or leaving Austria with EUR10,000 or more in cash (or its equivalent in other currencies or easily convertible assets (such as bonds, shares, traveller's cheques)) must declare the sum to customs (European Regulation (EC) No 1889/2005). This initiative has been introduced to assist the efforts made at the EU level to tackle crime and improve security by cracking down on money laundering, terrorism and criminality.

There are no general restrictions regarding the remittance of profits abroad. However, the wiring of profits must contain information regarding all parties involved to ensure that the transfer of the money can be tracked. In addition, Austria has recently increased its scrutiny regarding money laundering and terrorism financing and introduced severe penalties for these actions.

The main provisions are contained in sections 165 and 278d of the Austrian Criminal Code. Additional provisions regarding money laundering and terrorist financing are contained in the:

As an EU member state, Austria has no customs duties from import of commercial goods from countries within the EU. Any import restrictions merely apply to trade between Austria and non-EU countries.

The only sanctions for illicit trade measures are those imposed under the applicable UN sanctions regime, although the EU can also impose additional sanctions under its Common Foreign and Security Policy. In relation to non-EU countries, certain import and export duties are applicable pursuant to international tax treaties, predominantly under the World Trade Organisation framework.

There are trading restrictions with non-EU countries on the following sectors:

Imports from EU member states are exempt from customs duties.

The customs duties applying to non-EU countries depend on the type of goods, their value and on the country of origin. The Austrian customs duty rate is based on the Integrated Tariff of the European Union (TARIC), a multilingual database in which all measures relating to EU customs duties, commercial and agricultural legislation are integrated. TARIC can be accessed online and shows the customs tariff for each type of goods.

Austrian customs also apply VAT on imported goods. The standard VAT rate is 20% in Austria, calculated on the customs value plus customs duties and other charges such as shipping costs.

Most safety standards originate at EU level. Therefore, they are generally identical throughout the EU and European Free Trade Association countries. This has eliminated many technical barriers in trading within the EEA. Therefore, as soon as a product has been lawfully released in an EU member state, it can circulate freely across the EU.

Safety standards for commercial goods in Austria are generally considered as "qualified recommendations" rather than laws (that is, not compulsory but highly advisable). However, in certain cases the applicable standards are declared binding by ordinance or even by law, which makes their compliance obligatory.

The competent national authority on safety standards is the Austrian Standards Institute established under the Federal Act on Standardisation of 1971 (Normengesetz), which also governs its infrastructure and the organisational framework for standardisation. The relevant standards are accessible on the website of the Austrian Standards Institute.

Based on the EU freedom to provide services, and subject to certain notification obligations, EU companies who are legally operating in one EU member state can offer and provide their services in another member state on a temporary basis.

Companies from non-EU countries must obtain a trade (or similar) licence before providing their services in Austria. The conditions for obtaining a licence depend on the type of trade pursued but typically include proof of adequate qualification, integrity and personal suitability.

Austria offers foreign investors an attractive taxation regime and despite the increase of the capital gains tax rate from 25% to 27.5%, Austria is still considered to be an investor-friendly jurisdiction. In particular, foreign investors can benefit from Austria's group taxation regime and Austria is home to numerous holding companies of international group structures. Austria does not have a wealth tax or trade tax.

The most common business vehicle used by foreign investors is the limited liability company (Gesellschaft mit beschränkter Haftung) (GmbH). An Austrian GmbH is established on registration with the Austrian Companies Register (Firmenbuch). Its articles of association (Gesellschaftsvertrag, Errichtungserklärung) must be filed in the form of a notarial deed. The designated managing directors must file specified forms and provide relevant personal information. The procedure of registration generally takes about two to three weeks.

The minimum share capital of an Austrian GmbH is EUR35,000. However, there are circumstances under which the initial share capital may be substantially reduced. Purchasing shares or investing in an existing GmbH in the form of a "shelf company" is possible but it is advisable that thorough due diligence be carried out first.

According to the Austrian taxation system a company is liable to pay federal taxes such as corporate income tax (Körperschaftsteuer) if it has its seat (Sitz) or place of management (Geschäftsleitung) in Austria. The number of employees is not relevant for establishing tax payment obligations. In addition, a corporate income tax liability is also triggered if a company has a branch or permanent establishment in Austria.

The company's shareholders may be subject to income tax (Einkommensteuer) depending on their place of residence. In addition to the federal taxes, there are various types of municipal taxes (Kommunalsteuern), such as for each of the company's employees.

Foreign companies may be subject to limited tax liability (begrenzt steuerpflichtig) on certain types of income from Austrian sources such as income from:

Austrian corporations are subject to a flat tax rate of 25% on taxable profits. This rate is equal throughout the country. The corporate income tax is payable on distributed and undistributed gains.

As of 1 January 2016, the Austrian capital gains tax rate on dividend distributions was raised from 25% to 27.5%.

Pursuant to the Austrian group taxation regime, the profits and losses of domestic group members, together with the losses of foreign subsidiaries, may be set off, therefore reducing the basis for calculating corporate tax of the entire group. This group taxation system is available for companies with an equity share of more than 50% in a subsidiary.

In contrast to corporations, a partnership itself is not subject to corporation tax. The profits generated by the partners through the partnership are divided proportionately and are subject to personal income tax at the level of each partner. Therefore, the personal income tax provisions apply, including the progressive tax rates of up to 50% or even 55% for income exceeding EUR1 million (introduced by the most recent taxation reform and applicable until 2020).

Austrian companies including partnerships are also liable to pay municipal taxes for each employee at a rate of 3% of the employee's gross salary (Kommunalsteuer).

The VAT regime is governed by to the Austrian Value Added Tax Act and the respective EU regulations. VAT is a consumption tax imposed on products and services and is ultimately borne by consumers. Invoiced and paid VAT must be transferred to the competent tax authority by the companies involved on a monthly basis. The taxes collected and paid by the companies may be balanced out in the VAT return (Vorsteuerabzug). The general VAT rate is 20%. For certain consumer goods (such as food, literature, newspapers and public transport) the rate is 10% and some services are entirely exempt from VAT.

Dividend payments by an Austrian company to a foreign shareholder are subject to a withholding tax of 25%, subject to any double tax treaty. Most double tax treaties with Austria require the company to withhold the full tax rate and the shareholder to apply for a tax refund.

Dividends payments by an Austrian company to a foreign shareholder is exempt under the Directive 90/435/EEC on the taxation of parent companies and subsidiaries if, among other requirements, the shareholder is a corporation resident in another EU member state and the shareholder holds at least 10% of the shares for one year.

The Austrian Ministry of Finance published the Transfer Pricing Guidelines, which are the first guidelines regarding transfer pricing issues and mainly refer to the revised OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2010. Any ownership of 25% or more will be subject to transfer pricing rules.

Neither Austrian corporate laws nor Austrian tax laws have specific thin-capitalisation rules or minimum equity ratio requirements. In extreme cases, tax authorities can classify shareholder loans as hidden equity. It is recommended to stick to market standard equity ratios. Administrative practice and case law recommend minimum ratios in the range of 3:1 to 4:1 but this is only a guide.

Austria offers a variety of attractive incentive packages to all foreign investors including:

Some of the incentives are only available in designated development areas by federal and/or regional authorities. Other programmes, such as research and development or environmentally friendly projects are available throughout Austria.

Austrian authorities also offer training grants and subsidised education programmes for employees. Municipal authority agencies may also provide support to investors for infrastructure developments.

Austria's export credit agency (Oesterreichische Kontrollbank AG) offers export credit facilities and other types of financial support including federal export guarantees.

Austria offers a tax credit of 12% on certain in-house and contract research and development expenses. Companies that are interested in this tax credit must be approved by the Austrian Research and Promotion Organisation (FFG). The privileged R and D costs are limited to EUR1 million per year.

On a municipal level, companies can benefit from specific incentive programmes, which vary between the federal provinces. Those incentives often serve as an attractive supplement to the incentives offered at federal level.

Austria has introduced further tax breaks or exemptions for start-up companies within the first 12 months of their existence, such as an exemption from stamp duty and exemptions from other federal charges (including notary fees for entry in the company's register and the land register, the real estate transfer tax and certain charges in connection with employee salaries).

The AWS is the Austrian federal promotional bank. Its purpose is to assist companies implementing innovative projects by granting loans, awarding subsidies and/or issuing guarantees at favourable interest rates, especially if the companies cannot acquire necessary and sufficient funds from other sources. It also provides relevant information, advisory and other services to companies at any stage.

Although private property is generally respected and secured even on a constitutional level, an individual may be asked to concede his/her property for reasons of public interest. Generally, expropriations only take place if specific public demands must be satisfied, such as the realisation of infrastructure projects (for example, the building of railways and public roads).

The obligation to properly compensate against expropriations is not provided on a constitutional level but is provided in federal law. Although very rare, it is possible to expropriate without compensation.

Foreign investors may also be protected under bilateral investment protection treaties (BIT). Austria has ratified approximately 60 BITs with countries around the world, which create an attractive and secure environment for investors.

In Austria, IP rights are governed by the Austrian Patent Act (Patentgesetz), which provides a comprehensive set of regulations for the protection of new inventions, giving the patent holder an exclusive right to the commercial production and general use of the invention. Other IP-related laws include the following:

A patent is acquired through registration with the Austrian Patent Office. Its protection is subject to the principle of priority of registration. Austria has also ratified the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights 1994. Patent rights under the Austrian Patent Act have a maximum protection period of 20 years. The patent holder can prevent infringements through preliminary injunctions, such as a cease and desist order and may claim compensation. Additionally, the infringing party is usually ordered to surrender any profits made and to publish the final court decision.

The Austrian court system is a well-structured and highly efficient guarantor of the rule of law. The access to the courts is fairly easy, although legal assistance by an Austrian attorney is required in most complex cases. Foreign investors are not treated differently.

In general, civil lawsuits are concluded within a year or even less. However, complex cases of considerable value may take several years.

As an EU member state, Austria must recognise and enforce final judgements from another member state. In addition, Austria is party to the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 and must recognise and enforce arbitral awards issued in another state that is a party to the Convention.

Austria is ranked 16 of 168 by Transparency International (an organisation that combats corruption worldwide) and is continuing a trend of improvement regarding corruption, facilitating legal security contributing to an investor friendly environment.

At the date of publication, there are no developments that might impede foreign investments.

Austria's current government is committed to continuing to foster the collaboration with the EU Member States and therefore contribute to an even more integrated European domestic and foreign policy.