From: OVERSEAS BUSINESS REPORTS (AUSTRIA)
University of Missouri-St. Louis
Match 21 DB Rec# - 29,351 Dataset-MARKET
Source : USDOC, International Trade Administration
Source key :IT
Program key :IT MARKET
Program :Market Research Reports
Update sched. :Monthly
ID number :IT MARKET 111108470
Title :AUSTRIA - OVERSEAS BUSINESS REPORT - OBR910903
Data type :TEXT
End year :1992
Date of record:09/15/1992
Keywords 1 :
| EUROPEAN FREE TRADE ASSOCIATION
| ORGANIZATION FOR ECONOMIC COOPERATION & DEVELOPMENT
| ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMET
| WEST EUROPE
| WESTERN EUROPE
| WESTERN EUROPEAN COUNTRIES
AUSTRIA - OVERSEAS BUSINESS REPORT - OBR910903
Date: September 1991
Source: International Trade Administration, U.S. Dept. of Commercegton
Number of pages: 73
Subject: The report discusses the economic and commercial climate in
Austria, with emphasis on information useful for potential U.S. sellers and
investors. It consists of the following sections:
Foreign Trade Outlook
Principal Industry Sectors
Transportation and Utilities
Distribution and Sales Channels
Investment in Austria
Guidance for Business Visitors
Sources of Commercial and Economic Information
OVERSEAS BUSINESS REPORT
MARKETING IN AUSTRIA
Prepared by Philip Combs
and Michael Seiders
Office of Western Europe
with assistance from the
Foreign Commercial Service
American Embassy, Vienna
U.S. Department of Commerce
International Trade Administration
Foreign Trade Outlook
Austrian Trade Relations--Best U.S. Sales Prospects
Principal Industry Sectors
Chemicals--Textiles--Iron and Steel--Mineral Resources
--Telecommunications--Wood, Paper, and Forestry--
Vehicles--Construction and Engineering--Biotechnology
Transportation and Utilities
Shipping from the United States--Railroads--Highways--
Inland Waterways--Air Transportation--Fuel and Power
Distribution and Sales Channels
Marketing Centers--Trade with Central and Eastern
Europe--Marketing Practices--Import Channels--
Franchising and Licensing--Wholesale and Retail
Media--Trade Fairs and Exhibitions
Banking System--Export Financing--Consumer Financing--
Sources of Financing
Import Restrictions--Tariff Structure--Customs
Valuation--Special Customs Provisions--Multilateral
Trade Negotiations--Samples and Advertising Matter--
Shipping Documents--Marking and Labeling
Requirements--Metric Requirements for Imports--
Technical Standards and Requirements--System of
Weights and Measures
Investment in Austria
Foreign Direct Investment--Government Policy on
Foreign Investment--Investment Incentives--Foreign
Ownership--Exchange Restrictions--Forms of Business
Organization--Organization of Foreign Firms--The
Commercial Register--Trade License Requirements--
Industrial and Intellectual Property Protection
Convention to Avoid Double Taxation--Business and
Individual Taxes--Excise Taxes and Similar Fees
Guidance for Business Visitors
Entrance Requirements--Foreign Exchange Restrictions--
Trade Customs--Commercial Language--Business Hours--
Sources of Commercial and Economic Information
Austrian Government Representation in the United
States--Trade Organizations--General Information
Publications--Commercial and Economic Publications--
Legal Publications--Investment, Tax, and Insurance
Austria is located in the southern part of Central Europe. It is a federal
state with an area of 32,367 square miles and consists of nine provinces:
Burgenland (capital Eisenstadt), Carinthia (Klagenfurt), Lower Austria (St.
Polten), Salzburg (Salzburg), Styria (Graz), Tyrol (Innsbruck), Upper
Austria (Linz), Vienna (federal capital), and Vorarlberg (Bregenz).
Frontiers with foreign countries total 1,682 miles. Together with
Switzerland and Liechtenstein to its west, Austria forms a trans-alpine link
between Germany and Italy, two European Community member states. In the
east it has common frontiers with Czechoslovakia, Hungary, and Yugoslavia.
Austria's highest mountain is the Grossglockner (12,465 feet). The Danube
River flows 220 miles through Austria on its way from the Black Forest in
southern Germany to the Black Sea.
The largest population centers are Vienna, 1.5 million; Graz 243,000; Linz,
200,000; Salzburg, 139,000; and Innsbruck, 118,000. German is spoken
throughout the country, and there are strong regional and local dialects.
Austrians are 84 percent Roman Catholic, 6 percent Protestant, 4 percent of
other denominations, and 6 percent with no religious affiliation.
Vienna, today capital of a prosperous Austria of 7.6 million population, was
once the seat of the Habsburg Empire, the last 50 years of which (1867 to
1918) were known as the Dual (Austro/Hungarian) Monarchy. Of the 52 million
inhabitants of the Dual Monarchy, 12 million spoke German, 10 million
Hungarian, 6 million Czech, 5.5 million Serbo-Croatian, 5 million Polish, 4
million Ukranian, 3.2 million Romanian, 2.2 million Slovak, and 800,000
Italian. The empire was broken up following World War I with the signing of
the Treaty of St. Germain on September 10, 1919.
The First Republic of Austria lasted from 1918 to 1932. On March 13, 1933,
Austria was annexed by Germany. Following World War II, the Second Austrian
Republic was established under a four-power occupation (with U.S., U.K.,
French, and USSR zones) and lasted from 1945 to 1955. The city of Vienna
was also divided into four zones of occupation during the Second Republic.
Austria regained its freedom on May 15, 1955, with the signing of the State
Austria's government today is a multiparty parliamentary democracy. The
President is the head of state and represents the republic internationally.
The affairs of government are conducted collectively by the Chancellor, Vice
Chancellor, and Cabinet. The Federal Assembly (parliament) consists of two
houses, the Nationalrat (the lower house) and the Bundesrat (the upper
house). Virtually all legislative power is concentrated in the
Nationalrat. The Bundesrat is restricted to reviewing legislation passed by
the Nationalrat and has the power to delay but not veto legislation. The
principal Austrian political parties are the Socialist Party--SPO; the
People's (conservative) Party--OVP; the Freedom (liberal) Party--FPO; the
Green Party; and the Communist Party--KPO.
The 183 members of the Nationalrat are elected from the nine provinces for a
maximum four-year term, on the basis of a complicated system of proportional
representation. The Bundesrat consists of 58 delegates elected by the
legislatures of the nine provinces for terms of four to six years. Seats
are allocated on the basis of population, with each state guaranteed at
Austria's nine provinces (Laender) are headed by governors elected by the
provincial legislatures. While most powers are vested in the federal
government, the provinces have considerable authority in welfare matters and
the supervision of local administration. Austria has a long history of
local and provincial loyalty, which is reflected to a considerable extent in
the federal form of government.
The highest courts in Austria's independent judiciary are the Constitutional
Court, which has jurisdiction over constitutional matters; the
Administrative Court, which settles bureaucratic disputes; and the Supreme
Court, which litigates civil and criminal cases. Cases in the
Administrative and Supreme Courts concerning constitutional issues can be
appealed to the Constitutional Court. Justices for the three courts are
appointed by the President for specific terms.
Grand Coalition governments of the People's and Socialist parties (the two
largest) governed Austria from 1947 to 1966. After winning an absolute
majority in elections held in March 1966, a People's Party government gained
power until 1970. Socialist Party governments under Chancellor Bruno
Kreiski governed from 1971 to 1983. A coalition government of the People's
and Freedom Parties held office from May 1983 until 1987. Since January
1987, when the Grand Coalition was reinstituted to deal with serious
economic problems, Franz Vranitzky (SPO) has served as Chancellor.
In Nationalrat elections held October 7, 1990, the Socialists' position
remained unchanged with 80 seats out of 183 (92 needed for a majority). The
People's Party dropped 17 seats to 60, while the Freedom Party gained 15
seats to 33, and the Greens gained two seats to 10. A new Grand Coalition
government was formed with Vranitzky again Chancellor. Among the
significant problems with which the new government will have to deal are
membership in the European Community (EC), credit/aid to Eastern Europe, tax
and budget reforms, environmental concerns, privatization of nationalized
industries, deregulation, internationalization of the economy,
transportation, and labor market problems including immigration.
Austria has a diversified economy and is one of Europe's most affluent
countries. In 1989, industry and mining accounted for 29 percent of the
gross domestic product (GDP); financial and legal services, 16 percent;
other services, 4 percent; construction, 7 percent; transport and
communications, 6 percent; agriculture and forestry, 3 percent; energy and
water, 3 percent; and other sources, 32 percent. Austria's civilian labor
force totaled 3.5 million in 1989, of which 30.5 percent in industry and
small trades, 0.5 percent in agriculture, and 59.9 percent in services.
About 5 percent of the labor force were foreigners. While the chemicals,
mining, manufacturing, and construction industries have been considered to
be the pillars of the Austrian economy, tourism, banking, and insurance are
at the heart of a rapidly expanding service sector. More than 75 percent of
Austria's new jobs were created in this sector in 1989.
FOREIGN TRADE OUTLOOK
Austrian Trade Relations
The Austrian economy is heavily oriented towards international trade. Total
Austrian trade with other countries in 1990 amounted to 56.5 percent of
GDP. As indicated in Table 1, Austria exported $41.0 billion of goods in
1990, while it imported $48.9 billion. Foreign trade is heavily weighted
towards the EC, to which 64.5 percent of Austria's exports went and from
which 68.3 percent of its imports originated in 1990. Austria's principal
trading partner within the EC is Germany, the western part of which
accounted for 60.8 percent of total Austria-EC trade. Only 8.5 percent of
Austria's overall trade was with other European Free Trade Area (EFTA)
countries, of which Switzerland is Austria's principal trading partner.
Austrian exports to Eastern Europe rose 1.9 percent in 1990 to $3,477
million. Of these, 25.6 percent went to the USSR, 26.6 percent to Hungary,
8.7 percent to East Germany, 11.1 percent to Poland, 21.9 percent to
Czechoslovakia, 3.5 percent to Bulgaria, and 2.6 percent to Romania.
Austrian imports from Eastern Europe increased 7.0 percent to $2,935 million
in 1990. These goods originated in the USSR, 30.8 percent; in Hungary, 26.3
percent; in Czechoslovakia, 19.3 percent; in Poland, 15.1 percent; in East
Germany, 5.1 percent; in Romania, 1.7 percent; and in Bulgaria, 1.7 percent.
Table 2 shows Austrian trade with the United States in 1990. Imports from
the United States of $1,776 million supplied 3.6 percent of total Austrian
imports. Exports to the United States amounted to $1,312 million, resulting
in an Austrian trade deficit of $464 million as measured by Austrian trade
data. Most of the two-way trade occurred in the categories of chemicals,
machinery and transport equipment, and other finished goods.
TABLE 1: AUSTRIA'S TRADE WITH THE WORLD--1990
1990 1989(%)* 1990 1989(%)*
Europe 40,603 8.5 35,434 8.8
European Community 33,426 8.8 26,431 9.6
West Germany 21,378 8.3 15,043 15.4
Italy 4,428 9.0 4,027 1.2
France 2,056 3.1 1,947 10.5
Netherlands 1,384 6.9 1,188 6.3
Belgium 1,348 17.6 841 2.7
United Kingdom 1,256 10.6 1,588 6.5
Spain 465 20.3 889 7.7
Denmark 351 10.8 382 8.6
Portugal 302 18.2 167 5.5
Greece 205 6.1 236 -2.9
Ireland 178 4.9 68 9.7
Luxembourg 75 8.2 55 7.2
European Free Trade Area 3,455 7.3 4,160 3.8
Switzerland 2,082 11.2 2,846 4.2
Sweden 855 6.2 750 2.2
Finland 348 -3.8 332 5.6
Norway 163 -8.1 220 2.0
Iceland 7 97.4 12 1.6
Eastern Europe 2,935 7.0 3,477 1.9
USSR 901 20.2 886 -12.2
Hungary 768 11.4 921 20.8
Czechoslovakia 564 -4.9 760 72.5
Poland 441 15.2 385 -16.5
East Germany 151 -24.9 301 -40.2
Romania 49 -37.5 89 98.6
Bulgaria 49 14.5 122 -32.3
Yugoslavia 566 7.1 1,092 35.0
Turkey 205 4.3 225 13.7
Africa 1,194 17.7 658 -0.5
Libya 262 48.2 76 8.3
South Africa 146 -26.4 105 -11.4
Algeria 333 8.1 121 2.3
Asia 4,543 4.7 2,772 16.6
Japan 2,220 -0.8 654 19.1
Taiwan 416 11.6 100 -40.2
South Korea 265 -12.2 130 15.3
China 356 40.9 253 29.7
Americas 2,525 3.8 1,919 -1.6
United States 1,776 8.5 1,312 -0.1
Brasil 164 -32.4 50 -4.5
Canada 241 13.3 307 -16.3
Oceana 56 -4.7 208 7.7
Australia 24 20.4 179 9.1
TOTAL 48,921 8.1 40,991 8.6
1990 $1=11.37 AS * Calculated using AS data
Source: Der Aussenhandel Oesterreichs, Serie 1A, 1989 & 1990, Oesterreiches
Statistisches Zentralamt, Vienna.
TABLE 2: AUSTRIA'S TRADE WITH THE UNITED STATES--1990
Food 54,157 55,739
Beef 10,283 0
Cheese 0 21,720
Fruit and Fruit Products 20,789 28,605
Beverages and Tobacco 8,605 1,582
Alcoholic Beverages 1,198 1,396
Tobacco 7,390 1
Raw Materials 126,566 25,301
Oil Seeds 5,299 42
Wood 12,961 224
Pulp and Waste Paper 32,198 64
Nonprecious Metal Ores 22,766 57
Mineral Fuels 40,659 29
Coal 38,756 0
Fats and Oils of Animals and Plants 2,700 75
Chemicals 237,027 105,090
Pharmaceuticals 103,195 31,662
Manufactured Goods (Classified By Material) 81,249 369,604
Paper and Paperboard 5,697 30,677
Textile Yarn, Fabrics, Made-Up Articles 13,339 18,811
Glassware 1,899 70,655
Machinery and Transport Equipment 1,000,348 489,709
Internal Combustion Piston Engines 49,986 49,240
Agricultural Machinery 12,660 3,108
Construction Machinery 38,183 28,366
Office Machines 12,535 95
Computers and Peripherals 200,914 2,851
Parts for EDP and Office Equipment 165,194 11,950
Communications Equipment 32,692 5,000
Passive Electronic Components 14,030 9,349
Active Electronic Components 54,367 2,910
Electrical Medical Equipment 16,594 6,751
Automobiles 47,156 32,409
Special Purpose Trucks 2,250 1,218
Motor Vehicle Parts and Accessories 7,057 2,233
Vehicles on Rails 290 4,346
Aircraft 148,395 13,820
Other Finished Goods 224,253 264,484
Clothing and Accessories 5,280 18,209
Nonelectrical Medical Equipment 29,391 1,881
Instruments for Test and Analysis 54,842 24,871
Photo/Cinematographic Eq. and Materials 31,569 3,461
Optical Products 4,130 36,588
Sports Weapons and Ammunition 3,939 23,843
Sporting Goods and Games 13,210 57,469
Musical Instruments 34,944 7,740
Other Goods 193 10
TOTAL 1,775,757 1,311,625
1990 $1=11,37 AS
Source: Der Aussenhandel Oesterreichs, Serie 2, 1990, Oesterreichisches
Statistisches Zentralamt, Vienna.
Following 4 percent real growth in 1989, Austria's economy continued to
expand at a robust rate of 4.6 percent in 1990, only marginally affected by
the Persian Gulf crisis. Booming exports, strong investment, and lively
private consumption supported the strong growth in 1990. Fallout from the
Gulf crisis will be more in evidence in 1991 when 3 percent real growth is
expected. Consumer prices are projected to rise from 3.3 percent in 1990 to
3.7 percent in 1991. Although employment has continued to grow, more job
seekers from Austria, Yugoslavia, and Eastern Europe are expected to
increase the unemployment rate from 5.4 percent in 1990 to 5.9 percent in
1991. While the medium-term outlook is still positive and will be bolstered
by strong demand for exports coming from reunited Germany and increasing
investment in Eastern Europe, more moderate--although above the Organization
for Economic Cooperation and Development (OECD) Europe average--economic
growth rates are expected in Austria over the next few years.
These strong economic growth projections over the medium term bode well for
continued good sales prospects in Austria. In April 1990, leading Austrian
economic forecasters projected real economic growth for Austria averaging 3
percent annually during the five-year period 1990 to 1994. Factors expected
to support this extended period of growth include the improved industrial
structure, recent tax reforms, and continuing high levels of investment and
private consumption in Austria, as well as transformation of Eastern
European economies and German economic and monetary union. Deficits on the
current account of the balance of payments would average about AS
(schillings) 6 billion yearly. Unemployment, despite the strong economic
growth, would decline only slightly to an average of 4.6 percent over the
period. Average annual price rises would not exceed 3.5 percent.
Austria applied for membership in the 12-member-country EC in June 1989.
Negotiations for membership are not expected to begin before the completion
of the EC's single internal market, at the earliest in 1993. Meanwhile, the
EFTA countries, including Austria, are negotiating with the EC to improve
the free movement of goods, services, capital, and persons between the two
blocs of countries. Efforts to achieve free circulation of industrial
products are concentrated in the following areas: harmonization of
standards; elimination of technical barriers; simplification of border
procedures and rules of origin; the elimination of unfair trading practices,
including the provision of state aid contrary to the free trade agreements;
and improved access to foreign government procurement. Austria is
autonomously harmonizing some of its regulations in the above areas with
those of the EC, along with other regulations governing such areas as
tariffs, financial markets, banking, and currency. EC membership, including
progress towards achieving a single internal market, will result in greater
trade opportunities in Austria along with heightened competition.
Austria has long had close economic ties with the Federal Republic of
Germany and expects to benefit substantially from the reunification of
Germany that now provides a market of 78 million consumers open to Austrian
exporters. Germany is Austria's principal partner in trade, investment, and
tourism. The Austrian schilling has long been pegged to the Deutsche Mark.
Beginning in 1991, Austria expects a 0.25 percent boost in real GDP growth
resulting from additional trade with the reunified Germany. This boost is
expected to result from new exports (equivalent to 3 percent of total 1989
exports) by Austrian firms to the economy of eastern Germany under
Trade with Central and Eastern Europe (that is, East-West trade) has
traditionally been more important for Austria than for other European
countries except possibly Finland. Austria hopes to benefit from economic
reforms being undertaken in the countries of Central and Eastern Europe by
increasing trade and investment, and improving its stature as a base for
firms doing business in that region. Among the factors that have
contributed to making Austria a natural bridge for doing business with
Central and Eastern European countries are historical links, traditional
trade ties, and geographical proximity. Also imporant are Austria's
stability and internationally recognized neutrality, and a certain rapport
that Austrians have with the peoples of these regions. Austria is the only
industrialized, free enterprise democracy in Central Europe and is viewed as
a model rather than a rival. A wide spectrum of institutions that
specialize in various aspects of trade and investment in Central and Eastern
Europe are located in Vienna and elsewhere in Austria (see "Distribution and
Further evidence of Austria's renewed ties with the countries of Central
Europe is its participation in the "Pentagonal" meetings, which were first
held July 31 to August 1, 1990 in Venice. There the heads of government and
foreign ministers of Austria, Italy, Hungary, Czechoslovakia, and Yugoslavia
began discussions of cooperation on transportation and environmental issues
of the region.
Best U.S. Sales Prospects
The U.S. and Foreign Commercial Service in Vienna has identified the
following industry sectors as offering the best opportunities for U.S.
exporters to Austria. Note that prospects for chemicals and
telecommunications equipment are listed in the industry sectors below. More
detailed market reports on these and other sectors are available from the
Commerce Department's Austria Desk, telephone (202) 377-2920.
Computers and Peripheral Equipment. The Austrian market for computers and
peripherals in 1989 was $929 million, projected to average 15 percent real
annual growth through 1992. Imports totaled $1.2 billion, of which $295
million were sales by U.S. firms. U.S. exports to Austria are expected to
grow 13 to 15 percent annually through 1992. The United States, with 24
percent of the import market in 1989, ranked second to West Germany with a
25 percent market share, followed by Japan with 13 percent, the United
Kingdom with 8 percent, and France with 4 percent. The increasingly
competitive business environment in Austria accounts for the rapid growth of
the electronic data processing (EDP) market, as managers leave no stone
unturned to increase efficiency and productivity.
Best sales prospects: Personal computers, laptops, integrated data and word
processing systems, desk-top publishing systems, UNIX systems, digital image
processing, CAD/CAM and computer graphics (network products, high capacity
Winchester disks, optical disk products, and add-on-boards), graphic
displays, and IBM compatible micros. Domestic production in this market is
Computer Software and Services. The software and services market totaled
$1.8 billion and accounted for over 62 percent of the entire EDP market in
1989. Standard software accounted for 40 percent of the total; individual
software, for 14.6 percent; and software maintenance for 8 percent; while
data center, training, and consulting services accounted for 23.4 percent;
and hardware maintenance, for 14 percent. The total software market is
expected to grow by 15 percent annually through 1992, while the market for
computer and software related services is expected to grow at an annual rate
of 10 percent.
About 300 firms offer software in the Austrian market and had sales totaling
$1 billion in 1988. Sales of software for mainframes accounted for 50
percent of the total; for minicomputers, 35 percent; and for microcomputers,
15 percent. The highest growth rates are projected for personal computer
software, while demand for mainframe software will soften over the coming
The Austrian software market has become more competitive in recent years.
Hardware manufacturers develop and market software to be more competitive
and profitable. They often form cooperative arrangements with software
Health Care Industry Equipment Modernization of Austrian hospitals and new
medical practices will create opportunities for U.S. exporters in this
field. Austrian imports in 1989 totaled $282 million and are projected to
grow at an annual real rate of 6 to 10 percent through 1993. Imports from
the United States totaled $35 million in 1989 and are projected to grow 6 to
8 percent in real terms through 1993. Import market shares in 1989 were
West Germany, 46.7 percent; the United States, 12.4 percent; Switzerland,
9.2 percent; and Japan, 5.4 percent. Despite strong competition, U.S.
suppliers should be able to increase sales. The U.S. position in the
Austrian market is stronger than it appears, as many products imported from
other European or Asian countries are assembled or manufactured by
subsidiaries of U.S. firms.
Best sales prospects: Diagnostic apparatus, including cardiology
instruments, EKG equipment, pacemakers, monitoring, and assist systems;
clinical laboratory equipment, including blood cell counters, and blood gas
analyzers; scanners, computer tomographs, and imaging systems; nuclear
medical instruments; heart-lung machines; dental equipment and supplies,
including metals, alloys, and other materials; prosthetics and artificial
organs; and specialty disposables and supplies.
Analytical and Scientific Instruments. The Austrian market for analytical
and scientific instruments totaled $276 million in 1989, and real growth of
2 to 3 percent annually is expected through 1992. Some 1,400 research
institutes working in fields such as biotechnology, AIDS, cancer, heart, and
environmental sciences are fueling the demand for sophisticated electronic
research equipment. Although some production takes place in Austria, the
demand for highly sophisticated instrumentation is almost entirely filled
through imports, which totaled $256 million in 1989. West Germany was the
principal supplier with a 45 percent share, followed by the United States
with 13 percent, Switzerland with 9 percent, and Japan with 5 percent.
Imports from the United States, while not matching the 43 percent growth in
1989, should grow impressively through 1992.
Best sales prospects: Instruments for environmental control; electrical
measuring; analysis of electronic circuits, semiconductors, and electronic
spectrographs; electronic microscopes; and nuclear radiation detection and
monitoring. Sales of instruments for measuring environmental variables have
reached high and sustained levels, with projections in excess of 10 percent
real growth per annum over the next three years. The chemical industry has
increasing demand for such equipment as spectrometers, gas chromatographs,
and oxygen analyzers. Oscilloscopes, electron spectrometers, image
analyzers, electron scanning microscopes, and multichannel analyzers are in
increasing demand by the electronics industry.
Industrial Process Controls: Austrian companies, primarily in the chemical
sector (in particular the biochemical and pharmaceutical subsectors), pulp
and paper, and food processing industries, imported $136 million of process
control instrumentation and equipment in 1989. Imports from the United
States, which totaled $6.5 million or 4.8 percent of the market, are
projected to grow 2 percent annually through 1992. The import market share
of West Germany was 64.4 percent in 1989; followed by Switzerland with 14.5
percent; and Japan, Italy, and the Netherlands each with up to 2 percent.
Demand is driven by the need of Austrian industries to modernize and
rationalize production facilities to remain competitive in the markets of
Europe and elsewhere.
Best sales prospects: Advanced industrial electronic measuring and
controlling devices that are connected to microprocessors and computerized
Safety and Security Equipment. The Austrian market for safety and security
equipment totaled $64.0 million in 1989. The market is steadily growing at
1 to 2 percent yearly. Imports from the United States amounted to $2.4
million and are projected to increase from 2 to 4 percent yearly through
1993. Import market shares of the major suppliers were West Germany, 61.1
percent; Japan, 10.2 percent; Switzerland, 8.4 percent; Italy, 4 percent;
and the United States, 3.4 percent.
The greatest demand is expected to be for electronically controlled alarm
and access control systems, cameras and room monitoring systems, and room
intrusion detectors. Electronic key/lock systems have become increasingly
important in hotels. Museums, art galleries, churches, and monasteries have
great pent-up demand for modern electronic security equipment, but are short
of funds. The threat of international terrorism has created demand for
security equipment at airports and international agencies, in the diplomatic
community, and for international conferences.
Best sales prospects: Access control systems for hotels, airports, and
commercial buildings; intrusion alarm systems for museums and business
showrooms; burglar-proof electronic lock systems; electronic security
devices for apartments and private households; fire, smoke, and gas
detectors; metal detectors for passenger and baggage control (airport
security); access control systems for computer security (hardware and
software); and computer data records storage equipment.
Austria has traditionally had a large heavy industrial sector. To protect
its assets after World War II from Soviet appropriation as German war
reparations and to provide the capital needed for reconstruction, Austria
nationalized the vast majority of its iron, steel, and oil industries, large
segments of the heavy engineering and electrical industries, most of the
coal mines, and the nonferrous metals industries. The Nationalization Law
of 1946 also provided for the nationalization of the largest banks, which
controlled groups of provincial banks and industrial firms.
In 1970, the OeIAG (Oesterreichische Industrieverwaltung AG) was established
as a holding company for the main nationalized enterprises. However, by the
mid-1970s, OeIAG was running into serious problems related to shrinking
markets, overstaffing, too heavy concentration in outmoded smokestack
industries, insufficient research and development (R&D), and low
productivity. An unsuccessful effort at diversification was made after
1980. By 1985-86, major losses had occurred in the steel and chemical
sectors. After OeIAG was hit by an oil speculation scandal and failure of a
U.S. steel plant project, the Austrian Parliament appropriated AS 32.9
billion to improve finances and to restructure. Between 1981 and 1987, AS
75 billion ($5.6 billion) in government subsidies were appropriated.
Comprehensive measures to deal with the OeIAG's problems were begun in
1986. As a first step, the Austrian Parliament passed the OeIAG Act that
year, which laid the groundwork for restructuring OeIAG and enhanced the
role of its management while reducing political influence to ownership
rights. The following year, the lower house of the Parliament (Nationalrat)
passed the OeIAG Financing Act, which provided for the final financial
assistance for restructuring OeIAG (just under AS 33 billion) and required
it to devise and implement a restructuring plan. By early 1989, the
reorganization of the OeIAG was largely completed.
Today, OeIAG is Austria's largest industrial group and ranks among the 40
largest enterprises in Europe. The 350 companies of OeIAG--in aluminum,
steel, chemicals, electrical equipment, electronics, machinery, turnkey
operations, environmental technology, mining, crude oil, natural gas, and
petrochemicals--are legally independent and grouped into seven holding
companies according to product lines and marketing factors. Investment
strategy has been revised, and focus has shifted from basic industries to
high-growth sectors such as electrical equipment, electronics, chemicals,
machinery, and plant construction. Cost-cutting operations and the sale of
nonessential companies and assets resulted in AS 14 billion savings.
OeIAG's operating results have improved since 1986, and in 1989 a
consolidated positive balance was achieved for the first time since 1981.
The first dividend since the early 1980s was distributed in 1989.
Following the restructuring operations, OeIAG set up Austrian Industries AG,
a debt-free, 100 percent OeIAG-owned subsidiary to act as a holding company
for six of the seven sectorial holding companies as a precondition for stock
exchange listing. The sectoral holding companies are Voest-Alpine Stahl AG
(steel), Austria Metall AG--AMAG (metals), Maschinen- und Anlagenbau Holding
AG--M&A (machinery and turnkey operations), Elektro- und Elektronik
Industrieholding AG--E&E (electronics), OeMV AG--30 percent
privatized--(petroleum, petrochemicals, and plastics), and Chemie Holding AG
(chemicals, pharmaceuticals, and fertilizers). Effective July 1, 1990, OeMV
AG purchased Chemie Holding AG, resulting in five sectorial holding
companies under Austries Industries AG. Not included in Austrian Industries
AG were Bergbauholding AG (a holding company in the unprofitable mining
sector), and OeIAG's interests in Siemens Oesterreich.
Austrian Industries AG prepared consolidated accounts for the first time for
1989. The balance sheet, and the profit and loss statement were prepared in
conformity with EC regulations for the holding company, and 102 domestic and
26 foreign wholly or partly owned subsidiaries. Access to capital markets
is now required, as financial assistance provided under the OeIAG Financing
Act has been exhausted. The degree of privatization, now expected to be
about 45 percent or AS 30 billion, will be decided by the Federal Government.
The 1989 consolidated balance sheet shows total assets of AS 167.6 billion
($12.7 billion) and gross sales of AS 140.7 billion ($10.6 billion).
Mainstays of Austrian Industries' sales are VA Stahl and OeMV, each
accounting for about one-third of total sales, followed by the M&A group
with nearly 15 percent and other affiliated groups each accounting for
between 6 percent and 8 percent. The 55 percent of gross sales from foreign
accounts reflects the high degree of internationalization achieved by
Austrian Industries AG (Europe continues to remain the principal target of
the group's internationalization efforts). R&D expenditures in 1989 totaled
about 1.6 percent of gross sales. The work force is expected to continue to
decline--by about 2,000 in 1990--to 77,000, while the staff in overseas
affiliates has nearly doubled to 10,000 since 1987.
Austria's "second nationalized sector" is composed of industrial companies
wholly or partly owned by the government-controlled banks,
Creditanstalt-Bankverein and Oesterreichische Laenderbank. Both banks have
had to obtain federal assistance in the past to cover losses by some of
these companies. There has been considerable discussion about privatization
and restructuring of these firms to make them profitable.
PRINCIPAL INDUSTRY SECTORS
The Austrian chemical industry accounts for 14 percent of industrial
production and has 730 firms with 57,000 employees. Most Austrian chemical
firms tend to be small to medium-size operations. Of the 730 chemical
companies in Austria, only 6 employ more than 1,000 persons. The staples of
the Austrian chemical industry are organic and inorganic chemicals,
plastics, pharmaceuticals, rubber and asbestos, synthetic fibers, lacquers
and paints, soaps and detergents, personal hygiene products, and fertilizers.
An important part of the Austrian chemical industry falls under the
nationalized industries' holding company, Austrian Industries AG. These are
companies falling under or owned by the sectoral holding company OeMV AG.
OeMV, which is 70 percent state-owned, is composed of 40 different companies
in which OeMV owns majority shares. These firms control the mass production
of commodity chemicals and employ 9,500 persons. OeMV will continue its
efforts to become an internationally active, fully integrated petroleum,
natural gas and petrochemical group. The principal group company is
Petrochemie Danubia, a major producer of petrochemicals and plastics. The
sectorial holding company, Chemie Holding AG, was purchased by OeMV on July
1, 1990. Chemie Holding consists of more than 20 firms producing
pharmaceuticals, fertilizers, and bulk chemicals. Group companies employed
5,500 persons in 1988. Chemie Holding administers Chemie Linz, the
country's largest single chemical company which produces a variety of
chemical products, and the fertilizer producer Agrolinz. The pharmaceutical
company, CL Pharma AG, was sold to Norwegian interests in January 1990.
OeMV purchased Chemie Holding in order to exploit the synergies existing
between the petrochemical and chemical sectors as well as the further growth
in the field of fine chemicals and plant protection agents. In the future,
the holding companies will reorganize into three branches: energy,
chemicals, and materials. The energy branch will concentrate on oil and gas
exploration, and refining. The chemicals branch will produce fertilizers,
industrial chemicals, and other chemical products. And the materials branch
will focus on petrochemicals and plastics.
The Austrian chemical industry largely imports raw materials that are
processed and reexported in a semifinished state. Few goods are taken
through to the final product stage. Recognizing this as an advantage now
but a potential problem later on, the industry is devoting more funds to
R&D, particularly in pharmaceuticals, biochemistry, and genetics.
The industry is operating at near full capacity, and new production
operations are being built domestically and in other European countries.
Major increases in sales of inorganic and organic chemicals, and plastics
occurred in 1989, while sales of fertilizers continued their steady decline.
The EC's planned single internal market opens many opportunities for
Austrian chemical firms, but will also expose the many small and
medium-sized Austrian firms to competition with the world's largest chemical
concerns. Cross-border agreements, mergers, and acquisitions are currently
being undertaken to allow Austrian firms to effectively compete in the
emerging market of the EC. Likewise, the liberalization in Eastern Europe
has offered Austrian firms opportunities for many cooperative undertakings
with the chemical firms and governments of Eastern Europe. Joint ventures
between Austrian firms and those of Hungary and the Soviet Union in
particular have increased dramatically.
The Austrian chemical industry, like many around the world, is under intense
pressure by environmentally conscious interest groups. The environmental
(green) movement is strong in Austria, and the Green Party holds seats in
Parliament. Major issues include the disposal of toxic wastes and the use
of PVC's in industrial production. Balancing profit with environmental
concerns will be one of the industry's most challenging problems in the
The industry's total production of chemicals in 1989 was $7 billion.
Imports totaled $6 billion, while exports reached $4.1 billion. Imports
from the United States, projected to grow 5 to 6 percent yearly through
1993, amounted to $276 million. Import market shares were: West Germany, 45
percent; Italy, 6.2 percent; the Netherlands, 6 percent; France, 5.8
percent; Switzerland, 5.5 percent; and the United States, 4.6 percent.
Best sales prospects: Vinyl resins, high performance plastics,
pharmaceutical diagnostics, plant protectives, catalysts, activated carbon,
glycol esters, ethanolamine, silicone oils, silanes, water soluble polymers,
and special gases for the electronics industry.
Restructuring of the textile industry was completed in 1988. Since 1971,
the number of textile firms have been reduced by one-third and the number of
employees by one-half. Textile production increased by 50 percent by value
during the same period. Rationalization and automation accounted for this
success as the industry shifted its focus to the production of high-quality
The textile industry was composed of 422 firms employing nearly 32,500
people in 1989. The industry has three major centers: Vorarlberg province
in the west is a principal producer of lace, cotton, and woven goods; Tyrol
is a center for wool production, particularly of coarse or loden wool
products; and the Vienna area is Austria's center for high fashion.
Austria's textile industry is heavily involved in international trade.
Tariff reductions made January 1, 1990 on textile imports brought Austrian
rates more into line with those of the EC. Despite past successes, Austrian
textile manufacturers believe that full EC membership is essential for their
industry, without which production capacity might shift away from Austria
into EC countries.
Iron and Steel
The Austrian steel industry, which was nationalized in 1946, never achieved
a high degree of profitability. The industry was inefficient, required
heavy subsidies, and was in need of reform. The reorganization undertaken
by the Austrian Government took place in 1986 under the auspices of the
OeIAG Reform Act. Accompanying the reorganization were promises of no
further subsidies, less government involvement, and an entirely new
management structure. By 1987, Austria's largest nationally owned
industrial enterprise, Voest-Alpine, had been fundamentally restructured
with a view to enhancing productivity.
Today, the Voest-Alpine Stahl AG holding company is composed of 14 companies
with a turnover of AS 55.8 billion and over 29,000 employees. The steel
companies were reorganized into producers of three product lines: flat
products produced by Voest Alpine Stahl Linz AG, with subsidiaries in Krems
and Traisen; long products by Voest-Alpine Stahl Donawitz AG; and specialty
steels by the Boehler companies of Kapfenberg and Duesseldorf (Germany).
Despite the increasing profits from 1988 to 1989, Voest-Alpine will have to
continue its program to reduce costs and to refine products to meet market
demand. In the medium term, the strategy is to increase the share of
high-technology products in turnover from the present 10 percent to
one-third. The company is seeking joint ventures, especially in Germany,
Italy, and the Soviet Union. It has been asked to take part in
restructuring and financing the Czech and Hungarian steel industries.
Austria's large variety and quantity of mineral deposits play a significant
role in the countries economic growth. There are large deposits of lignite
in the central and southern parts of the country, along with sufficient
reserves of magnesite, both of which permit sizable exports. Austria also
possesses large quantities of lead and zinc. Mica, quartz, gypsum, wolfram,
talc, and bauxite are also found in Austria. Iron ore is mined in Austria,
although these quantities are insufficient to meet domestic demand. Austria
imports nearly all of its anthracite coal, natural gas, and petroleum.
The Austrian Post, Telephone and Telegraph Administration (Oesterreichische
Post- und Telegraphenverwaltung) or PTT has a monopoly on telecommunications
networks, main telephone instruments, and information transmission
(including telephony, mobile telephony, telegraphy, telex, teletex, data
transmission, value added services, and videotext). The PTT sets technical
standards and issues type approvals for telecommunications equipment. It
competes with private companies in such areas as the sale, leasing,
installation, and maintenance of terminal equipment. The PTT falls under
the Ministry of State-Owned Industries and operates under the
Telecommunications Law of 1949.
The PTT is currently in the process of converting Austria's telephone system
from electro-mechanical to digital exchanges. About 500,000 digital
subscriber lines are scheduled to be installed by 1991, and the entire
project is to be completed by 2015. The PTT also plans to offer integrated
services digital network (ISDN) facilities within the next few years.
ORF, the Austrian Radio and Television Broadcasting Company, has a
long-established monopoly in nearly all areas of broadcasting. Current law
provides for the PTT to allocate transmitting frequencies to ORF. ORF owns
all transmission facilities, does all programming, and operates a central
broadcasting facility in Vienna and regional studios in each province. It
covers expenses through advertising revenues and mandatory consumer
contributions. There are plans to allow some private participation in
As a buyer of public exchanges, telephones, videotex terminals, modems,
etc., the PTT has a dominant position in the market. Two Austrian firms,
Kapsch AG and Schrack AG, and two multinational companies, Siemens Austria
AG and Alcatel Austria AG (formerly ITT Austria), the so-called Four
Sisters, account for between 85 and 90 percent of the investment volume in
telecommunications and are the principal suppliers of the market. Motorola,
Nixdorf, and Telenorma are examples of other companies that have established
themselves in Austria. The chances for foreign companies to enter the
market are improving, as the PTT is becoming more liberal in approving
The PTT has considerable power and independent discretion due to its
regulatory authorities. Approval testing, conducted by the PTT's Central
Office for Telecommunications Technology, is largely for preventing injury
to the user and guaranteeing the quality of service and integrity of the
networks. Companies interested in obtaining approval for the sale and use
of any type of telecommunications equipment should contact the Central
Office at the following address:
Fernmeldetechnisches Zentralamt (FZA)
A-1030 Vienna, Austria
Telephone 011-43-1-78 15 110
FAX 011-43-1-78 29 16 or 23 23 222/400
Telex 13 17 22, 13 10 02.
Every application to the FZA for approval of equipment or services must be
made by either a registered Austrian company or an authorized person who
must be a permanent resident of Austria. Applications, including technical
data, must be in German. U.S. suppliers are therefore recommended either
to: (1) appoint a qualified local representative who is familiar with local
requirements and approval procedures, (2) establish a licensing agreement
with a local telecommunications equipment manufacturing firm, or (3)
establish a joint venture with a local company to bid for large projects.
The Austrian market for telecommunications equipment, $680 million in 1989,
is expected to average 5 to 10 percent annual growth through 1993. Total
imports were $287 million and were sourced from West Germany (35 percent),
Japan (18 percent), Taiwan (6 percent), Switzerland (4 percent), and the
United States (3 percent).
Best sales prospects: Telephone switching and switchboard equipment,
high-quality telephone apparatus, high-speed modems, mobile telephones,
space satellite communications systems, transceivers, multiplexers,
parabolic antennas, acoustic couplers, facsimile communications equipment,
video studio equipment, radio and television broadcast transmitters, closed
circuit television equipment, components for telecommunications equipment,
and fiber optics systems and devices.
Wood, Paper, and Forestry
Austria, covered 44 percent by forests, is the third most wooded country in
Europe after Finland and Sweden. Although the forestry industry has
declined in relative importance in recent years, the worked and processed
timber industry in Austria is quite well developed and provided employment
for over 150,000 persons in 1989. Major sectors included paper production
with 32 firms employing 13,017 persons, paper processing with 134 firms
employing 9,375 persons, the saw industry with 2,054 firms employing 8,868
persons, and wood processing with 460 firms employing 25,801 persons.
Austrian papermakers, under the gun from environmentalists and staggered by
falling demand for their products, began a shakeout in the late 1970s which
resulted in only 32 companies surviving by 1990. Today's more healthy
industry is facing another wave of mergers and takeovers. The industry has
improved productivity, recycled a record level of waste, and pooled research
and development costs. Capital investment has been boosted to 10 percent of
sales. Production has expanded impressively, and 75 percent of it is
exported, mostly to EC countries.
Vienna, together with Hamburg and New York, are the world's three major
paper trading centers. Numerous paper wholesalers are headquartered in
Vienna, buying from producers in Scandinavia, South America, Central Europe,
the Far East, and North America, and selling to markets in Europe and the
One-quarter or more of total Austrian production is attributable to goods
and services in the leisure time sector. Tourism is the largest segment,
representing about 10 percent of the sector. Austrians also participate in
a wide range of sports and games, while showing increasing interest in
gourmet foods, cultural events, reading, radio and television, entertainment
electronics, and beauty care. Although Austrians have more time and money
at their disposal today, some leisure time segments are growing at double
digit rates, while others are experiencing structural difficulties.
Austrians have been characterized as 19 percent sports enthusiasts, 21
percent motor vehicle fans (including do-it-yourself types), 17 percent
action-loving (for example, arts, crafts, and outdoor activities), 22
percent home loving (for example, sewing, knitting, and gardening), and 21
percent inactive (for example, watching TV and listening to music). During
the decade 1985 to 1995, they are expected to increase spending 42 percent
for recreation in the home; 36 percent for tourism; 28 percent for sports;
25 percent for hobbies, social events, and other activities; and 9 percent
for the media.
The Austrian sports equipment industry focuses on winter sports. The
1989/90 winter season sales of equipment such as skis, boots, and bindings
exceeded $490 million. Every second alpine ski and every third
cross-country ski is made in Austria. About half of Austria's annual sports
equipment sales of $378 million ($718 million including sports clothing) are
made in the Christmas season. Likewise, about half of the $265 million toy
sales are made around Christmas; however, demand is falling as the
proportion of children in the population is declining.
Austria has targeted its electronics industry for development. Domestic and
foreign firms supply completed units and electronic components to buyers in
Austria and abroad. The Austrian electronics industry supplies a wide range
of products including active and passive components, integrated and printed
circuits, electromechanical components, and optoelectronic equipment.
Major manufacturers of electronic components in Austria include Siemens,
Philips, Brown-Boveri, Alcatel, Telefunken Electronic, Kapsch, Schrack,
Austria Micro Systems International (AMS), AEG-Telefunken, Grundig Austria,
and AB-Electronik. Electronic valves and semiconductors devices account for
about 60 percent of the Austrian output, radio components for 20 percent,
printed circuits for 10 percent, and electro-mechanical components for 10
Austrian electronics firms often work with foreign companies to develop and
market their products, they emphasize exporting because of the small size of
the domestic market. The growth of Austrian exports of electronics products
is largely due to companies such as Philips, Siemens, Grundig, and others
that have established subsidiaries in Austria to manufacture goods largely
for export. In terms of sales, the foreign subsidiaries dwarf the
Austrian-owned firms and account for two-thirds of employees in the
electronics sector. A belt of electronics firms is located south of Vienna.
Philips, which accounts for over half of Austrian electronics production,
manufactures more than a half million dictation machines per year, of which
over 90 percent are exported. CD players, electric shavers, electrolytic
capacitors, and other products are also manufactured by Philips in Vienna
and elsewhere in the country. Siemens has two plants that produce
microchips and other electronic components, nearly all for export. It also
produces sound and studio equipment, and operates a computer software
laboratory in Vienna. Grundig, which exports 95 percent of the 5,000
television sets it manufactures daily, has recently invested in robot
Within the nationalized sector, the sectoral holding company for electronics
is the Elektro und Elektronik Industrieholding AG (EE). Among the holding
company firms is Austria Mikro Systeme International GmbH (AMS), which is
owned by Voest-Alpine. AMS specializes in the development and production of
application-specific integrated circuits. Outside the nationalized sector,
two of the largest Austria-owned electronics firms--Schrack AG and Kapsch
AG-- formed a subsidiary, Austria Telecommunications, to develop Austria's
first digital central exchange for the PTT. Technology licensed from the
Canadian firm, Northern Telecom, enabled Austria Telecommunications to win
over the Swedish electronics giant, Erickson, the bid to upgrade the
Austrian public telephone system.
Of the 7.5 million hectares in agricultural use in 1989,
3.2 million hectares were in forests, 1.4 million hectares in arable land,
875,000 hectares in alpine pastures, 179,000 hectares in other pastures,
961,000 hectares in meadows, 56,000 hectares in vineyards, 37,000 hectares
in horticultural land and orchards, and over 800 hectares in other
pursuits. A high degree of mechanization and rationalization has led to
high productivity and agricultural surpluses. The principal agricultural
regions are north of the Alps and either side of the Danube River extending
to the plains of the eastern border areas.
Although Austria is predominantly mountainous and forested, some 42 percent
of the 83,857 square kilometers is used in the production of food. Cattle
breeding and milk production tend to be concentrated in the higher
elevations and in the foothills, whereas grains, root crops, fruits,
vegetables, and wine grapes tend to be harvested on the plains around the
Danube, and in the eastern and southern parts of the country. Forests are
located mostly in the foothills and mountains.
Austria's most important exports are forest products, grains and grain
products, meats and meat products, dairy products, and coffee/tea/spices.
Most important imports are forest products, coffee/tea/spices, fruits, feeds
(mainly oil meals), vegetables, and grains and grain products. In 1989,
with $3.1 billion of imports and $2.5 billion of exports, Austria had an
overall agricultural trade deficit of $0.6 billion. Principal categories of
Austria's $89 million of purchases from the United States were forest
products, fresh/dried fruits, grains and grain products, meat and meat
products, raw tobacco, cotton, and feeds (oil meals).
Agriculture is highly protected in Austria. Through the use of variable
levies and quantitative restrictions on imports, and subsidies on exports,
Austria is able to maintain farm incomes and has some of the highest food
prices in Europe. The government has reservations about agricultural trade
liberalization. One study indicated that trade liberalization could result
in a 15 percent drop in prices and force 25,000 farmers out of business,
possibly bringing an end to the small Austrian family farm. If import
barriers drop, Austria expects import pressure from many countries, such as
Hungary, because of its high-price policy.
Among the principal problems of Austrian agriculture is that of
overproduction in some areas. Grain surpluses began in the early 1970s and
worsened in the 1980s. The wide margin between domestic and world prices
for grains requires substantial subsidies for export sales. A quota system
similar to that used by the EC was introduced to deal with continuously
increasing milk production. As for livestock surpluses, mainly in the
breeder and slaughter cattle sector in Alpine regions, there are few
production alternatives possible in those locales. Ecological problems
include the effects of emissions on forests and intensive agriculture on
soil and water. New regulations on the application of pesticides entered
into force in February 1990.
Austria is also concerned about the economic effects of changes in its
agricultural system that EC membership would require.
Austrian production of automobiles was terminated by Steyr-Daimler-Puch AG
and Graef & Stift AG following World War II. The last Austrian-made
automobile, the Steyr-Puch 500, rolled off the assembly line in 1960.
Production was shifted to other vehicles such as trucks, busses, and
traction engines. Four-wheel-drive vehicle production began in 1960.
An effort was made to build up an automotive parts exporting industry, in
part to offset the negative trade balance in automobiles. In 1977, when car
imports were 8.4 percent of total imports, exports of the motor vehicle
components industry, consisting largely of sheet metal for auto bodies from
the Voest company, amounted to only 1.4 percent of total exports. Component
industry exports covered 11.6 percent of car imports that year, rising to
24.2 percent coverage in 1980, 81 percent in 1985, and 86 percent in 1988.
The program was crowned with success in 1988, when overall automotive
exports covered corresponding imports for the first time.
The Austrian motor vehicle industry comprises about 220 enterprises, which
employ some 31,000 persons. The industry specializes in heavy vehicles such
as trucks and smaller all-terrain vehicles, and is the second largest
producer of utility vehicles in the European Free Trade Area following
Sweden. The largest Austrian suppliers to the automotive industry are
subsidiaries of General Motors and BMW followed by Steyr-Daimler Puch and
the tire manufacturer Semperit. Steyr-Daimler Puch, the largest enterprise
in the Austrian private sector, manufactures trucks, cross-country vehicles,
mopeds, motorbikes, tractors, busses, engines, and bicycles.
In January 1990, the Chrysler Corporation entered into a $350 million joint
venture with Steyr-Daimler Puch to produce minivans in Graz. Production is
scheduled to begin in June 1991 with 25,000 vehicles and should rise to a
capacity of 100,000 five years later. The project is expected to create
4,000 new jobs. Graz will also become the site of Chrysler's European
headquarters and distribution center, and a research and development
operation. Steyr-Daimler Puch also participates in joint ventures with the
German firms Daimler Benz AG to produce a cross-country all-terrain vehicle
and Volkswagen to produce a four-wheel minibus. In 1983, Steyr-Daimler Puch
signed an agreement with the People's Republic of China to manufacture
trucks in China.
General Motors established a plant in Vienna in 1982. By 1988, production
totaled 380,000 transmissions and 510,000 engines, all for export to West
Germany, Spain, Great Britain, and Belgium. Injection nozzles produced by
General Motors Austria's Rochester Products Division plant, also in Vienna,
are exported to the United States. In June 1990, General Motors announced
that it will coordinate the company's expanded activities in Eastern Europe
in Vienna. The site of Vienna was chosen for the $20 million operation
because of the unique resources available there.
BMW maintains a subsidiary in Upper Austria which produces diesel and
gasoline turbo engines for BMW and the Ford Motor Company.
Construction and Engineering
Austrian construction and engineering firms see great demand opening up in
the countries of Eastern Europe, provided sources of credit are available.
However, order books of Austrian firms are close to full and a shortage of
highly skilled labor has developed. Between 11 and 12 percent of the
construction industry's business is generated in Eastern Europe. Austrian
firms have been successful in the face of international competition because
they have specialized in niche markets. These include tunnel and hotel
Turnkey operations involving the construction of steelworks, chemical
factories, power plants, and other types of operations have been undertaken
by Austrian companies. These companies frequently work in syndicates under
the direction of their own engineering firms or cooperate with foreign firms
to carry out the projects abroad.
Transportation patterns within Austria are expected to be altered by the
opening of Eastern Europe and the unification of Europe. Greatly increased
flows of passengers and goods, both north-south and east-west, will give
rise to projects such as roll-on, roll-off trains to piggy-back trucks
traversing Austria between Germany and Italy.
Between 30 and 40 firms are active in biotechnology and genetechnology in
Austria. Sales in 1988 exceeded $320 million. Biochemie Ges.m.b.H., a
subsidiary of the Swiss firm Sandoz AG, and Jungbunzlauer AG are two of the
principal firms in the field. Activities of the biotechnology firms are
concentrated in the pharmaceutical field. Austrian scientists believe there
are opportunities in the fields of agriculture and environmental
protection. The government has urged research institutes to undertake less
basic research and concentrate on developing products for market niches.
Toxic waste disposal and other environmental pollution, agricultural
production, cancer treatment, and all fields of diagnostics are regarded as
areas of greatest need in Austria.
TRANSPORTATION AND UTILITIES
Shipping from the United States
Surface shipping time from the eastern United States to Vienna for general
cargo on scheduled carriers normally runs at least three weeks. Since
Austria is landlocked, sea cargo must first pass through German, Dutch,
Belgian, Italian, or Yugoslav ports. The closest ones are the ports of
Rijeka in Yugoslavia and Trieste in Italy. These southern ports offer the
advantage of proximity.
Most of the traffic between Austria and the seaports is carried by rail.
However, in the case of the Belgian and Dutch ports, about one-third of the
traffic is carried by road. Some of the oceangoing trade between the
Germany's northern ports and Austria is carried in combination
rail-river-barge service, with transshipment at Regensburg. Once cargo has
arrived in Austria and cleared customs, it can be forwarded within the
country in a matter of hours. The well-developed railway, airline, inland
waterway, and highway network is fully equipped to handle the efficient and
rapid movement of goods within the Austrian market.
The railroads continue to be the cornerstone of Austria's transport system.
For all practical purposes, the Austrian railway system consists of the
state-owned and -operated Oesterreichischen Bundesbahnen (OeBB) (Austrian
Federal Railways). The total track mileage of the OeBB is 5,630
kilometers. In addition, 19 small privately owned railroads operate a
network of primarily narrow gauge lines with a total length of 563
kilometers. The transport capacity of the OeBB has been continuously
improved, principally through the electrification and dieselization of the
system, although the overall emphasis of diesel fuel appears to have
declined in recent years.
The movement of freight has been greatly enhanced by the establishment of
various express train services and by the participation in the Transfer
Express Freight Train System or TEEM. TEEM trains serve interlock
connections to the major production and consumption centers of Europe. Fast
transportation, quick customs clearance, and around-the-clock
operations without weekend restrictions are also available.
To facilitate freight handling, the OeBB has been promoting the use of
containers and pallets. Container service, which has been expanding in
recent years, is expected to increase further, since most goods suitable for
container transportation are already handled in this manner. Container
centers are operated at Vienna, Wels, Linz, Salzburg, Innsbruck, Rankweil,
Bludenz, Wolfurt, Villach, and Graz.
The importance of road traffic has been increasing in recent years. Nearly
28 percent of Austria's imports and 46 percent of its exports arrived or
departed via the highway system in 1988. The Austrian Government has
embarked on several superhighway projects in response to increasing
commercial needs. A 300-kilometer superhighway connects Vienna and
Salzburg. Additionally, primary sectors of highway connecting Vienna via
Graz to Klagenfurt, Villach to Salzburg, and Passau (Germany) to Wels have
Trucking conflicts have escalated within Austria due to transit disputes
with the European Community. On December 1, 1989, the Austrian Government
instituted a ban on foreign and domestic trucks over 7.5 tons using
north-south transit highways between 10:00 p.m. and 5:00 a.m. The ban is to
be extended to all Austrian highways and major transit routes, including
those in the west and the south, by 1993. The intent of the ban is to
encourage the diversion of truck transit traffic to railroads, which have
considerable unused capacity and to encourage the EC countries most affected
to invest in upgrading rail, bridge, and tunnel links across Austria. The
ban has wide support in Austria because of increasing anger over noise and
air pollution accompanying the growth of intra-EC road traffic through the
country. In 1988, 22.8 million metric tons of freight transited Austria by
truck, of which 17.6 million tons were goods traded between EC countries.
Inland waterways extend nearly 1,800 kilometers. About 20 percent of
Austria's foreign trade is transported by ship, 13 percent of its imports
and 7 percent of its exports. The 350 kilometer Danube River and Canal, the
country's major inland waterway, provides an important artery for
transporting bulk cargo--especially iron ore, scrap metal, coal, coke, coke
metals, petroleum, fertilizers, and minerals.
The importance of the Danube waterway will increase dramatically if the
Rhine-Main-Danube Canal is completed. This canal, originally scheduled for
completion in 1985, would establish navigable connections between Atlantic
and the North Sea ports and those of the Black Sea. However, due to strong
opposition from the German Government and various environmental groups, the
completion of the canal is now targeted for 1993. The major Austrian Danube
ports are Vienna, Linz, and Krems.
Air transportation in Austria plays a relatively modest role vis-a-vis other
European countries, although it has been expanding in recent years. In the
last 10-year period, inbound and outbound passenger travel have collectively
increased by more than 50 percent. The majority of air travel is handled by
the Vienna Schwechat Airport, which is served by most commercial carriers.
Other airports open to commercial traffic are in Linz, Salzburg, Graz,
Innsbruck, and Klagenfurt.
Austrian Airlines (AUA), the national air carrier, offers commercial and all
cargo services and operates a comprehensive short- and medium-range
passenger network within Europe and the Near East. AUA's service is
supplemented by a nonscheduled line, Austrian Air Transport
Flugbetriebsgesellschaft mbH (AAT). The second largest Austrian carrier,
the privately owned Lauda Air, operates regular passenger and freight
service from Vienna to a few far-eastern destinations. In addition, the
private Tyrolean Airways operates from Innsbruck, offering scheduled flights
and taxi service to Germany and Switzerland.
The U.S. carriers Pan Am and TWA have direct service to Austria. In
addition, several international carriers service Austria from U.S. cities
via a stopover in a European city (for example, Frankfurt, Zurich,
Amsterdam, London, and Brussels).
Fuel and Power
Austria is highly dependent upon foreign imports to support its energy
needs. In 1989, domestic production met only 24 percent of the country's
natural gas and 16 percent of its petroleum needs. Algeria, Libya, and Iran
are Austria's primary petroleum suppliers, and the Soviet Union is Austria's
major natural gas supplier. Austria's 1989 petroleum imports originated
from Algeria (27 percent), Libya (18 percent), and Iran (14 percent).
Kuwait supplied only 1.6 percent of petroleum imports, and Iraq supplied
none. The Soviet Union provided 97 percent of Austria's natural gas imports.
Although Austria's GDP in 1989 rose 4 percent in real terms, overall energy
consumption declined by 1.3 percent from the year before. Total energy
consumption for the year was 288 billion kilowatt hours (kWh).
While the consumption of oil and oil products declined 2.2 percent in 1989,
oil still satisfies the lion's share of Austria's total energy needs. Oil
accounted for 41 percent of the Austrian energy market; natural gas, 19
percent; coal, 15 percent; electricity, 15 percent; and alternative energy
sources, 10 percent. Industry consumed 31 percent of Austria's total
energy; transportation, 27 percent; and the private sector (including
agriculture and trades), 42 percent.
Austria's heavy dependence upon Soviet natural gas is expected to decline
due to a 1986 contractual agreement between the Austrian natural gas
industry and a Norwegian consortium. The agreement stipulates that gas
imports from Norway will begin in 1993 and will increase dramatically until
the year 2002. The 2002 level of imports from Norway will be maintained
until the year 2026. It is expected that Austria will purchase 25 to 30
percent of its future gas needs from the Norwegian consortium. The
contractual agreement will significantly diversify Austria's gas imports,
which has been a priority of the Austrian Government.
The Austrian Government favors the continued construction of transit
pipelines with foreign partners. There are now several gas pipelines
transiting Austria. TAG, the Trans Austrian Gasleitung, and WAG, the West
Austria Gasleitung, conduct natural gas from the Soviet Union to France,
Italy, and Yugoslavia. The Transeuropean Pipeline (TAL) and the Central
European Pipeline (CEL) also cross Austria to connect Italy with Germany.
Austria has limited supplies of brown coal and no reserves of anthracite
coal. Most of Austria's coal needs are imported from traditional suppliers
in Eastern Europe. Over the past several years, 3.5 to 4 million metric
tons (mmt) were imported annually. In 1989 Austria's major coal suppliers
(by rank order) were Poland, Czechoslovakia, the Soviet Union, and the
A major impediment to increasing the 14 percent U.S. share of the Austrian
coal market is the 1980 Austro-Polish agreement for the delivery of Polish
coal as repayment for Austrian bank loans. The agreement runs through the
year 2000. An additional problem for U.S. coal is that Polish coal burns
with considerably less sulfur content, an important factor in light of the
Austrian environmental standards. Moreover, the transport costs of U.S.
coal are much higher than those of Polish coal.
Austria has historically relied heavily on hydroelectric power, which
accounts for 77.7 percent of its entire electric power generation. Total
output of electric power was 50.2 billion kWh in 1989, a 2.3 percent
increase over the previous year. Austria's consumption of electricity
increased 3.3 percent in 1989, to 47.8 billion kWh. Austria is a net
exporter of electric power and has a sufficient production capability for
the next 10 years.
Austria has no nuclear generating capacity. A 692 megawatt nuclear power
plant was completed in 1977 at Zwentendorf, but it never went into operation
due to strong domestic opposition. Subsequent referenda contesting the
plant's closing have failed. The Chernobyl disaster finally galvanized
long-standing opposition to the project. The Austrian Government has no
plans for generating nuclear power.
DISTRIBUTION AND SALES CHANNELS
Austria has four easily defined marketing areas. The most important is the
capital city of Vienna and its vicinity. This marketing area is highly
industrialized; it contains more than 20 percent of the country's population
and about 35 percent of its wholesale and 25 percent of its retail
establishments. The largest industries are food and beverage; iron and
steel construction; chemical, mechanical, and electrical engineering;
hardware; paper products; vehicles; textiles; electronics; tobacco;
ceramics; and glass. Because of the large concentration of administrative
and economic activities in metropolitan Vienna, the city has a higher income
level than the rest of Austria.
The second marketing area comprises the provinces of Styria, Lower Austria,
and Upper Austria. These three provinces account for 52 percent of
purchasing power in Austria. Graz, the capital of Styria and the second
largest city in Austria, has a population of 243,000. Overland
transportation links Graz with Austria's nearest maritime ports of Trieste
in Italy and Rijeka in Yugoslavia. Energy, paper, leather, metal, iron and
steel, brewing cloth production, precision optical instruments, and tourism
are Graz's principal industries. Graz is also an active trade center for
grains, fruits, and wine. Its proximity to Yugoslavia and Hungary make it a
natural market center for trade with those countries. Linz, the provincial
capital of Upper Austria, lies on the banks of the Danube. With a
population of nearly 200,000, Linz is also an important industrial center.
Linz is the home of Chemie Linz, Austria's largest chemical manufacturer,
and Voest Alpine, the national steel and machinery works with one of the
largest and most impressive industrial complexes in the country. This
marketing area's proximity to Germany and Czechoslovakia allows traders easy
access to and from those countries.
Carinthia, Tyrol, and Salzburg form the third marketing area and account for
21 percent of total purchasing power. This marketing area is the most
visited by tourists, and Tyrol supports the highest concentration of
tourists in the world. In 1989, tourism accounted for 10 percent of the
The fourth marketing area is composed of Vorarlberg in the extreme west and
Burgenland in the extreme east. Vorarlberg is a highly industrial province,
with a population density second only to that of Vienna and a current per
capita income equal to that of Vienna. Vorarlberg's principal industries
include textiles, energy production, electronic equipment, metals, iron and
steel, and sporting goods. Electrical power is one of the province's most
important net exports. Burgenland is a rural province with little industry,
but it is the largest wine producing region in Austria. The two provinces
account for 7 percent of the country's purchasing power.
Trade with Central and Eastern Europe
Austria serves as a unique western gateway to the markets of Central and
Eastern Europe by virtue of its advantageous location; political neutrality;
and its historical, cultural, and linguistic ties with the countries of
Central and Eastern Europe. Consequently, numerous organizations in Austria
offer information on trading and investing in these countries.
Among the Vienna-based organizations is the Information Office for the
Promotion of Foreign Trade (Evidenzbuero fuer Aussenhandelgeschaefte),
Brucknerstrasse 4, A-1040 Vienna, telephone 011-43-1-505 13 06, or 505 51
31, or 505 92 55, FAX 011-43-1-505 92 55. The Evidenzbuero is a nonprofit
organization--with branch offices in Eastern Europe--established to counsel
commercial member firms on marketing conditions and practices in Eastern
Europe (and the developing countries), countertrade, and joint and
The International Institute for Applied Systems Analysis (IIASA) located
near Vienna has developed a great deal of information of use to companies
contemplating joint ventures in Eastern Europe. IIASA is located at
Schlossplatz 1, A-2361 Laxenburg, Austria, telephone 011-43-2236-715 21 0,
FAX 011-43-2236-713 13.
Austrian banks and Vienna-based operations of several American banks have
special expertise to assist their clients in coping with the financial
aspects of commercial transactions with Central and Eastern European
organizations. Many non-bank consulting firms are assisting their clients
in similar fashion. A number of experienced "barter houses," many being
affiliates of major Austrian and foreign banks in Vienna, offer their
clients assistance in resolving countertrade obligations. A list of these
firms is available from the Commerce Department offices listed in the next
The Austria Desk at the Department of Commerce in Washington (telephone
202-377-2920) has information on Austria as a site for doing business in
Eastern Europe. A list of firms in Austria experienced in countertrade is
available. Information on trade and investment in Eastern Europe can be
obtained from the Commerce Department's Eastern Europe Business and
Information Center, telephone (202) 377-2645;
FAX (202) 377-4473.
In recognition of the relatively small size of the marketing area, local
agents are generally given exclusive distribution rights for a particular
product line. Most Austrian firms insist on a written contract specifying
the period during which the arrangement may not be cancelled except for
reasons provided in the contract. Depending upon the product and the
promotional effort involved, this period may range from one to five years,
following a test period for as much as one year.
Major exporters from many European countries give their Austrian
representatives extremely favorable financial and material support in
introducing new products on the local market. They share in or cover the
cost of advertising, preparing prospectuses and manuals in German, as well
as demonstration units, display materials, and spare parts. American
exporters not prepared to offer such assistance may encounter difficulty in
finding satisfactory representatives, even though their products may be
superior to those of their competitors.
Most local distributors expect their suppliers to provide substantial
allowances. In the case of launching a new product, a larger contribution
may be expected.
The establishment of a brand name in the Austrian market may take some time
and effort. Samples are quite helpful to distributors, agents, wholesalers,
and retailers. It is also advisable to supply them with high-quality sales
literature in German, as importers are often unwilling to spend the time or
money to translate such material.
U.S. exporters may find a suitable agent in the ranks of independent
wholesalers and manufacturers in Austria. Cooperatives and retail
organizations are not normally interested in agency arrangements.
Marketing in Austria, and especially in Eastern Europe through Austrian
intermediaries, demands flexibility and adjustments to local business usage
by American exporters. The market is extremely competitive and even a delay
in answering a business inquiry may lose the business to a competitor
responding more promptly.
Type of product, location of manufacture and distribution sites, and
financing are important in determining the most effective methods of
importation into and distribution within Austria Other considerations such
as size of the market, long-term sales potential, and the need for
installing, servicing and promoting the product must be considered.
U.S. firms that have exportable products but do not wish to engage directly
in the export business may find it worthwhile to enlist the services of a
U.S.-based export management firm. These firms generally arrange
documentation, shipping, financing, and promotion of the product overseas.
U.S. firms that want to handle their own export operations normally operate
in the following ways: (1) sell directly to general or specialized importers
for resale (the greatest portion of Austria's total imports move through
import houses, importing wholesalers, and other general
importer-distributors); (2) sell indirectly through brokers, manufacturers'
representatives, or locally appointed sales agents, on a commission basis
(their main function is to find customers and place orders on behalf of the
foreign supplier; the commission varies with the product and the degree of
service performed); or (3) sell directly to end-users without a local
intermediary of any kind. This latter alternative is generally employed
with capital equipment.
Many end-users also purchase their bulk raw materials directly from abroad,
particularly such commodities as tobacco, ores, and metals. Retail
establishments and cooperatives represent an excellent target group for
offers involving single transactions rather than the establishment of
In addition, under certain conditions, many U.S. firms have found it
worthwhile to set up a branch office or subsidiary in Austria or a nearby
country to exercise full control over the marketing operation at both ends.
Franchising and Licensing
Distributing through Austrian and other European-based licensees and
franchisees is another possibility. Distribution through franchisees can
often be as effective as a branch office operation, yet without the expense
entailed in overhead, payrolls and direct management. Although franchising
is not well known as a distribution system in Austria, it has considerable
potential. Among the 50 major franchisors represented in Austria,
Intersport, Bauwelt, 3 Pagen, Palmers, Gazelle, Almdudler, Skribo, Afri
Cola, Meinl, In-Time Kurier-Systeme, Wild (Champion Sportswear), and Pizza
Mann are the largest. Major U.S. franchisors in Austria include McDonalds,
Sheraton, Marriott, Hertz, and Budget Rent-a-Car. Business services such as
computer software, business systems, collection agencies, fast food
restaurants, hotels, motels campsites, and travel agencies appear to offer
the best prospects for U.S. franchisors.
Use of licensing has become increasingly common, partly as a means for
foreign companies to transfer technology and to stay competitive in the face
of steadily rising transportation costs. Royalty and license fee payments
may be freely transferred out of Austria.
Wholesale and Retail Channels
Wholesaling. The Austrian wholesale trade includes about 13,000 enterprises
and nearly 170,000 employees. Austrian wholesalers are heavily engaged in
the distribution of raw materials, semifinished goods, agricultural
products, building materials, beverages, and electro-technical products.
In 1988, wholesale sales were estimated to be $9.6 billion. About 65
percent of Austria's wholesalers are located in the metropolitan Vienna
area. The relatively small share of wholesalers in the distribution of
finished goods stems from the fact that many manufacturers maintain their
own sales organization and directly supply retailers and retail
organizations. The distribution of finished imported goods is largely
handled by importing wholesalers who sell to other wholesalers or directly
Markups in wholesaling vary a great deal, depending on the type of product,
quantities, frequencies of orders, payment terms, and whether or not the
wholesaler has any effect on retail prices. Markups generally range from 5
percent for staple items to 30 percent for finished consumer goods. A
typical example in the consumer goods sector is the price calculation of toy
wholesalers who import. The formula for determining the recommended retail
price is: landed cost plus 60 percent times two. The retailer is granted a
discount of 47 to 50 percent of the recommended retail price plus 20 percent
Retailing. The retail trade, a sector now employing one in seven members of
the labor force, is experiencing dynamic growth. The expansion of shopping
centers and limited-line discount stores is changing the appearance of
shopping streets and, more importantly, the structure of commercial
establishments. In 1988 the number of employees in the retail trade reached
a record high 209,566, an increase of 3.2 percent from the previous year.
The rise in employment is expected to continue for the foreseeable future,
mainly in large retail chains.
Retail sales amounted to an estimated $5.5 billion in 1988, representing a
3.3 percent increase from the previous year and an overall retail market
share of 4.3 percent. The rise in the retail trade has been attributed to
several factors such as a strong overall economy, higher levels of
disposable income, lower energy prices, an easing of labor tensions, tax
reform, and the increasing longevity of the overall population. The top
selling retail items in terms of percentage increases from 1987 to 1988
were: sewing and knitting equipment, 20.8 percent; office machines, 20
percent; precision and optical goods, 10 percent; electro-technical goods,
9.1 percent; household appliances, 9 percent; vehicles, 8.3 percent; medical
products, 5.5 percent; and food items, 5 percent.
After years of decline in the number of retailers, the 3 percent rise in
1988 outstripped the number of new industrial and small craft enterprises
established during the same year. In Vienna and throughout Austria, retail
outlets are generally small and specialized. There is, however, a growing
trend toward larger establishments handling a great variety of merchandise.
Following the trend emerging in preceding years, a number of less
competitive, smaller firms have been forced to close due to economies of
scale. Because the shops leaving the market are chiefly small retailers,
concentration is on an up trend. In 1988 only 12.5 percent of the stores
accounted for 50 percent of the retail sales. Completely independent shops
are vanishing in favor of large chain stores and franchise operations. By
contrast, food retailers with large selling areas have been clearly
expanding their sectors. The number of self-service establishments is also
rising. While at the end of the 1970s just over 30 percent of the stores
offered self-service goods, it is expected that during the 1990s,
self-service sales may rise to as high as 95 percent of total sales.
A new type of competitor for the supermarket and discount houses, the
so-called consumer market, has appeared in Austria. This is a self-service
retail enterprise carrying a full range of food and nonfood items. In the
late 1970s, 15 regional consumer markets merged to form one giant consumer
market--Konsum Oesterreich. The Konsum cooperative maintains vast
centralized purchasing and stock facilities, its own production facilities,
and a broad network of holdings in banking, insurance, data processing, and
real estate. Konsum Oesterreich is the fourth largest enterprise in
Austria with 1988 sales of $2.6 billion. Konsum offers product lines in
well over 1,000 shops, retail chains, and discount markets.
To offset the competitive advantages of the large-scale enterprises, small-
and medium-sized retailers have formed voluntary cooperatives. Z-E-V
(Zentral Einkaufs - und VertriebsgmbH) acts as the central purchasing and
marketing company for 2,400 retailers, including A&O and IFA. ADEG
Oesterreich Handels AG buys for more than 2,000 members while Spar
Warenhandels AG services about 1,500 retailers.
Unlike the United States, where department store restructuring was completed
years ago, Austrian department stores are just about half way through the
modernization phase. The rental of sales floor space to licensees to
strengthen a store's image as a specialized leader, a practice which has
long been established abroad, is only beginning in Austria.
Presently, 30 percent of all retail purchases in Austria are transacted with
credit cards. It is estimated that by 1995, 50 percent of all buyers will
opt for this kind of payment. Some Austrian firms are uncertain about the
use of credit cards, as they believe profits may be reduced by as much as 5
percent. In the United States, 80 percent of all retail sales are
transacted by credit card.
In Austria state-controlled trading is conducted in two different ways: by
state monopolies and by special boards established under the so-called
Marketing Laws. There are three significant monopolies: the Tobacco, Salt,
and Alcohol Monopolies.
The Tobacco Monopoly Administration makes its foreign purchases of tobacco
through its purchasing agency (Einkaufsorganization der Oesterreichischen
Tabakregie Ges.m.b.H., Porzellangasse 51, A-1090 Vienna), which follows
normal commercial practices.
The Salt Monopoly (Oesterreichischen Salinen AG, Wirerstrasse 10, A-4820 Bad
Ischl) is a product monopoly. Since domestic salt production is more than
adequate to meet the Austrian requirements, only chemically pure sodium
chloride and other salt specialties, including sea water, have been imported
to Austria in small quantities by commercial enterprises.
The Alcohol Monopoly extends only to industrially produced raw spirits.
Importers of ethyl alcohol or neutral spirits, brandy and other than French
cognac, rum or other pure rum, and arak, as well as importers of all other
alcoholic beverages with a content of less than 10 percent of extract, in
terms of weight, or more than 50 percent of alcohol by volume, require a
special import permit by the Alcohol Monopoly (Verwertungsstelle des
Oesterreichischen Branntweinmonopols, Daffingerstrasse 1, A-1037 Vienna).
These permits have been generously granted in past years.
Imports of milk and dairy products, grains, livestock, and meats also fall
under the special provisions of the Austrian Marketing Laws, which establish
state-controlled trading for these commodities. Under these laws, imports
of such commodities are subject to quantitative restrictions and special
variable equalization fees adjusting the price of imported goods to the
higher Austrian home market price.
Advertising in Austria is far behind most of Western Europe in quality,
imagination, targeting, and market penetration. Thus, U.S. firms have an
edge in selling their products and services to aggressive innovative
companies interestid in upgrading their operations.
Five U.S. advertising agencies were among the 10 leading agencies in Austria
in 1989. The U.S. agencies Lintas, Ogilvy and Mather, McCann-Erikson,
Grey-Austria, and Young and Rubicam collectively had gross revenues of
nearly $25 million from their Austrian operations in 1988. Many U.S.
advertising agencies are very successful in the Austrian market and some are
growing rapidly. Other U.S. advertising agencies operating in Austria are
D'arcy Masius, Benton and Bowles, DDB Needham, HDM Dorland, Puttner and
Bates, BBDO/Batten, Barton, Durstine and Osborne, and J. Walter Thompson.
There are increasing market opportunities for additional U.S. advertising
agencies in this growing market. Presently, many U.S. firms are considering
using their Austrian subsidiaries as springboards to the markets of Central
and Eastern Europe. McCann-Erikson has already begun a joint venture
project with Hungary.
Newspapers and Magazines. Newspapers and magazines rank first among the
Austrian advertising media, taking in over 50 percent of total advertising
outlays. Austria's principal newspapers include the conservative and
comprehensive Die Presse with a circulation of about 80,000; the Neue Kronen
Zeitung, Austria's tabloid-like daily with a circulation density that is the
highest in the Western World; and the Kurier, a moderate newspaper with a
daily circulation of about 450,000. Other Austrian newspapers include the
Neue Arbeiter Zeitung, the Wiener Zeitung, Profile, and Wochenpresse. Der
Standard, a new daily with an economic orientation, has recently entered the
market and promises to be a strong competitor of Die Presse. The provincial
press in Austria is also well developed.
Austria has three types of magazines: weeklies, women's magazines, and trade
and technical publications. Of the nearly 2,000 trade and technical
publications in Austria, 300 are considered important. A large number of
German magazines are also circulated in Austria.
Radio and Television. Electronic media in Austria are state owned. The
Austrian Broadcasting Corporation (ORF) operates on two television channels
and three radio frequencies with a combined daily audience of 2.5 million.
Treatment of international developments on television and radio is usually
prompt, comprehensive, and straightforward. Austrian television stations
feature weekly programming devoted to international issues. One ORF radio
station provides English language programming entitled Blue Danube, which
includes daytime broadcasting as well as an hour long evening broadcast.
Austrian radio and television transmissions to Hungary and western
Czechoslovakia reach audiences of up to 7 million people.
Movie Theater Advertising. Movie theater advertising has been on the
decline in recent years, as fewer people visit the cinemas.
Posters. Poster advertising has remained a constant in Austria for many
years. Posters are displayed in post offices and public phone booths, and
on motor vehicles and outdoor pillars known as Litfass-Saeulen, which are
located near street car stops and other places heavily frequented by the
public. Sites may be hard to find since many advertisers retain them year
In Vienna, poster advertising is dominated by the city-owned GEWISTA,
Doeblerhofstrasse 6, A-1030 Vienna, while in the provinces Internationale
Werbegesellschaft m.b.H., located at Hoher Markt 12, A-1010 Vienna, holds a
dominant market position. Railroad advertising is handled by Bahnwerbung, a
joint establishment of the Austrian Federal Railroads and the Oesterreiche
Verkehrsbuero, at Friedrichstrasse 7, A-1010 Vienna or Girardigasse 1,
Store Displays and Commercial Samples. As in the United States, displaying
merchandise in shop windows plays a significant role in the retail trade.
In addition to shop windows, display cases are common in streetcar
terminals, railroad stations, and airports. Mailing of commercial fliers
and other printed matter is also widely used.
Truth in Advertising. Following the general trend toward better
representation of consumer interests, a Consumer Forum has been established
in the Austrian Trade Ministry. The forum comprises representatives of the
political parties, business organizations, labor unions, and business
associations. A ministry subcommittee concerned with commercial advertising
examines posters, TV spots, newspaper ads, and entire sales promotion
campaigns with regard to their truthfulness, information value, and ethnic
tendency. It can initiate court proceedings against the advertisers who
make false claims on behalf of their products. Anyone taking part in
activities that transgress established commercial usage can be sued, either
for damages or for an injunction. Ostensible price rebates and premiums
offered in order to conceal the real price level are also punishable.
Inquiries should be sent to the Consumer Forum at the following address:
Konsumentenbeirat, Ausschuss fuer Wirtschaftswerbung, (Federal Ministry for
Economic Affairs), Landstrasse-Hauptstrasse 55-57, A-1031 Vienna.
Trade Fairs and Exhibitions
Participation in trade fairs and exhibitions has traditionally been an
integral part of doing business in Western Europe. Trade fairs provide
important vehicles for making direct sales, securing sales representation,
breaking into new markets, renewing contacts, and keeping abreast of both
foreign and domestic competition. Within Austria, large general fairs are
held each spring and fall in Vienna, and several of the largest cities hold
provincial fairs in which participation by new exhibitors of foreign
products is welcome. In addition to these general trade fairs, other
specialized fairs offer U.S. businesses the opportunity to make their
products known to the Austrian market. These events obtain substantial
amounts of free advertising in the form of special reports in trade journals
and on exhibited novelties.
The U.S. contact for Austrian trade fairs is: The Austrian Trade
Commissioner, 150 East 52nd Street, 32nd floor, New York, New York 10022,
telephone: (212) 421-5250. Vienna International Trade Fairs promotes the
participation of U.S. companies in Vienna and Salzburg trade fairs. This
company can be reached at 1700 K Street, N.W., Suite 403, Washington, D.C.
20006-3824, telephone (202) 659-4557. The cable address is Interglahe:
Telex ITT 440322, Fax: (202) 457-0776. For information on Commerce
Department trade promotion events in Austria, contact: Austrian Desk, Room
3043, Europe/IEP/ITA, U.S. Department of Commerce, Washington D.C. 20230,
telephone (202) 377-2920.
The Austrian banking system is composed of special-purpose and universal
banks; the universal banks have gained in importance in recent years. The
principal types of Austrian banks are: joint-stock banks, private banks,
savings banks, regional mortgage banks, agricultural credit cooperatives
(the Raiffeisen sector), small business credit cooperatives (the Volksbank
sector), building societies, and special-purpose banks. The institutions
vary according to different interests, legal forms, and business
activities. Liquidity requirements differ from sector to sector.
The present banking system is rooted in the banking structure of the old
Austro-Hungarian Empire, in which separate sectors specialized in retail or
wholesale banking activities and served specific parts of the population or
business. On March 1, 1979, a new banking law including supplemental
regulations contained in the Savings Bank Law and the Securities Issue Law,
entered into effect, replacing the Banking Law of 1939.
The 1979 banking law took account of developments which occurred in the
1960s and 1970s, a period when the traditional division of labor among
various types of credit institutions became blurred. Reflecting the idea of
"universal banking," the law allowed each institution to offer the full
range of banking services at any location, in effect codifying services then
being offered by some institutions--savings banks and credit cooperatives
already had been offering customers all types of banking services. This
relaxed policy represented a challenge to large commercial banks which,
while not neglecting their traditional function of financing trade and
industry, began to expand their services to private persons. Liberalization
of regulations governing the opening of branch offices resulted in a flood
of new ones. Competition intensified and a certain restructuring of the
Austrian credit sector occurred.
Deregulation of the Austrian banking system in 1979 sparked strong
competition among banks for market share, which eroded their profitability.
Also threatened was the soundness of banks as measured by equity/assets
ratios, which declined simultaneously with operating profits. Partial
reregulation of the system was introduced by the Banking Act that entered
into force in January 1987. Provisions of the act aimed to strengthen
equity, limit equity substitutes, strengthen loan loss provisions, decrease
loan limits, tighten restrictions on foreign (including currency) business,
provide for better financial planning and improved deposit insurance, and
institute closer banking supervision.
The new regulations have presumably improved the soundness of Austrian
banks, small by international standards, thereby strengthening the Austrian
credit system. Profitability has risen in the bank sector, and major
Austrian banks have increased their international activity. However,
Austria appears to be "overbanked." Competition remains intense and is
likely to become more so as Austria moves towards EC membership. Some
believe that excessive rivalry still exists among Austrian banks. Plans are
for introducing new Austrian banking regulations by 1993 which will be
compatible with those prevailing in the European Community and provide for
tighter risk-weighted capital standards. The new federal government also
plans to give up its majority positions in the two nationalized banks by
selling additional shares.
The Austrian National Bank, the country's central bank, is a corporation or
joint-stock company of which the Federal Government owns 50 percent of the
shares and determines the ownership of the remainder. The bank's exchange
rate policy aims to maintain stable exchange rates between the Austrian
schilling and other European hard currencies, in particular the Deutsche
Mark. Measures have also been taken to liberalize capital movements and to
participate in the EC's single internal market. The Austrian National
Bank's main office is in Vienna, and it has locations in provincial capitals
and in several financial centers. A representative office was opened in New
York in October 1987.
The central bank issues Austria's bank notes and is responsible for the
regulation of the money market and the administration of exchange controls
where they exist. It discounts bills of exchange, buys and sells gold and
foreign exchange, and conducts open market operations in treasury bills and
in federal, provincial, and municipal bonds that are negotiable on the
Vienna Stock Exchange. It fixes the official discount rate and the level of
reserves to be maintained by credit institutions. The bank is responsible
for preserving the purchasing power of the currency, maintaining its value
in terms of stable foreign currencies, and for controlling external
transactions affecting the balance of payments.
The joint-stock commercial banks accounted for the bulk of domestic bank
loans outstanding at year-end 1989. The largest banks in Austria and their
1989 assets were Creditanstalt with $32.5 billion; Girozentrale, $22.8
billion; Zentralsparkasse, $17.8 billion; and Laenderbank, $16.7 billion.
Creditanstalt and Laenderbank, both joint-stock banks, were nationalized in
1946 and 40 percent of their ownership was returned to the public by the
sale of shares by 1956. Girozentrale is a privately owned bank, and
Zentralsparkasse is a savings bank. Creditanstalt, Girozentrale, and
Laenderbank each maintain offices in New York.
Despite government ownership, these joint-stock banks operate as private
banks and are organized as regular Austrian joint-stock enterprises. They
exert considerable influence on the Austrian economy due to their control of
many large Austrian corporations, to the bank and credit institutions that
are their subsidiaries, and to their specialized operations in securities.
Six U.S. commercial and investment banks have branches or affiliates in
Austria: American Express International Banking Corp. in Vienna, Salzburg,
Innsbruck, and Linz; Chase Manhattan Bank (Austria) A.G. in Vienna; Citibank
(Austria) A.G. in Vienna; Chemical Bank (affiliated with Breitach, Pinschof,
Schoeller Bank K.G.) in Vienna; Philadelphia National Bank (International
Bank fuer Aussenhandel A.G.) in Vienna; and Merrill Lynch GES.m.b.H. in
Foreign banks doing business in Austria on a permanent basis are considered
local banks by law and are treated like domestically owned enterprises. No
special license is required to establish a representative office as long as
it does not engage in any kind of legally binding bank business but confines
itself to such activities as collecting information and establishing and
maintaining contacts. A special license from the Finance Ministry is
required to establish a domestically or foreign-owned bank or bank agency.
The license holder must be a legal resident of Austria. Therefore, a U.S.
bank must enter into a joint venture with an Austrian bank or obtain a
license for its own subsidiary in Austria.
The Austrian Kontrollbank--AKB (Oesterreichische Kontrollbank AG, Am Hof 4,
A-1011 Vienna, Austria, telephone 011-43-1- 53 127-0, telex 13-2771)--is the
Austrian Government's official export credit agency and the sole agent for
its export guarantee program.
AKB was founded in 1946 to provide a variety of specialized financial
services, including routine commercial bank services. Its AS 440 million
share capital is held exclusively by Austrian banks. The government holds
shares in AKB indirectly through its majority interests in the Creditanstalt
and Laender banks and their subsidiaries. The Austrian Export Promotion Act
designates AKB as the sole agent for administering the government's export
guarantee program. In June 1991, the Austrian Parliament changed AKB's
fixed rate guarantees for political and economic risks to guarantees with
variable rates dependent on country risk and the exporter's loss performance.
AKB also engages in refinancing export credits using funds from government
guaranteed domestic and foreign borrowings. The bank is also involved in
money market transactions, syndication of domestic bond issues, collecting
and processing bond market data, and acting as a clearing agency for the
Vienna Stock Exchange and central repository for securities.
Programs of the Austrian National Bank and Export Fund deal exclusively with
the refinancing of short-term supplier credits granted to Austrian exporters
by commercial banks. The Export Fund (Oesterreichischer Exportfonds
Ges.m.b.H., Gottfried Keller-G 1, A-1030 Vienna, Austria, telephone
011-43-1-72 61 51-0) is a 100 percent government-owned entity which
refinances short-term export supplier credits with a maximum annual export
turnover of AS 100 million. No guarantee cover is required for Export Fund
financing. The National Bank refinances short-term credits to exporters
whose annual export turnover is between AS 100 million and AS 800 million.
Exporters require an AKB guarantee to obtain export National Bank
refinancing. However, the AKB will guarantee only amounts over AS 3
million. Transactions under AS 3 million can be insured by the private
insurance company, Oesterreichische Kredit-Versicherungs AG (Stubenring 24,
A-1011 Vienna, Austria, telephone 011-43-1-51 5 54-0), which has 12 private
insurance companies as shareholders.
As recently as 1989, official guarantees covered about 23 percent of all
Austrian exports, and guaranteed trade to Eastern Europe increased greatly.
AKB's export financing commitments for the year were 43.3 percent to Eastern
Europe. The AKB's decision in the summer of 1990 to no longer cover 100
percent of economic and political risks of exports to Eastern Europe
(exporters now must cover 10 to 30 percent of this risk themselves) is a
reflection of the realization that following liberalization in Eastern
Europe the outstanding debt of these countries is becoming increasingly
AKB's guarantee business has not been expected to increase significantly as
short-term business for exports to the OECD area have been expected to shift
to the private insurers, Oesterreichische Kredit-Versicherung and Prisma.
However, the new AKB guarantee system in place since June 1991 may
disadvantage the private insurers. Under the new system, these companies
will have to pay more for their comprehensive reinsurance cover from the
government, which backs 50 percent of their economic risk insurance and 100
percent of their political risk insurance.
Austria, a prospective EC member, is preparing for the EC's single internal
market of 1992. Internal market principles require members to disengage
government support for sales to member countries--which will cease to be
exports in 1992--and to hand over such export finance or credit insurance
business to the private sector. Thus, the government has decided to
concentrate its guarantee cover on countries where exports without
government guarantee are difficult or impossible.
Although buying on the installment plan is not yet as popular in Austria as
it is in the United States, Austrian consumers are increasingly making use
of this kind of buying to finance their purchases. There are four Austrian
consumer credit institutions whose main business is the financing of
automobiles, farm machinery, furniture, and apparel. Commercial banks also
extend personal loans. Department stores, mail order houses, and larger
retailers also have individually administered schemes permitting purchases
on installment plans. To channel more funds into medium-term industrial
credits, there has been a general effort to broaden consumer banking
facilities and to extend the banking habit to wider sections of the Austrian
Sources of Financing
Austria has one stock exchange, the Vienna Stock Exchange, which was founded
in 1771. The Vienna exchange operates under public law and is managed by
the Stock Exchange Chamber. It is both a securities and commodities
exchange. The Federal Ministry of Finance supervises the securities
exchange, while the Ministry of Economics supervises the commodities
The Vienna exchange offers three types of trade: official, over-the-counter,
and other securities trade. In the last category, the exchange's Executive
Committee may approve trade in securities not listed for official or
over-the-counter markets. The Executive Committee also decides on the
listing of securities. Equal treatment applies to the listing of domestic
and foreign equity shares.
Austria adopted a new stock exchange law in 1989. The new law harmonizes
Austrian and EC regulations in this field. It is part of a future oriented
capital market policy and a further step toward liberalization of Austrian
financial markets. The law provides for increased transparency and more
information for investors. Its features include the transfer of
responsibility for approved listings from the Finance Ministry to the Vienna
Stock Exchange, regulations covering the contents of a shared prospectus, an
obligation for interim financial reports, as well as a requirement to report
major transfers of shares to the exchange and a prohibition against insider
trading. It is expected that the Vienna Stock Exchange will play an
important role in capital formation for Eastern European firms.
In addition to the normal commercial credit system, there are special credit
institutions that grant long-term credits at favorable rates of interest for
investment in fixed assets. Special credits are available for industrial or
business investments, including the financing of large-scale projects; the
development of industrial sites; easing unemployment; research and
promotion; and the construction or enlargement of industrial wastewater
purification plants. The two largest specialized banks are the Austrian
Investitionskredit A.G. and the Austrian Kommunalkredit A.G. Provinces and
municipalities also assist to varying degrees by providing credit,
subsidized loans, and other services.
Austria's trade policy has become increasingly liberal, particularly in the
nonagricultural field. Austria has for the most part removed import
restrictions on all industrial and most agricultural products. In 1989,
Austria and the EC agreed to eliminate quantitative export restrictions on
trade with each other. In January 1990, the Austrian Government
substantially reduced some of its tariffs in order to align them with EC
tariffs. These reductions will also apply for textiles and apparel imported
from the United States. Imports of some commodities and from certain
countries are subject to controls; these include self-restraint agreements
and their monitoring procedures, certification of origin requirements,
import declarations, and import quotas.
The customs authorities issue freely and without delay licenses required for
imports of liberalized goods. Licenses, if required for other imports or
for exports, are issued by the Federal Ministry of Economic Affairs
(Licensing Office) for industrial imports, or the Federal Ministry of
Agriculture and Forestry for agricultural products. For products falling
under state monopolies, the licensing authority is the Ministry of Finance.
All commodities not included in the annexes to the Foreign Trade Law are
free from import licensing and may be imported from any country without
quantitative restriction. All goods included in the annexes require
licenses, but most are free from quantitative restriction. For many goods,
licenses are granted by customs at the time of clearance, irrespective of
the country they are imported from.
Nonliberalized imports may be obtained under various procedures: namely,
state trading, global quotas, bilateral quotas, and discretionary
licensing. State trading covers tobacco in any form, ethyl alcohol, and
salt. Global quotas apply to specified imports from countries that are
party to the General Agreement of Tariffs and Trade (GATT), including the
United States; such quotas apply only to wine, potatoes, cornstarch, wheat,
preserved meat, and certain medicaments (penicillin and other antibiotic
preparations). Discretionary individual licensing is applicable to all
private imports not covered by the procedures listed above, including
imports of certain textiles from specified countries. Licenses are usually
granted if the imports in question do not adversely affect domestic
Grains, milk and butter, and cattle, pigs, sheep, goats, and horses for
slaughter and products from these animals for human consumption are imported
in accordance with a special system of controls and regulations maintained
under the Agricultural Marketing Law and the law governing livestock farming
and trading, and the marketing of livestock produce
(Viehwirtschaftsgesetz). Certain agricultural products are subject to
The Austrian customs tariff uses the Harmonized System for the numerical
classification of goods. All countries are afforded GATT
Most positions of the tariff have ad valorem duty rates which are applied to
the customs value (c.i.f. Austrian border) of the imported goods. In
general, imported raw materials are accorded duty-free treatment or assessed
rates up to a 10 percent; semifinished products, up to 20 percent; and
finished goods, free to 15 percent. Austria levies no surcharges as such,
but a 20 percent value-added tax (VAT) is charged on most industrial
imports. The VAT is 10 percent on imports of most agricultural/food
products and 32 percent on certain luxury goods (for example, automobiles).
A tax of 0.3 percent of the customs value (c.i.f) is levied on all imports
and exports. Proceeds are mainly used to finance Austrian export promotion
activities. A small trade statistical fee is levied on both imports and
Most agricultural and related products are subject to specified duties,
although some are duty free. Moreover, levies or equalization fees are
charged on the importation of certain commodities under the Sugar, Starch,
and Market Regulation Laws. Export equalization fees are also levied under
the same laws. Importers of many industrial products may request reduced
rates of duty or duty-free treatment when the imported product is not
produced or not produced in comparable quality in Austria. A large number
of products have temporarily reduced duty rates on the basis of Article 6 of
the Customs Tariff Law, which are available upon request of the importer
without respect to the country of origin or the imported product.
Federal Law No. 247 in Austria's Federal Law Gazette of May 31, 1989,
provided for tariff reductions on about 2,000 items, about 25 percent of all
dutiable Austrian goods. Duties on tropical goods listed in Annex A were
reduced on July 1, 1989, and those on industrial goods in Annex B, on
January 1, 1990. The law states that the new tariff rates should be applied
until December 31, 1991, as a contribution to those tariff reductions made
in the Uruguay Round of the GATT multilateral trade negotiations. Cuts were
made where Austrian rates were high, in particular where they were
significantly out of line with rates of the European Community's Common
External Tariff. Cuts of 10 to 30 percent were made on cocoa, tea, coffee,
and spices, as well as on industrial products, including chemicals,
pharmaceuticals, textiles, iron and steel and products thereof, machinery,
transportation equipment, and optical measuring and testing equipment. Cuts
were sharpest in Austria's traditionally high-tariff textile sector.
Austria is a member of the European Free Trade Area (EFTA). Other members
are Switzerland (including Liechtenstein), Sweden, Finland, Iceland, and
Norway (including Spitzbergen). EFTA members maintain their own external
tariffs, while tariff duties on trade with each other in industrialized
products have been eliminated. The EFTA countries, including Austria,
negotiated free trade agreements with the EC which went into effect in 1973
(Finland on January 1, 1974). EC members include Belgium, Germany, France,
Denmark, the Netherlands, Luxembourg, Greece, Portugal, Spain, Ireland,
Italy, and the United Kingdom. Austria applied for EC membership in July
On the basis of the current Austria-EC agreement, trade in industrial goods
between Austria and the EC, excluding Spain, is duty free. Reduced duty
rates now applicable to trade between recent EC member Spain and other EC
and EFTA member countries will be reduced to zero by January 1, 1993.
Preferential Austrian tariff treatment for goods imported from the EC-EFTA
free trade zone requires the importer to make the request on the import
declaration and to produce a valid certificate of origin. Tariff
preferences are also granted to developing countries under the Generalized
System of Preferences (GSP).
Goods not considered to be of EFTA or EC origin--that is, goods which are
not eligible for a certificate of origin according to the EC-EFTA rules of
origin--are subject to regular Austrian customs duties at the time of their
importation. If they are then reexported to an EC or another EFTA country,
import duties of that third country will be levied. The duties paid on the
importation into Austria in this case are not refunded.
Austria's trade policy is also greatly influenced by its economic and
financial obligations to other countries as a result of its membership in
the GATT and other organizations, including the United Nations, the
Organization for Economic Cooperation and Development (OECD), the
International Monetary Fund (IMF), and the International Bank for
Reconstruction and Development (IBRD).
Austria has extensive trade with the countries of Central and Eastern
Europe, and it has concluded long-term industrial cooperation agreements
with a number of these countries. As liberalization of the Central and East
European economies has occurred, Austrian firms have sharply increased the
number of joint ventures with organizations in those countries.
Information regarding Austrian duties applied to specific products is
available from the Austria Desk, Office of Western Europe/IEP, Room 3039,
U.S. Department of Commerce, Washington, D.C. 20230, or from Department of
Commerce district offices. Inquiries should contain a complete product
description, including the Harmonized System commodity number, if known.
Inquiries pertaining to agricultural products should be directed to the
Department of Agriculture.
The Austrian Customs Law of 1980 replaced the earlier law of 1955. The new
law, which went into effect on January 1, 1981, is closely patterned after
the Multilateral Trade Negotiations (Tokyo Round) Agreement on Customs
Valuation. This agreement provides detailed rules for the determination of
value, which are designed to provide a uniform and neutral system of
valuation and preclude the use of arbitrary or fictitious values. These
rules stipulate the primary method of customs valuation, the transaction
value, as well as a series of alternative values that may be applied in a
Under the transaction method of customs valuation, the dutiable value is
based on the price actually paid or payable for the goods with a limited
number of adjustments for things such as selling commissions, packing costs,
and certain costs for material and services used in producing the goods that
were borne by the buyer but not reflected in the price paid or payable for
the goods. It is anticipated that the transaction value will be used in all
but a limited number of cases. For example, it would not be used where
there is a sale between related parties and this relationship affects the
price as in transfer pricing.
Special Customs Provisions
Entry. All goods imported into Austria must be presented and declared at
the customs office nearest to the point of entry into the customs territory
except where due to the nature of the goods, the declaration must take place
elsewhere. The declaration is made by the importer or his authorized agent
at which time the goods are cleared for free trade or cleared to a special
customs procedure, for example, storage in a bonded warehouse, transit,
inwards processing or outwards processing. The obligation to submit the
imported goods to the customs procedure exists until: (1) the goods are
cleared for free trade, thereby assuming domestic or national status,
following the collection of duty and other fees required by customs and
related regulations; or (2) the goods have either perished or been destroyed
or reexported from the customs territory.
Security may be required on those goods which are to be cleared to special
customs procedures. The declarer of the goods must provide security in the
amount of duties and taxes chargeable in one of the following ways: (1) cash
deposit; (2) surety in the form of a letter of guarantee from a recognized
Austrian bank (where economic circumstances render it necessary, surety
provided by other trustworthy and solvent sources may be acceptable); or (3)
deposit of a negotiable savings document of a recognized credit
institution. Security may be wholly or partly refunded when it is no longer
Transit. Goods imported into Austria by air, rail, road, or inland waterway
may be cleared to the transit procedure under which they can be transported
under customs supervision without being unloaded and without the payment of
duties and taxes to another customs office within the customs territory,
their point of destination being within or outside of Austria. However,
small customs offices may not be approved for the clearance of some goods.
Security is usually required; exceptions are goods shipped by railroad,
national inland waterway transport enterprises, and national public
enterprises such as the post office. Waiver of security is possible where
the applicant provides property sufficient to cover any claims made by the
customs officials. Imported goods unloaded from the importing vehicle may
also be transported under customs supervision between customs offices within
Austria or between other points such as two bonded warehouses.
Free Trade Zones. Free trade zones are considered to lie outside the
Austrian customs territory and are maintained in Graz, Linz, Solbad Hall
near Innsbruck, and Vienna-Freudenau.
The zones of the Danube River cities of Linz and Vienna-
Freudenau have the added benefit of direct access to extensive port
Foreign products may be brought into the zones for transshipment, storage,
processing, manufacturing or packaging without the payment of a customs duty
or tax. These customs charges are made on goods only when they are shipped
from the zone into Austrian customs territory. The importer has the option
of having the duty based on the condition of the goods at the time of their
entry into the zone or from abroad, or on their condition at the time of
their shipment from the zone into the customs territory. Where goods
produced in the zone from both domestic and foreign materials are shipped
into the customs territory, duty is charged only on the foreign materials.
However, foreign consumer goods entered into the zone for consumption or
capital goods brought in for use in the zone are subject to customs duty or
tax upon entry.
Additional up-to-date information on free trade zones in Austria can be
obtained from the following addresses: Zollfreizonen-Betriebsgesellschaft
m.b.H. (Free Zone Management Company Ltd.), Lastenstrasse 9, A-8010 Graz,
Austria; Oesterreichische Zollfreizonen-Betriebs A.G. (Austrian Free Trade
Management Company), Stadthafen, A-4020 Linz, Austria; Tiroler Zollfreizonen
Betriebsgesellschaft m.b.H. (Tyrolean Free Trade Management Company Ltd.),
Loefflerweg 35, A-6060 Solbad Hall, Austria; and Wiener Hafen-
Betriebsgesellschaft m.b.H (Vienna Port Management Company Ltd.),
Seitenhafenstrasse 15, A-1020, Vienna, Austria.
Warehousing. Customs privileged warehousing facilities for imported foreign
goods are of two basic types: (1) nonbonded warehousing against customs bond
account and (2) storage in bonded customs warehouses.
Imported goods which are to be sold in the customs territory or reexported
may be stored in nonbonded warehouses without customs seal and without
payment of duties and taxes for an unlimited time. A transaction license is
required that is granted only to registered firms and traders. Security is
required, and pertinent customs provisions must be observed. Account is
kept of the disposition of the goods through their registration in
custms-bond accounts. Minor operations such as packing, unpacking and
repacking, refilling, and maintenance may be performed by the holder of the
transaction license without notifying customs officials, provided that such
operations do not result in a change of the tariff classification or dutible
value. In certain circumstances, nonbonded storage against a customs-bond
account may be permitted if the goods are processed during their storage; in
such cases, the pertinent provisions of inwards processing traffic apply
(discussed on next page).
Bonded customs warehouses serve to store dutiable imported goods that are
subsequently to be cleared for free trade within the customs territory,
submitted to another customs procedure, or reexported. Warehouse rooms are
so constructed that goods cannot be entered or removed without breaking a
customs seal. An authorized agent is required to supervise the goods while
in storage and is entitled to subject them to operations (for example,
packing, blending, separating, cleaning, and marking) that are compatible
with the purpose of customs warehousing, as long as the tariff
classification and the dutiable value of the goods remain unchanged.
Bonded customs warehouses are of two types: public and private. Public
customs warehouses may be used by anyone who observes warehouse
regulations. They are often located near a customs office and are usually
operated by the Federal Government or by certain regional organizations.
Some serve for the storage of most types of goods, while others restrict
themselves to certain goods. Private customs warehouses generally may be
used only by the warehouse owner. This warehouse may amount to no more than
a room in the merchant's own warehouse or business premises.
Processing. Goods may be cleared for custom-bond trade (Vormerkverkehr) in
order to undergo two types of customs favored processing: (1) inwards
processing (Active Veredelung), carried out within the customs territory,
and (2) outwards processing (passive Veredelung), carried out outside the
customs area. Processing trade is permissible only where it is expected to
contribute favorably to the Austrian economy. A transaction license issued
by the Federal Ministry of Finance in conjunction with any other pertinent
federal ministries is required. The license indicates the type of
customs-bond trade required, the validity period of the license, the date of
reimportation as well as other conditions and control measures related to
Under the inwards processing procedure, foreign goods may, with the
provision of security, be imported for processing without the payment of
duty and tax, following which they are to be reexported. Where, due to
their nature, identification of the goods is only possible according to
their weight, measurement, or number, an accounting procedure is prescribed
for the producer(s) involved. An accounting by customs officials of those
goods sold domestically (on which customs charges were levied) and of those
reexported is made at least once a year. Goods in inwards processing
traffic may, with the approval of the federal authorities in the provinces
(Finanzlandes-direktion), be passed on for further processing to other
enterprises holding transaction licenses for inwards processing. Customs
offices are authorized in certain circumstances to clear goods for active
processing without a transaction license when limited processing is to take
place within a short period of time.
Austrian goods cleared for outwards processing may be shipped out of the
customs territory for processing and reimported at a reduced rate of duty.
Clearance to this procedure is permissible only where comparable domestic
processing facilities are not available or cannot offer comparable terms.
Temporary Importation. Austria provides for temporary importation of goods
to be reexported in the same state under its customs-bond procedure. These
goods may be imported directly from abroad, or from a customs transit
procedure, a customs warehouse or a free trade zone. Most goods are
eligible for temporary importation. Prior application is necessary in
certain cases. Security is required. Although Austria maintains a drawback
procedure, its conditions are stricter than those relating to temporary
importation. Examples of temporary importation would be goods sent from
abroad to fairs, exhibitions or demonstrations, and goods imported for
inspection, copy or testing purposes. See also the section entitled
"Samples and Advertising Matter."
Refund of Duty. Import duty and tax paid on foreign goods reexported from
the Austrian customs territory to the supplier within three years after
their clearance through customs are eligible for refund. The goods may not
have been worked or processed within Austria. Customs charges on goods used
after importation are refunded only if the supplier agrees to take them back
as not conforming to contract (for example, damaged or defective). When
reexportation of the goods is not economically feasible, customs charges may
be refunded where the goods are destroyed under customs supervision.
Application for refund of duties and taxes must be made by the importer.
Refunds (drawbacks) of Austrian duties collected on goods imported from
third countries are no longer permitted if the goods are incorporated into
products exported at preferential tariff rates to EC countries. Austrian
manufacturers must decide between either obtaining a refund of the duty on
third country supplies processed into finished products for export or
requesting preferential tariff treatment for exports of their products to
If the imported goods are incorporated into Austrian-produced items which
would qualify for an EC-EFTA certificate of origin (that is, the stipulated
amount of the processing was carried out in Austria), then the duty-free
treatment is accorded to these processed items when import into an EC
country or another EFTA country. Austrian duties are not usually refundable
once paid. Provisions to avoid payment of duties must be made at the time
of importation. The only exception is for transactions which are cancelled
and the goods are returned to the country of origin.
Advance Rulings on Classification. Official rulings on the applicable
tariff classification of goods will be supplied by the Austrian Ministry of
Finance in Vienna, upon application. Advance rulings are valid only for
individual cases, but are published in the Austrian customs and tax bulletin
Oesterreichische Zoll- und Steurnachrichten. An importer may contest a
ruling by citing another previously passed ruling. Customs authorities may
alter rulings within six months if the ruling is found to have been
Multilateral Trade Negotiations
The Tokyo Round of the Multilateral Trade Negotiations (MTN), conducted from
1973 to 1979, was the seventh round of international trade negotiations
conducted under the auspices of the General Agreement on Tariff and Trade
(GATT). In addition to conducting further multilateral tariff lowering
negotiations, the Tokyo Round produced a series of detailed codes or rules
on the use of nontariff trade measures by the signatory governments. These
include the Government Procurement Code, Standards Code, Customs Valuation
Code, Import Licensing Code, Antidumping Code, Subsidies Code, and Civil
Aircraft Agreement. Austria is a signatory to all of the codes and the
Agreement on Trade in Civil Aircraft. Publications describing the codes are
available from the Trade Advisory Center, Room 3211, International Trade
Administration, U.S. Department of Commerce, Washington, D.C. 20230,
telephone (202) 377-3268.
On September 15, 1986, representatives from over 90 nations met in Punta del
Este, Uruguay to launch the current round of the MTN, the Uruguay Round.
Topics covered in the Uruguay Round include measures to improve the
functioning of the GATT multilateral trading system, agriculture,
intellectual property, textiles, tariffs, tropical products, trade-related
investment measures, subsidies and countervailing measures, nontariff
measures, and the Tokyo Round Codes. For further information on the Uruguay
Round, including "The Uruguay Round Update," a periodic status report on the
negotiations, contact: The Office of Multilateral Affairs, Room 3513,
International Trade Administration, U.S. Department of Commerce, Washington,
D.C., telephone (202) 377-3681.
Samples and Advertising Matter
Austria is a member of the International Convention to Facilitate the
Importation of Commercial Samples and Advertising Material of 1952. On the
strength of the 1955 Customs Law, Austria grants duty-free treatment to
imports of samples of negligible commercial value.
Monopoly products, food for human consumption, medicinal and toilet
preparations, poisonous substances, gifts, weapons, articles of precious
metals, as well as pictures of goods and sample packings supplied upon order
from abroad and destined for trade, are not eligible for duty-free sample
Samples that do not meet the requirements for duty-free clearance are
dutiable at the same rate as commercial shipments of the same product.
Samples registered for importation or exportation may be repeatedly imported
and exported within the period determined for return shipment using the same
registration certificate. The actual number of samples and their identity
must be ascertained at each frontier crossing. Where goods in the customs
bond import traffic are destined for trade fairs, exhibitions, or shows,
simplified clearance procedures may be available through financial
authorities at the state level (Finanzlandesdirektion).
Commercial advertising material, such as catalogs, price lists, and trade
notices, are subject to import duties. Such shipments may be entered duty
free, however, if they contain only one copy of each advertising matter or
if the shipment does not exceed 2.2 pounds. Import charges are not made on
printed books and booklets (including technical publications), and
brochures, pamphlets, and leaflets (including instruction notices, shorter
scientific theses and monographs, and travel literature).
Austria and the United States are parties to conventions providing for
simplified customs procedures in the form of the carnet. U.S. business and
professional people can use the carnet for the importation of commercial
samples, advertising materials including film, and medical and other
professional equipment into Austria for a limited time. The carnet is a
customs document which eliminates extensive customs procedures for temporary
imports. Such goods may be imported with a carnet without the payment of a
duty and tax, or the provision of additional security.
Carnets are issued in the United States by the Council for International
Business, 1212 Avenue of the Americas, New York, N.Y. 10036, telephone (212)
354-4480, telex 820 864, fax (212) 575-0327. Applications for carnets are
available from some U.S. Department of Commerce district offices. Carnets
are valid for one year from the date of issuance and fees vary according to
the value of the merchandise.
Documents required for shipments to Austria include the usual commercial
invoice and the bill of lading or air waybill, neither of which requires
consular certification. Commercial invoices must be forwarded in duplicate
and attached to the customs declaration. The invoices should include the
following information: name and address of the shipper and the cosignee; a
full description of the shipment, including any special markings, number of
packages, the value, country of origin and country of production; and any
other information that will facilitate customs handling. For textile
imports, specific information as to type, width, and weight of the fabric
must be included on the commercial invoice.
Certificates of origin are required mainly for imports of textiles and
clothing. Evidence of origin on the basis of shipping documents, invoices,
business correspondence, or other suitable documents is also required if the
lower GATT duty rate is to apply to the imported product. Certificates
should show marks, numbers, weight, and value of the merchandise and must be
issued or certified by authorized U.S. chambers of commerce. The Austrian
importer must be in possession of the original certificates at the time the
shipment clears Austrian customs.
Information on documents required for the importation of agricultural
products (including food items), plants, and animals is available from the
U.S. Department of Agriculture. Owing to the complexity of these
regulations, U.S. exporters should also obtain information directly from the
importer prior to shipment. The appropriate ministry in the Austrian
Government is another source of information for import requirements.
Marking and Labeling Requirements
Austria has no general requirements that imports be marked as to country of
origin. However, certain commodities imported into Austria are subject to
special regulations regarding the manner in which they must be marked or
labeled at the time of sale to indicate composition, content, or country.
Some markings are not permitted, mainly those that may lead to
misinterpretation of the nature or origin of the product. These special
regulations, highly detailed and diverse, are embodied in numerous laws and
directives, for example, the 1975 Textile Ordinance, or the 1975 Ordinance
on the Use of Textile Care Symbols. In addition, some customs and practices
have become established in various trades. This information should be
obtained from the Austrian importer prior to the shipment of the goods.
Since 1978, Austrian customs officials are authorized to inspect and detain
imports of textiles, shoes, detergents, and other packed household
chemicals, for example, paints, inks, toothpaste, cosmetics, and adhesives,
which do not meet labeling requirements. As far as textiles are concerned,
care and washing instructions must be included. The shipper or the importer
has three weeks to correct any deficiency or apply for customs clearance for
reexport or storage in a bonded warehouse where such deficiencies can be
remedied. Failure to take action within a three-week period is subject to
heavy penalties and possible confiscation. Marking and labeling of food and
food products is under the jurisdiction of the Austrian Ministries of
Economic Affairs and Agriculture, pursuant to the 1973 Food Labeling
Ordinance. Sanitary requirements come under the jurisdiction of the
Ministry of Health and are based on the 1975 Food Law.
Although Austrian marking and labeling requirements can be met either by the
manufacturer in the exporting country or by the importer, the latter may
result in unnecessary delays and difficulties. U.S. exporters are urged to
label goods properly prior to exportation.
Metric Requirements for Imports
Austrian law requires the use of metric units of measure for all internal
legal and commercial transactions, but specifically exempts imports and
exports from the metric requirement.
Problems arise from the use of different measurement systems by the United
States and Austria. The most frequent problem is that U.S.-made, nonmetric
items such as machinery, components, and spare parts are not compatible with
European equipment, as they are different in size. Also, European technical
standards are based on the metric system while those in the United States
are often not. The result is the incompatibility of U.S. and European
standards in many areas. Products of one area often must be adapted to be
sold in the other.
Although Austrian law permits any goods denominated in nonmetric units to
enter the country, certain packaged foodstuffs and chemical products must be
labeled to show their net weight or volume in metric units prior to sale
within the country. For foodstuffs, the raw product filling weight for
determining the product value at the time of packing must also be expressed
in metric units on the label. Such labeling may be undertaken either at the
point of origin, or by the Austrian importer.
The packaged foodstuffs subject to metric labeling requirements for domestic
sale, as described above, are fish, crustaceans, and mollusks; vegetables,
including pulses, vegetable products, mushrooms and mushroom products, and
food preparations containing any of these items; fruit, including nuts and
almonds, fruit products, and food preparations containing any of these
items; frozen foods; vegetable juices; fruit juices and beverages; fruit
syrup; dietetic foods; infant foods; whole eggs and egg yolks; and edible
oils and fats, including margarine and lard.
The packaged chemical consumer goods that require metric labeling for
domestic sale include the following items, whether packaged conventionally
or in aerosol cans: lacquers and paints; inks and china ink; toilet soap,
shaving cream, shampoos, eau de cologne, toilet water, aftershave lotions,
skin lotions, deodorants, antiperspiration agents, dental soap, tooth paste,
tooth powder, mouthwashes, mouth sprays, hair grooming products, massage
oils, cosmetic creams, powders, nail polish, and all other cosmetic
products; air fresheners, dish washing preparations, cleaning agents for
floors, furniture, wallpaper, and glass; shoe polishes, metal cleaners, and
bathroom cleaners; protective, cleaning, and maintenance preparations for
automobiles; and adhesives.
Metric labeling requirements for packaged foodstuffs are contained in the
Food Labeling Ordinance of 1974, published in the Federal Law Gazette, No.
627. Certain packaged chemicals are also subject to metric requirements by
notice of the Ministry of Trade.
Technical Standards and Requirements
Most ministries and a large number of agencies of the Federal Government are
involved in the development of national standards, which become binding
throughout Austria following approval by Parliament, or by the issuance of
ordinances or decrees. Provincial governments and municipalities also
develop and/or enforce standards in those areas which fall under their
jurisdiction. Examples are construction codes on both the provincial and
The Austrian Standards Institute (Oesterreichisches Normungsinstitute) is an
association which operates in the area of voluntary standards. Its purpose
is to develop and publish standards which are designated OeNorms
(Oesterreichische Normen). The association was established under the
authorization of the Federal Ministry for Construction and Technology and
operates under the Standards Law of 1971 and the Rules of Procedure of 1974.
OeNORMs have the character of voluntary nonbinding recommendations, but any
standard can be declared binding by the competent public authority for the
subject concerned. Federal ministries, for example, have declared binding
OeNORMs for products such as safety belts, explosive-accentuated ram tools,
elevators, cranes, and winches, while the municipality of Vienna has done
likewise with respect to a large number of construction standards. OeNORMs
that reflect the current level of technology are usually observed, as
nonadherence may open one to claims for damages.
The Austrian Standards Institute develops and issues the following types of
standards: dimension, material, delivery, test, process, communication,
sorting, type, projecting, construction and calculation, quality, and
safety. It is required to maintain standard registers for: (a) institute
standards produced under the 1954 Standards Law or its successor of 1971,
(b) institute standards that have been declared binding by laws or
ordinances, (c) institute standards providing for examination by authorized
organizations and authorized civil engineers, and (d) foreign and
international standards occasionally recommended as guidelines for use in
Austria. There is no central agency which coordinates activities of all
mandatory standards-making agencies.
The Austrian Standards Institute maintains contact with the following
international standards organizations: International Organization for
Standardization (ISO), International Electrotechnical Commission (IEC),
European Committee for Coordination of Standards (CEN), and European
Committee for Electrotechnical Standards (CENELEC). To obtain further
information or copies of published standards, the institute may be contacted
directly: Oesterreichisches Normungsinstitute, Heinestrasse 38, Postfach
130, A-1021 Vienna, Austria, Tel. 43-1-26 75 35 0, Fax 43-1-26 75 52 0.
The inquiry person for governmental standards and certification systems is
Reg. Rat. Guenter Schloegel at the Federal Ministry for Economic Affairs,
Abt. I/5, Stubenring 1-3, A-1010 Vienna, Austria, Telephone 011-43-1-71
100-Ext. 5452, FAX 011-43-1-734 45 91, Telex 11780.
State and, to a lesser extent, municipal authorities engage in writing
mandatory standards. The total number of these mandatory standards is not
known, as a large number of standards are contained in laws and regulations
issued by federal, state, and municipal authorities, and a census of
mandatory standards has not been undertaken.
Federal testing institutes, authorized testing agencies, and civil engineers
(Ziviltechnicher) are competent to test compliance with mandatory or
voluntary standards. Products subject to compulsory standards must be
tested and approved by the appropriate administrative body before they can
be sold or used.
Testing of foreign products subject to compulsory standards is initiated in
most instances by the Austrian importers. Assurances from foreign suppliers
or testing stations of conformity to standards are not accepted. However, a
test certificate issued by a reputable testing agency in the supplier
country, certifying that the product meets the standards of the exporting
country, may in some cases limit the testing to be done in Austria.
Since 1986, the EC has been pressuring Austria to align its standards with
those of the Community. EFTA, as a group, has been negotiating with the EC
to this end. Consequently, Austria has harmonized many of its standards
with those of the EC in preparation for EC membership.
System of Weights and Measures
Austrian weights and measures are based on the metric system:
1 kilogram equal 2.2046 pounds; 1 quintal equals 220.46 pounds; 1 metric ton
equals 2,204.6 pounds; 1 meter equals 39.37 inches; and 1 liter equals 1.057
quarts. Austria amended its weights and measures in 1973 to put the
International System of Units (SI) into effect. For best sales results,
quotations, labels, and promotional literature should be expressed in the
metric system or should have metric system equivalents indicated.
The Austrian power grid operates on a 220/380 volt a.c., three phase, four
wire system. Electric and electronic appliances must be adapted for use
with 220 or 380 volts, 50 cycles; equipment using other voltage is not
Residences, stores, and hotel rooms are generally supplied by a
single-phase, 220 volt, two wire system. Commercial establishments and
residences located in rural areas generally have a three-phase, 220/380
volts, four-wire connection at their disposal. Adapter plugs should be
secured in advance.
INVESTMENT IN AUSTRIA
Foreign Direct Investment
The Austrian National Bank makes periodic surveys of Austrian foreign direct
investment abroad and foreign direct investment in Austria. In the most
recent survey estimated to cover 70 to 80 percent of Austrian overseas
direct investment, 767 Austrian firms and residents contacted reported 1,015
holdings abroad in 1986, 513 in the industrial sector, and 502 in the non-
industrial sector. While net overseas assets rose AS 2.2 billion in 1985, a
contraction of AS 1.9 billion to a total of AS 16.7 billion ($1.1 billion)
occurred in 1986, the result of losses incurred by several overseas projects
which offset new foreign investment.
In terms of nominal capital, the 1,015 Austrian holdings abroad totaled AS
8.4 billion ($549 million) invested percent wise in the following locations:
EC, 52.4 percent; West Germany, 32.5 percent; EFTA, 21 percent;
Switzerland/Liechtenstein, 20.7 percent; Eastern Europe, 1.0 percent; OECD,
91.6 percent; United States, 16.7 percent; and OPEC, 1.9 percent.
The 513 industrial sector investments totaled AS 8.6 billion ($563 million)
in value. Subsectors with numbers of foreign holdings and percent of total
value were: metals/vehicles, 208 holdings (39 percent); electrical
engineering, 39 (2.1 percent); petroleum/chemicals, 73 (22.6 percent);
paper/wood, 57 (12.1 percent); textiles/clothing/leather, 48 (3.1 percent);
food/drink/tobacco, 13 (3.4 percent); construction, 27
(3.9 percent); and other, including holding companies, 48 (13.8 percent).
The 502 nonindustrial sector holding totaled AS 8.1 billion ($531 million)
in value broken down as follows: energy/transportation, 18 (0.8 percent);
trade, 753 (9.5 percent); tourism, 14 (0.2 percent); small business, 39 (1.1
percent); banking/finance, 63 (45.9 percent); insurance, 24 (24.4 percent);
and other, 212 (18.1 percent).
The most recent Austrian National Bank survey for foreign direct investment
in Austria is for 1985. In terms of nominal capital, total foreign direct
investment in Austria totaled AS 39,376 million ($2.6 billion) in 1985. Of
that, 31.6 percent originated in Switzerland/Liechtenstein; 31 percent, in
West Germany; 13.1 percent, in the United States; and 24.3 percent,
elsewhere. Industrial investments totaled AS 20,780 million ($1.4 billion),
broken down as follows: metals/vehicles, 26.3 percent; electrical
engineering, 17.7 percent; petroleum/chemicals, 28.6 percent; paper/wood,
5.5 percent; textiles/clothing/leather, 6.7 percent; food/drink/tobacco,
5.4 percent; construction, 6.8 percent; and other, 3.0 percent. There were
AS 18.6 billion ($1.2 billion) of investments in Austria's nonindustrial
sector: energy/transportation, 2.8 percent; trade, 49.9 percent; tourism,
3.9 percent; small business, 7.3; banking/finance, 19.8 percent; insurance,
9.5 percent; and other, 6.8 percent.
U.S. foreign direct investment in Austria at year-end 1990 totaled $767
million, according to U.S. Government data. Of this, 39 percent was in the
wholesale trade; 8 percent in manufacturing; 5 percent in banking; and 2
percent in other services, excluding finance, insurance, and real estate;
and 46 percent in other sectors. There are about 250 U.S. firms and
subsidiaries in Austria supplying a wide range of products and services.
The largest U.S. investor is General Motors, which established production
facilities in Austria in 1982. GM-Austria exports transmissions, engines,
and fuel injectors to Spain, Belgium, Great Britain, Germany, and the United
In January 1990, the Chrysler Corporation signed a letter of intent to
construct a minivan assembly plant in Graz. The agreement covers a project
of roughly $350 million. All Voyager vans for the European market,
currently imported from North America, are to be produced in Graz by 1991.
Federal, state, and municipal subsidies are to provide one-third of the
costs. Chrysler and its Austrian partner, Steyr-Daimler Puch, will each
share 50 percent of the venture. Other large U.S. investors in Austria are
Mobil Oil, NCR, and Cincinnati Milacron.
Austria is an attractive potential location for U.S. companies establishing
European subsidiaries because of its relatively stable economic and
political climate. Austria also boasts a sound currency, skilled work
force, labor peace, moderate wage costs compared with other industrialized
countries, and easy access to third markets, particularly the countries of
the EC, Eastern Europe, and the Middle East. The new corporate tax rate of
30 percent, together with the generally favorable economic environment and
liberal foreign exchange controls, makes Austria an appropriate base for
Potential U.S. investors should study Austria's integration efforts with the
EC, since various advantages for U.S. firms planning to invest in Austria
could be affected by whether or not Austria is successful in joining the
EC. Although Austria has made its intentions clear by submitting its
application, the EC does not expect to make a decision on Austria's
application before 1993. Thus, some uncertainty will remain. If Austria
does not join the EC, bilateral agreements with the Community regarding free
market access in capital, services, and goods will remain a critical element
for U.S. investors considering this country as a base for European
U.S. investors may seek assistance in planning industrial projects in
Austria from the Industrial Cooperation Development Company (ICD-Austria),
which can be contacted at its U.S. offices at 737 Third Avenue, 19th Floor,
New York, N.Y. 10017; telephone, (212) 980-7970, fax, (212) 980-7975. In
Austria, ICD is located at Opernring 3, A-1010 Vienna, telephone
58 85 80.
Investment inquiries may also be directed to: The Information Office for
Investors (Informationsstelle fuer Investoren), Attn.: Ministerialrat Dr.
Heinrich Hofeneder, Federal Ministry for Economic Affairs, Stubenring 1,
A-1010 Vienna, Austria, Telephone 011-43-1-71 100-Ext. 5329.
Another important contact in Vienna is the Vienna Business Promotion
Fund--WWFF, a service center run by the city of Vienna, the Federal Economic
Chamber, and two banks, which assists investors interested in locating in
Vienna. Its free services include site proposals, assistance in finding
office space, and legal and financial counseling. The fund sells real
estate and has a special service to assist foreign firms to execute their
investment projects. The fund's information center is located at
Ebendorferstrasse 2, A-1082 Vienna, Austria, telephone, 011-43-1-43 50 463,
fax, 011-43-1-43 50 462. In addition, all Austrian provinces maintain
investment promotion agencies. Addresses can be obtained from the U.S.
Embassy, Commercial Section, Boltzmanngasse 16, A-1091 Vienna, Austria,
telephone 011-43-1-31 55 11-Ext. 2285.
Government Policy on Foreign Investment
Austria welcomes foreign direct investment that creates new employment,
introduces high technology, uses products of local industry, and does not
compete in sectors already burdened with excess capacity, such as steel,
textiles, and paper. Restructuring of the economy is a recognized need,
with redeployment of industrial capacity and labor in favor of technology
intensive branches regarded as the basis for sustained economic growth and
balance. Simple takeovers of healthy enterprises are not encouraged.
While there are generally no restrictions on the percentage of foreign
ownership, restrictions on foreign ownership exist in the nationalized
sectors, for example, in the nationalized industries, broadcasting,
railroads, telephone/postal services, gas, and electricity. A number of laws restrict the right to engage in certain trades, businesses, and
professions, in particular law, medicine, banking, insurance, tourism, and
the state monopolies. However, a U.S. subsidiary can usually comply with
the legal requirements by employing a person with the required background in
the particular field. A trade license, which must be obtained in each case,
is usually little more than a formality.
While the official attitude towards foreign direct investment is liberal,
federal and state governments, and semiofficial organizations such as the
chambers of commerce, and the industry and trade associations can seriously
discourage an investment through bureaucratic delays or by withholding
permits or certain incentives. Foreign-owned businesses are in general
subject to the same legal procedures as locally owned businesses. However,
special regulations apply to capital movements, acquisition of real estate,
and business licensing.
In 1981, the Austrian National Bank liberalized capital imports for
nonresident participation in Austrian business enterprises, nonresident
direct investment in private firms in Austria, the establishment of
subsidiaries, the acquisition of Austrian securities, and the purchase of
Austrian real estate. In the wake of strong domestic economic performance
in recent years, Austrian officials have actively sought out foreign
investors. U.S. firms should now find it easier to acquire participations
in Austrian business enterprises, considering the weak capitalization of
many Austrian firms. Although the central bank's decision favors
nonresident direct investment, it does nothing to alter the regulations and
decisions by provincial governments with respect to purchases of Austrian
real estate by nonresidents.
Licenses are required to engage in certain business activities. These are
issued if the applicant meets the required qualifications relating to
education, vocational training, and previous experience. Qualified foreign
investors are issued licenses if their home countries grant reciprocity to
Austrian citizens. Licenses for certain business activities are available
only to Austrian citizens (for example, civil engineers and public
Investors in Austria are offered a wide range of incentives and assistance
at the federal, state, and local levels. Domestic as well as foreign firms
are equally eligible for all programs. The programs range from tax
incentives--including tax holidays, free leasing, and interest subsidies to
premiums, and grants.
Investment incentives, usually in the form of subsidized loans, vary
according to industry and region. About 90 percent of investing companies
receive incentives amounting to about 20 percent of the total investment.
Investments involving technology transfer and locations in remote or
underdeveloped regions are top candidates for investment incentives.
Indirect tax incentives are basically of three types: depreciation,
investment reserves, and investment allowances.
(1) Depreciation: As part of the operating expenses, normal straight-line
depreciation may be applied on acquisition or production costs of fixed
assets. For industrial buildings, the depreciation period is 25 years.
Accelerated forms of depreciation are no longer acceptable.
(2) Investment Reserve: A tax-free investment reserve (amounting to 10
percent of profit) may be formed in the years when no investment allowance
is used. By the end of the fourth year of its formation, the investment
reserve has to be used up to an amount equivalent to the investment
(3) Investment Allowance: In addition to normal depreciation, 20 percent of
the acquisition and production costs of movable capital assets may be
claimed against the profits as an investment allowance in the year of
acquisition or production of these assets, if they are depreciated and used
for a minimum of four years.
However, a major overhaul of Austria's subsidy system is planned to make it
compatible with EC practices. While the EC allows subsidies under certain
circumstances, Austria's system will have to undergo major revisions before
Austrian membership in the EC. Subsidies for investment and export
promotion will be most affected. For example, investment subsidies used to
attract new plants to other than depressed areas or for exports to other EC
member states are not allowed under EC regulations.
A key institution in Austrian economic development aid is the Oesterreiche
Investitionskredit A.G., Renngasse 10, A-1013 Vienna), a development bank in
Vienna which provides preferential loans. Established in 1957, its capital
is controlled by the large Austrian commercial banks, although its
management operates independently.
The East-West Fund was established in April 1990 as a special program
operated by the Financial Guarantee Company (FGG). Founded in 1969, the FGG
is an Austrian Government agency, which provides various kinds of investment
guarantees. The fund was in fact a 5 billion schilling expansion of the
existing 10 billion schilling FGG facility. Designed to facilitate the
financing of joint ventures of Austrian companies abroad, it provides
guarantees for Austrian direct investments and joint ventures abroad. At
least one half of the 5 billion schilling facility is reserved for projects
in Eastern European countries, and the balance is available for the rest of
the world, excluding less developed countries. A cooperation was recently
undertaken with the U.S. Overseas Private Investment Corporation (OPIC) to
encourage U.S.-Austrian cooperative ventures in Central and Eastern Europe.
The Kooperationsboerse (Schwarzenbergplatz 4, A-1031 Vienna), established by
the Federation of Austrian Industrialists, assists Austrian firms in finding
foreign as well as domestic partners. The office actively seeks American
sources for Austrian licensees and other industrial joint ventures.
A list of English language publications on taxation and investment in
Austria appears at the end of this publication. The three Austrian
commercial banks operating in the United States are also sources of
1. Girozentrale Vienna A.G., Park Avenue Tower, 29th Floor, 65 East, 55th
Street, New York, N.Y. 10022 (212) 644-0660, Fax (212) 421-2719.
2. Oesterreichische Laenderbank A.G., General Motors Building, 767 Fifth
Avenue, 5th floor, New York, N.Y. 10153, telephone (212) 362-3000, Fax
3. Creditanstalt Bankverein A.G., 245 Park Avenue, 27th Floor, New York,
N.Y. 10167, telephone (212) 856-1000, Fax (212) 856-1234
Creditanstalt also maintains two representative offices:
1. Creditanstalt Bankverein, Two Ravina Drive, 16th Floor, Suite 1680,
Atlanta, Ga. 30346, telephone (404) 390-1850.
2. Creditanstalt Bankverein, Four Embarcadero Center, Suite 2150, San
Francisco, Calif. 94111, telephone (415) 788- 1371.
The purchase of real estate in Austria is difficult for foreigners. The
acquisition, possession, and disposition of real property by foreigners is
controlled by the provinces or states (Laender), most of which have passed
legislation requiring special approval by the local authorities prior to
all transactions. However, authorization to purchase or rent real estate is
usually granted if the foreign investment is desirable from an economic
point of view and if the project conforms with the environmental regulations
and land utilization plans of the province. Otherwise, there is a tendency
to keep foreigners from acquiring land or even the ownership of apartments.
This may change if EC membership is achieved.
The Austrian National Bank administers the exchange control and issues
licenses when required. Permission for direct investments by nonresidents is usually granted, subject to the aforementioned restrictions. A permit
must be obtained for the transfer of the proceeds from the liquidation of
foreign investments. This is usually granted, as is permission to transfer
profits earned in Austria.
Forms of Business Organization
The following forms of business organization exist in Austria:
(1) individual enterprise or sole proprietorship; (2) open, limited, and
silent partnerships; (3) limited liability company and corporation; (4)
limited partnership with a limited liability company as the general partner;
and (5) cooperative.
A large part of the foreign firms in Austria are organized as limited
liability companies or limited partnerships in which a limited liability
company is a fully liable partner. Foreign companies appear to prefer these
types of business organization for the following advantages which they
offer: (1) right of control over the manager of a limited company, (2)
absence of legal requirement to publish annual balance sheets, (3) absence
of binding rules concerning the breakdown of data included in the balance
sheets, (4) absence of the cost of issuing stock certificates, and (5) tax
advantages gained by combining a limited partnership with a limited
liability company and the circumvention of full liability.
Single Proprietorship (Einzelfirma). A holder of a trade license may,
without being entered in the Commercial Register (Handelsregister),
establish a business enterprise under single ownership. A business
enterprise is entered in the Commercial Register only if its operations
exceed those of small trades or small industry (Kleingewerbe). This status
is determined by turnover, working capital, and working equipment, and on
the basis of local conditions.
The owner has sole responsibility for the firm's operations, and, in the
case of debts, the owner's entire property, according to the provisions in
the Commercial Code, may be attached.
Open Partnership (Offene Handelsgesellschaft, OHG). Two or more partners,
natural or legal persons, may form an open partnership to carry on
commercial or industrial activities as a joint firm. The principal place of
business must be in Austria. Partners are liable, jointly and severally,
for business debts to the full extent of their personal assets, although
within the partnership the liability of a partner may be limited or
precluded. Open partnerships must be registered in the Commercial Register,
and the partnership contract is effective as soon as verbal agreement has
been reached. Each of the partners may represent the company unless
stipulation to the contrary is made in the Commercial Register.
Limited Partnership (Kommanditgesellschaft, KG). At least one partner fully
liable for the business debt (general partner, Komplementaer) and at least
one partner whose liability is limited by his invested share in the firm
(limited partner, Kommandist) are required to form a limited partnership for
conducting business as a joint firm. The extent to which the liability of
the limited partnership is restricted must be stipulated in a contract and
entered into the Commercial Register to enter into force. Limited partners,
unless otherwise arranged, are neither organized to take an active part in
management nor act as its agents. The limited partners have a right of
control only at the company's meetings and have the right of appeal only
when transactions fall outside the scope of the particular enterprise.
Silent Partnership (Stille Gesellschaft). A silent partnership is formed
when a person invests in an existing business enterprise (company,
partnership, or sole proprietorship) and shares in the enterprise's profits
and in some cases the losses as well. The silent partner has no liability
for the debts of the enterprise and is not entered in the Commercial
Corporation (Aktiengesellschaft, AG). The corporation (joint-stock company)
is a legal person whose capital is represented by shares. The Austrian
Corporation Law of 1965 governs the establishment and operation of
corporations. Shareholders are not personally liable for the debts of the
company. To attain legal status, the corporation must be entered in the
The minimum share capital is AS 1 million (about $83,000), of which at least
25 percent must be paid in. Shares may be issued with Austrian schilling
face values of 100, 500, or multiples of 1,000. The company may be formed
immediately with the entire capital paid in by the founders or gradually
with at least 25 percent paid in to start.
Upon registration, a fee of 0.4 percent is charged on capital under AS
500,000 and 0.55 percent on larger amounts. A 2 percent tax
(Gesellschaftsteuer) is charged on paid-in share and loan capital, and on
capital increases. Real estate contributed to capital is subject to a 6
percent transfer tax. Notaries charge between AS 10,000 and AS 16,000 for
authentication of company statutes, depending on the size. Other notary
fees raise basic charges 50 to 80 percent.
The board of directors (supervisory board) is 3 to 7 in number for capital
up to AS 5 million, 12 for capital up to AS 50 million, and 20 for capital
above that. There are no nationality or residence requirements. Directors
appoint but may not serve on the managing board, which is composed of
principal officers of the corporation and is completely responsible for the
management of company business. One-third of the managing board seats go to
members of the Works Council (Betriebsrat) who have the same rights as other
directors and are the employees' voice in management. Managing board
directors are not required to be Austrian citizens.
General meetings of shareholders take place once a year, at which time an
auditor is selected for the annual balance sheet. Company reports must be
filed with the Commercial Registry and published in the official newspaper.
Bearer shares are issued unless registered shares are provided for in the
articles of incorporation. Ordinary and preferred shares may be issued, and
multiple voting shares will be allowed from 1991. Nonvoting shares are
allowed if they are preferred.
Major decisions--such as mergers and changes in capital or the articles of
incorporation--require a three quarters majority of the board of directors.
Other decisions require only a simple majority vote. Representation on the
board may be claimed by a 33 percent minority. A shareholders meeting can
be called by 5 percent of the shareholders.
Limited Liability Company (Gesellschaft mit beschraenkter Haftung,
Ges.m.b.H.). The legal basis for this form of business organization is the
Limited Liability Company Act of 1906 as amended in 1974 and 1980. The
limited liability company is in effect a legal person solely liable for the
company's business debts. Shareholders are not personally liable for
company debts. Limited liability companies are prohibited in insurance,
mortgage banking, and activities relating to political parties.
The minimum authorized capital of a new company is AS 500,000 (about
$42,000), at least half of which must be paid in. The capital consists of
contributions by individual shareholders, which vary in amount but must be
at least AS 1,000 (about $83). Small limited liability companies are
restricted to AS 1 million, which must be paid in cash. A minimum of two
founders/shareholders are required to establish a limited liability company,
although a single shareholder is possible.
All shares must be registered and may be transferred only through a notary.
There are no nationality or residence requirements.
Upon incorporation, fees and taxes are the same as for the corporation.
Notary fees charged on an incorporation involving the minimum capital would
be AS 3,000.
A board of directors is required for large companies (authorized capital of
at least AS 1 million--about $83,000--or more) and the number of
shareholders must be at least 50, or it must have an annual average of more
than 300 employees, or it must control one or more companies with a combined
or annual average of more than 300 employees. Where employment exceeds 300,
the board must consist of one-third works council members with the same
rights as other members. There are no nationality, residence, or management
requirements. Large companies have the same disclosure requirements as
corporations; small companies are exempt from this requirement. A simple
majority of the board of directors is sufficient for deciding most issues,
but 75 percent is required to amend the charter or bylaws, while mergers and
other important corporate issues require 100 percent. A 10 percent minority
can institute an audit, summon a general meeting, or add subjects to the
Limited Liability Company & Co., Limited Partnership (Ges.m.b.H + Co. KG).
This limited partnership is formed when the intent is to limit the liability
of investors as much as possible and still maintain the advantages of
partnership. The general partner is a limited liability company. It is
only liable up to the amount of its capital and is entitled to exercise the
management function. Decisions handed down by the Courts of Appeal have
established that foreign firms may become general partners only if they
register as branch establishments in Austria at the same time. In this
mixed form of business enterprise, the share of the profits falling to the
limited liability company as a general partner is subject to corporate tax,
while dividends paid by the limited liability company are subject to the
capital yield tax. The limited partners, who are often the shareholders of
the limited liability company, pay income tax on their share of the profit.
Any other taxes on earnings and property are governed by regulations
relating to partnerships. In a similar manner to the above described mixed
business form, a limited partnership may be formed in which a corporation
assumes the role of a general partner (AG & Co., KG).
Cooperative (Genossenschaft). A cooperative is a group (Verein) comprising
an unlimited number of members engaged in promoting the trade or economic
welfare of its members by means of joint business enterprises (management)
or of credit grants. Cooperatives may be established with either unlimited
or limited liability of their members. If unlimited, each person is liable
to the full extent of his assets and jointly with the other members for the
debts of the cooperative. If limited, the liability of the member is
limited to a certain previously fixed amount representing a multiple of his
shares in the business. A liability merely in the amount of the business
share is permissible only in the case of cooperative stores in which each
individual share amounts to at least 10 Austrian schillings (about $0.83),
and which distributes merchandise only to members of the cooperative. The
operations of the cooperative are governed by the law of April 9, 1873, and
the supplement of August 3, 1934 as amended.
Organization of Foreign Firms
Establishment of Branches. To open a branch in Austria, a firm (individual,
partnership, or corporation) may register such branch in the Commercial
Register of the Trade Court (Handelsgericht) in the district in which the
branch is to be located, if the head office abroad is registered in a
foreign country. Application for the establishment of a branch must be
signed by the owner, if the business is a single proprietorship; by each
partner, if the business is a partnership; and by all the members of the
board of directors, if the business is a corporation.
If the branch is to be operated as a limited liability company, the foreign
firm applying for registration must submit evidence of its own registration
abroad as a company whose legal basis corresponds to that of an Austrian
company with limited liability and that reciprocal treatment is accorded to
Austrian firms in the foreign firm's country, unless state treaties or
government declarations are in effect verifying such conditions.
Reciprocity has been formally recognized between Austria and the United
States since 1951. An American citizen must present a certificate showing
that his state (for example, Utah) gives Austrian companies with limited
liability the same treatment as an American firm.
The admission to Austria of branch establishments of foreign companies with
limited liability is governed by the provisions of section 37 of the law
concerning corporations and by section 107 and subsequent sections of the
law regulating limited-liability companies.
The application for the establishment of a branch must show that the foreign
firm would be eligible for registration in the Commercial Register if it
were organized as an Austrian firm. If the foreign firm is a corporation,
it must include a certified copy of its articles of incorporation. In
addition, the application must indicate the subscription price of the shares
and the name, profession, and residence of each founder and each member of
the supervisory board (Aufsichtsrat). Since procedures in the case of
corporations are more complicated, it is advisable to engage the services
of an Austrian chartered accountant and/or lawyer.
Finally, it must be stated in the application whether all or only part of
the shares have been taken over by the founders, and the evidence must be
presented that the license required for the establishment of the branch has
been obtained. Permission for foreign corporations to conduct business in
Austria is subject to the approval of the Federal Ministry of the Interior;
if the business is a bank or insurance company, approval must be obtained by
the Federal Ministry of Finance.
Each Austrian branch of a foreign corporation will be legally treated as a
main establishment under the presumption that it must enjoy a degree of
independence in carrying out current business in spite of being economically
and legally dependent on the parent firm. In all cases where branch
establishments are to be opened, an expert opinion by the chamber of
commerce is needed to the effect that such a branch establishment has
actually been established and that it conducts business independently with
its own capital and bookkeeping system.
Establishment of Agencies. A foreign firm (individual, partnership, or
corporation) may do business in Austria through an agent. If the agent is a
citizen of the United States or another foreign country, the relation
between agent and principal is, most likely governed by agency law in that
country; if the agent is a citizen of Austria, this relationship is subject
to Austrian law.
Under Austrian law, a distinction exists between the agent employed by the
principal, known as Handlungsvollmaechtigter, and the agent acting
independently, known as Handelsagent, who transacts business in the name of
and for the account of the principal. A Handlungsvollmaechtigter has the
authority to carry out all transactions that are normally required in the
principal's business. However, he is not authorized to sell or encumber
real estate, to sign bills of exchange, to lend money, nor to engage in
legal proceedings unless specifically authorized by the principal to do so.
The Handelsagent may have the authority to enter into transactions for the
principal which do not require approval (Abschlussagent); or do require
Both agents are entitled to commissions for transactions entered into during
the period of the agency. Commissions are due when the principals have
carried out their part of the transaction. If a definite commission fee has
not been stipulated, a reasonable fee is then deemed to have been agreed
upon. Agents appointed for a definite area or for a definite clientele are
also entitled to commissions for transactions made without their efforts.
For cogent reasons, agencies can be terminated by either the principal or
agent without notice.
Establishment of Subsidiaries. In establishing a subsidiary, a foreign firm
(individual, partnership, or corporation) may avail itself of any of the
forms of business organization permissible under Austrian law. In general,
foreign firms desiring to establish in Austria choose either a corporation
or a limited liability company, rather than a sole proprietorship or
partnership, in order to avoid unlimited liability for business debts.
The Commercial Register
The Commercial Register (Handelsregister) lists single private merchants,
partnerships, limited-liability companies, corporations, and cooperatives.
Single merchants are not required to register in the Commercial Register if
their volume of business does not exceed that of a small business
(Kleingewerbe). There are no fixed limits regarding volume of business, and
the decision as to eligibility for registration is made by the Court of
Trade upon recommendation of the chamber of commerce. Single merchants,
regardless of the size of their business, are usually interested in being
listed in the Commercial Register because such registration improves their
credit standing. All trading companies and partnerships must be
registered. Registration fees are either flat for individual
proprietorships and partnerships, or a percentage (a fraction of 1 percent)
of capital for other business entities.
Trade License Requirements
Anyone who wishes to operate an individual business concern in Austria must
have a trade license (Gewerbeschein). The preliminary conditions for
granting a trade license are laid down in the Gewerbeordnung (Trade Law) of
1973 and several supplementary laws. In general, applicants must be at
least 24 years of age, show evidence of proper apprenticeship (three to four
years depending on the trade or profession) and practical work (three to
five years), and have a clean record. In the case of a handicraft, the law
provides that the person must have passed a master's examination.
Aside from the provisions of the handicraft law, special licenses
(Konzessionen) are required for bookstores, internal navigation, architects,
producers of arms and ammunition, manufactures of explosives, secondhand
dealers, producers of poisons, manufacturers and dealers of pharmaceuticals,
restaurants, manufacturers of playing cards, bus operators, electricians,
printers, and plumbers.
Juristic persons, according to paragraph 3 of the Trade Law, may operate a
business just like physical persons, but must appoint proper managers or
lessees. Partnerships enjoy the same status as juristic persons. In silent
partnerships, each active partner must have a trade license.
Limited-liability companies and corporations attain legal status only in the
Commercial Register, which in such cases is the preliminary condition for
their trade license.
Industrial and Intellectual Property Protection
Austria is a member of the "Paris Union" International Convention for the
Protection of Intellectual Property (patents and trademarks), to which the
United States and about 90 other countries adhere. American businesses and
inventors are thus entitled to receive national treatment in Austria (that
is, treatment equal to that accorded to Austrian citizens) under Austrian
laws for the protection of patents and trademarks. American nationals are
also entitled to certain other benefits such as the protection of their
patents against arbitrary forfeiture for nonworking and a one year "right to
priority" for filing their patent applications (that is, one year--following
first filing a patent application in the United States--in which to file a
corresponding application in Austria and receive for the latter application
the benefit of the initial U.S. filing date). The Right of Property period
for trademark applications is six months.
Austria signed both the Patent Cooperation Treaty and the European Patent
Convention in 1979. These conventions benefit U.S. business people
primarily by simplifying the procedures for obtaining international patent
protection and may be useful to those interested in seeking patent
protection in Austria.
Austria is also a member of the Universal Copyright Convention to which the
United States and about 60 other countries adhere. Works of American
authors first copyrighted in the United States are thereby entitled to
automatic protection in Austria. To obtain copyright protection, authors
need only display on such works their names, the year of the first
publication, and the symbol "c" in a circle. Austria is also a member of
the Berne Union Copyright Convention. Although the United States is not a
member of that convention, U.S. authors may obtain protection in Berne Union
countries by publishing a work in a Berne Union country at the time it is
first published and copyrighted in the United States (simultaneous
Applications or enquiries about patents and trademarks should be addressed
to the Federal Patent Office in Vienna--Oesterreichisches Patentamt,
Kohlmarkt 8-10, Vienna I. Enquiries about copyrights should be addressed to
the Federal Ministry of Education--Bundesministerium fuer Unterricht und
Kunst, Minoritenplatz 5, 1014 Vienna I.
Patents. The Austrian Patent Law became effective in 1969. Patents are
granted for a period of 18 years from the effective publication date of the
application. Applications are examined for novelty and, if acceptable,
published for opposition for four months. If no opposition is filed or an
opposition is successfully overcome, the application is allowed, and the
patent is granted. If a patentee does not work his patent within three
years from the date of the grant, or four years from the date of the
application, whichever is later, a compulsory license may be granted by the
authorities upon request by another party. If a compulsory licensee does
not fulfill the working requirement, the patent cannot be revoked until two
years after issuance of the license.
Trademarks. Trademarks are protected under the Trademark Protection Law of
1970. Austria has adopted the Nice International Classification System for
registration purposes (34 product and 8 service classes). Trademark
registrations are valid for ten years from the date the mark is accepted for
registration and may be renewable for like periods. A party who is the
first applicant for a mark is entitled to receive a registration and
exclusive ownership of the mark. If another party, however, can prove to
have been the first user, the mark can be cancelled and re-registered to
him. After five years, a registration becomes incontestable on the grounds
of prior use. Applications are examined as to having been previously
registered and published. Not registerable as trademarks are official
national or foreign emblems, or words contrary to public order or good
morals. There are no formal opposition provisions. Use of a registered
trademark is compulsory, and it may be cancelled upon petition by a third
party if not used after a lapse of five years.
Copyrights. Protection of copyrights in Austria is governed by the
Copyright Statute of April 9, 1936, as amended in 1972. The term of the
copyright protection is for the author's life plus 70 years for any
literary, dramatic, musical, and artistic work. Copyright includes the sole
right to produce and reproduce the work or a translation of it, to publish
such work or translation, to perform it in public, and to authorize others
to do any of the foregoing.
The following is intended as a very general guide to taxes that are of
primary interest to persons contemplating direct investment in Austria.
Organization fees and taxes are the same for Austrian and foreign-controlled
Convention to Avoid Double Taxation
A convention to avoid double taxation between the United States and Austria
came into force in 1957, and it is still the basis for the bilateral
U.S.-Austrian taxation relationship. The main purpose of the treaty is to
provide relief from taxation of the same income by both countries. This
relief is achieved by allowing exemptions, by applying the credit principle,
or both. The convention also provides for limited exchange of
administrative assistance between the tax authorities.
The convention covers the U.S. Federal income tax, including surtaxes, and
the Austrian income tax, the corporation tax, and housing reconstruction and
family allowance contributions. The convention automatically applies to any
other similar income or profits taxes imposed by one of the contracting
The industrial and commercial profits of an enterprise of one country are
not taxed by the other country unless the enterprise is engaged in a trade
or business through a "permanent establishment." The term is defined as a
branch office, plant, workshop, warehouse, merchandising establishment,
mine, oil well, or other place of exploitation of the ground or soil, a
construction or assembly project exceeding 12 months duration, or other
fixed place of business. Commissioned warehouses and businesses established
solely for the purchase of goods in the other contracting country are not
considered permanent establishments.
Dividends and Interest. According to Article II, Section 2 of the
convention, dividends from sources within the country where the corporation
paying the dividends is domiciled are treated as income.
The country within which the income has its source as well as the country of
residence may in principle both levy taxes. However, as a logical
consequence of the principles of residence, Article XIV provides that
dividends and interest paid by an Austrian corporation (except where it is
also an American corporation) shall be exempt from U.S. tax where the
recipient is a nonresident alien or a foreign corporation. Reciprocally,
dividends and interest paid by a U.S. corporation shall be exempt from tax
in Austria when the recipient has no residence in Austria or is not an
Article VII of the convention provides that interest received from sources
in one contracting country by a resident, corporation, or similar entity in
the other contracting country is exempt from tax if the recipient has no
permanent establishment in the originating country. The amount of interest
may not exceed a fair return, and interest on mortgage debt is not
included. Likewise, royalties and other income from copyrights, artistic
and scientific works, patents, designs, plans, and trademarks are exempt
from taxation by the contracting country within which the income
originates. However, Article VIII excludes film rental from this
exemption. The provisions relating to fair rate of return and lack of
permanent establishment in the origin country of the income continue to
Real Property. Income from real property and royalties on the operation of
mines, oil wells, or other natural resources are taxable in the contracting
country where the real property is located. Real property income includes
gains from the sale or exchange of such property and the interest on
mortgages secured by the property. Recipients of such real property income
may in any tax year elect to be subject to the tax of the other contracting
country on a net basis. This subjection to the tax of the other contracting
country would occur as if the recipient were engaged in the trade or
business within the other contracting country through a permanent
Compensation for Labor or Personal Services. Articles X and XI deal with
taxation of compensation received for independent activities, including the
practice of liberal professions, rendering services as a manager, and
compensation of past or present labor services (pensions and annuities).
Article X provides that a resident of one country may earn up to $3,000 from
performance of several services in the other country where he is temporarily
present for less than 183 days. Article XII deals with the remuneration of
visiting teachers and exempts income from teaching during a period of six
months to two years; and Article XIII exempts the overseas income of
students, apprentices, and similar persons from their activities in the
other contracting country.
Business and Individual Taxes
Personal Income Tax. Personal income taxes were reduced in 1989 under the
new tax law. The new legislation provided an across-the-board reduction in
marginal tax rates, as the old system of 11 brackets with marginal rates
from 21 to 62 percent was replaced with 5 brackets from 10 to 50 percent.
As a result, about 90 percent of all salaried and self-employed workers will
pay less tax in 1989 than in 1988, with 4 percent having their tax bills
unchanged and 6 percent paying more. It is estimated that 250,000 of
Austria's 4.4 million taxpayers will be removed from the tax role altogether
by the reform (100,000 low wage earners and 150,000 pensioners). At the
other end of the scale, the effective top marginal rate for salaried income
will be even less than the 50 percent specified in the legislation. The
reform provides preferential treatment for Christmas and vacation bonuses.
As a result, the effective top marginal rate for salaried employees is
about 42 percent.
Corporate Taxes. The corporation tax is levied on the profits of
corporations, limited liability companies, cooperatives, and other private
juristic persons, and similar organizations such as societies and
foundations. Under the 1989 Tax Law, a flat rate of 30 percent on
distributed and undistributed corporate profits replaced the previous system
of marginal rates ranging from 30 to 55 percent. The specific provisions
applying to corporations include the termination of the half tax rate
privilege for profits distributed as dividends; the allowance of payments of
the property tax and inheritance tax equivalents to be deducted as business
expenses; termination of the tax exempt status previously granted to
cooperatives; and an expansion of the existing intercompany tax concession
for income derived from investments or equity participations of at least 25
percent in other companies, to cover all income from equity investments
regardless of size.
Tax on Interest and Dividends. The tax on capital returns
(Kapitalertragsteuer) is a special form of business income tax levied on
dividends and interest. A flat rate of 25 percent applies and is withheld
at the source for dividends from shares in corporations and limited
liability companies, dividends on participation capital, and other income
from a participation in a business as a silent partner if the person or
company making the payment has its domicile or headquarters in Austria.
The tax withheld is regarded as prepayment of income tax (corporate tax) and
credited to the income tax account for natural persons and the corporate tax
account of corporations. If one Austrian corporation pays dividends to
another Austrian corporation, the recipient of the dividends is exempted
from paying corporate tax on them. Likewise, on a holding of 25 percent or
more, no tax on interest is withheld; if the holding is less than 25
percent, the withholding tax of 25 percent is withheld for technical
reasons, but is subsequently credited. If an Austrian corporation pays
dividends to a foreign corporation, the 25 percent tax is also withheld, but
some double taxation agreements, including the one with the United States,
provide for lower rates.
Capital Investments. A flat 10 percent withholding tax on interest income
from savings deposits (except regular passbook savings paying the minimum
interest rate), other receivables from banks, and bonds is withheld at the
source. The tax withheld is regarded as prepayment of income tax (corporate
tax) and credited to the income tax account for natural persons and the
corporate tax account of corporations.
Capital Gains and Losses. Capital gains are generally treated as ordinary
business income and are taxed at the prevailing income/corporate tax rates.
Losses on the sale of assets are fully deductible. Capital gains on the
disposal of long-term assets (that is, those held for at least seven years)
may be deducted from the cost of newly acquired fixed assets and in this way
be rendered tax free. In fact, this deduction amounts to a deferral of the
capital gains until the dates of depreciation or disposal of such newly
acquired fixed assets. Capital gains resulting from the purchase or sale of
participations in a foreign company of at least 25 percent are tax free.
Capital Transfer Tax. The capital transfer tax (Kapitalverkehrsteuer)
comprises the following three types of taxation: (1) company tax
(Gesellschaftsteuer) of 2 percent or, in exceptional cases, 1 percent,
levied on the initial acquisition of ownership rights in an Austrian
company; (2) securities tax (Wertpapiersteuer) of 1 percent on the initial
acquisition in Austria of interest-bearing bonds or related claims against
the domestic debtor (2 percent in the case of a foreign debtor); and (3)
stock exchange turnover tax (Boersenumsatzsteuer) of 0.5 percent on
transactions in bonds or shares other than initial acquisition.
Value-Added Tax. The Austrian sales tax is a value-added tax (VAT). The
VAT is levied in the following instances: (1) on the sale of goods and
services by an enterprise in Austria within the scope of its business, (2)
on the business enterprise's own consumption, and (3) on the importation of
goods into the customs territory of Austria. The general rate is 20
percent. A 10 percent rate is charged on certain goods and services,
including foodstuffs, agricultural produce, some raw materials, books, guest
accommodations and related services, and some health care and cultural
services. A 32 percent VAT is in effect for a small number of luxury
items. The VAT (import turnover tax) is assessed on a duty-paid c.i.f.
value of the imported goods. VAT is not charged on exports; exporters
obtain rebates of VAT paid on goods that are exported out of the customs
territory of Austria.
The VAT is levied at each transaction (sale) in the production and
distribution chain. But, as the name of the tax implies, it is only the
value added at each stage of production and distribution that is taxed.
This taxing only of the value added occurs in that the firm may reduce the
amount of tax it owes on its sales by the amount of tax charged (passed on)
to it by other firms for their provision of goods and services. In effect,
each firm incurs a liability for tax on its net turnover or the difference
between the tax calculated on its own sales and the tax passed on to it
accruing from its purchases from other producers or distributors.
Consequently, the VAT does not constitute an actual expenditure for the
enterprise; the brunt of the VAT is borne by the consumer end-user, who is
not entitled to deduct previously paid tax. VAT liabilities incurred by
manufacturers on purchases of capital equipment are eligible for offsetting
credits from the tax authorities.
Trade Tax. The trade tax (Gewerbesteuer) is levied on all business
enterprises, in particular corporations and limited liability companies,
except those in agriculture, forestry, and the liberal professions. The
three-part tax is levied on three different assessment bases: (1) trade
profit (Gewerbeertragssteuer), (2) trade capital (Gewerbekapitalsteuer), and
(3) sum of wages (Lohnsummensteuer). The first two are federal taxes, and
the third is charged by the municipalities. The trade profit is the profit
of a business enterprise domiciled in Austria as determined by provisions of
income and corporate tax laws, including certain additions and deductions.
The 1989 Tax Law raised the minimum level of profits to which the tax is
applied from AS 80,000 to AS 160,000. The tax rate is 4.5 percent. The
trade capital is the assessed net value of the business enterprise as
defined by the Valuation Law, with additions and deductions corresponding to
those applied to trade profit. The tax rate is 0.3 percent. The sum of
wages assessment base is the total of wages and salaries paid by the firm.
The 1989 Tax Law eliminated the requirement that the trade tax be applied to
the compensation of employees who owned a share of less than AS 200,000 in
the business in which they worked. While the tax rate varies, the most
common rate paid by the employers to municipalities is 2 percent.
Property Tax. The property tax (Vermoegensteuer), one of Austria's oldest,
is a general property tax levied on the value of net assets of physical
persons and legal entities (for example, corporations, limited liability
companies, or cooperatives). The tax assessment base for those subject to
unlimited tax liability is the total of taxable net assets and for those
subject to limited tax liability, their domestic assets less domestic
liabilities. It is levied on households rather than on individuals. With
a rate of 1 percent, the property tax is less important in terms of revenue
than many other taxes. Property of foreigners is taxed only if located in
Austria. Subject to tax are agricultural and forestry property; real
estate, including buildings and plants of business enterprises, located in
Austria; and industrial property rights, such as patents that are registered
and commercially exploited in Austria. Excluded are copyrights of creative
art, literature, and composition; domestic mortgages; assets invested in or
leased to domestic enterprises; and claims arising from domestic shares in
Real Estate Tax. In addition to the general property tax, there are two
other taxes levied on certain property assets. The real estate tax
(Grundsteuer), which is levied by the municipality on agricultural and
forestry enterprises, and all other real estate and buildings, rarely
exceeds 0.5 percent of the resale value of the property. The tax varies
with the location, usage, and the value of the property. It is based on the
Einheitswert, the officially assessed value of real estate, which serves as
a uniform basis for all taxes on real estate. Vienna applies the maximum
rate of 0.84 percent of the assessed value. A land value levy
(Bodenwertabgabe) is imposed by the federal revenue authorities on the value
of vacant real estate.
Real Estate Transfer Tax. The base on which the real estate transfer tax
(Grunderwerbsteuer) is levied is the consideration given, generally the
purchase price plus other commitments assumed by the buyer. If no
consideration is given, the tax is charged on an estimated value of the
property. The rate is 7 percent if the consideration is AS 100,000 or less,
8 percent if it exceeds AS 100,000. Property contributed to a corporation
or a limited liability company in exchange for stock in the company is taxed
at a rate of 6 percent.
Inheritance Tax Equivalents. Unlimited tax liability arises with respect to
the total net assets of enterprises (legal entities) whose domicile or
management center is located in Austria. Enterprises without domicile or
place of management in Austria are subject only to a limited tax liability;
that is, only with regard to property located in Austria. The tax rate does
not exceed 0.5 percent of the total taxable net assets (domestic property),
provided it exceeds AS 150,000. Participations (shareholdings) of more than
10 percent of physical persons subject to unlimited tax liability may reduce
the assessment basis. The 1989 Tax Law stipulated that payments of property
tax and inheritance tax equivalents (Erbschaftsteueraequivalent) can now be
deducted as business expenses.
Inheritance Tax. The inheritance tax (Erbschaftsteuer) applies to
inheritances, legacies, and donations (inter vivos) of people domiciled in
Austria or of corporations, foundations, etc., with place of management in
Austria. The rates vary between 2 and 60 percent depending on the
relationship of the testator (donator) to the inheritor (donee).
Insurance Tax. The insurance tax (Versicherungssteuer) is levied on premiums
paid by people domiciled in Austria or for property located in Austria. The
1989 tax reform increased tax premiums (rates vary from 1 to 8.5 percent
depending on the type of insurance) by 10 percent.
Fire Insurance Tax. The fire insurance tax (Feuerschutzsteuer) is levied on
fire insurance premiums. The applicable tax rate is 8 percent.
Motor Vehicle Tax. The motor vehicle tax (Kraftfahrzeugsteuer) is levied on
all motor vehicles in Austria. Depending on the type of vehicle and its
piston displacement, the annual tax ranges from from AS 60 to AS 8,100.
Stamps and Fees. Stamp and legal fees are charged for certain documents
such as passports, transaction contracts, and mortgage transactions.
Excise Taxes and Similar Fees
Alcohol Tax. The alcohol tax was also targeted by the 1989 tax reform. The
new provisions reduced the tax on wine from 10 to 5 percent. Excise taxes
charged on beer, alcoholic beverages, and sparkling wine were not affected
by the tax increase.
Tobacco Tax. The tobacco excise tax was increased by the 1989 Tax Law by 5
percent. Existing rates range from 18 to 55 percent, depending on the
nature of the product.
Gambling Tax. The gambling tax was increased by the 1989 Tax Law by 10
percent. Gambling tax rates vary with the type of game from 35 to 80
Excise taxes are also charged on petroleum, petroleum products,
A strong incentive for direct investors has traditionally been the favorable
climate of labor-management relations in Austria. In 1989, for example,
there were only seven strikes. According to labor statistics published by
the Austrian Trade Union Federation (ATUF), the average strike time per
worker was a mere 50 seconds in 1989.
In 1989, blue-collar income increased by 3.7 percent from the 1988 figure.
Income of salaried workers and civil servants increased by 3.9 percent.
These relatively low figures represent the ATUF's traditional moderation
when faced with favorable economic growth. However, most Austrians have
benefitted from the 1989 tax reform and have more disposable income.
An important factor in Austria's post-war tradition of labor peace has been
the nation's system of social partnership, a nonofficial forum for working
out a range of labor-management and other socio-economic questions. The
forum brings together representatives of labor, management, government, and
agriculture to achieve consensus on contentious issues.
Among the most important questions addressed by the social partners during
1989 was the issue of Austrian admission to the European Community. Early
in the year, a study jointly prepared by the social partners concluded that
Austrian participation and integration in the EC would be in Austria's
interest provided it did not endanger the country's social welfare,
environment, or permanent neutrality. Austrian labor has been very active
in the EC membership debate and has overcome an initial reluctance to become
generally favorable to the prospects of Austrian membership in the EC.
With a population of 7.6 million, Austria has a labor force totalling 3.4
million. Of this number, 55 percent are employed in the service sector, 37
percent in industry and small trades, and 8 percent in agriculture. The
unemployment rate was 5 percent in 1989, a slight drop over the previous
year. Austrian industry and service sector workers are highly trained and
pick up techniques rapidly. Industrial training is undertaken by
organizations such as the Institute for Economic Development (WIFI). Such
training is generally of a high quality.
While slightly more than 60 percent of the labor force are organized in
unions affiliated with the ATUF (Oesterreichischer Gewerkschaftsbund), all
salary and wage earners must be members of the chambers of labor
(Arbeitskammern). The chambers are organized on a provincial basis and
constitute the legal representation of the workers. They are consulted on
proposed labor and social policy legislation.
The number of foreign workers or Gastarbeiter increased to 189,237 in 1989,
an increase of 10.9 percent from 1988. Foreign workers accounted for 6.5
percent of the working population in 1989. The tourism, cleaning services,
and construction sectors employed 75 percent of the foreign workers.
The revolutionary changes in Eastern Europe have resulted in a surge in the
number of economic migrants to Austria, whose open-door policy has enabled
some 600,000 Eastern Europeans to settle there over the past four decades.
The resultant pressure has raised debate on reform of the law on employment
of foreigners to the top of the domestic political agenda. In addition the
legal foreign workers in Austria, up to 100,000 illegal aliens are in the
country. A parliamentary compromise reached in June 1990 allows foreigners
to comprise 10 percent of the Austrian work force. This would permit an
additional 100,000 legal foreign workers in Austria.
The shortage of skilled labor on the Austrian labor market continued to grow
in 1989. Some businesses reported that they had to turn down orders because
of a lack of qualified labor. Nearly five times as many openings for
skilled workers were registered in 1989 than there were people to fill
them. Compared with 1988, there were almost 5 percent fewer skilled workers
entering the labor force.
Legislation in 1969 resulted in the reduction of the workweek from 45 to 40
hours. In 1989, the ATUF continued its push for a further reduction in the
workweek to 35 hours for industrial and civil service workers. Since
advancing the proposal at its 1987 Congress, Austrian labor has been pushing
for a nationwide collective bargaining agreement. The proposal called for
meetings with management to negotiate a 35-hour workweek with full wage
compensation. Business opposes the shorter workweek, arguing that a further
reduction would endanger the economy's recovery and seriously undermine the
industrial competitiveness of Austrian companies. Although more than half
of all employees in 1990 worked 38 or 38.5 hours per week, a general 35-hour
workweek is not likely to materialize before 1995.
A minimum of five weeks of vacation has been provided for under law since
Sunday work is permissible only in exceptional cases and is usually
compensated with double-time pay. The law in Austria also provides for rest
on the 13 statutory holidays during the year, for which current wages or
salaries must be paid. For work done on a statutory public holiday,
payment is required for the actual time worked in addition to the basic
payment of wages or salaries.
Working conditions and safety regulations are strictly defined in Austrian
legislation and are enforced by imposing heavy penalties on employers and
employees for violations.
GUIDANCE FOR BUSINESS VISITORS
U.S. citizens need only a valid passport to enter Austria. An Austrian visa
is required for stays longer than three months but less than a year. The
visa may be obtained free of charge from any of the Austrian consulates
general listed at the end of this report. Visas for stays of more than one
year must be approved by the Austrian Ministry of the Interior in Vienna.
All residents are required to register with the local police. Persons who
seek employment in Austria must first obtain a residence permit, as well as
a work permit from the local employment office. These must be applied for
by the employer before the prospective employee's entry into Austria.
Applications may be filed by the prospective employee only after entry into
Austria. Employment and residence permits are issued for one year and may
be extended. Self-employed foreigners must also receive approval to engage
in business activities.
U.S. citizens enjoy, by virtue of the Treaty of Friendship, Navigation,
Commerce and Consular Rights of 1931 and the principle of
most-favored-nation treatment, full rights to reside in Austria and to carry
on all forms of commercial activities under the same conditions that apply
to Austrian nationals.
Foreign Exchange Restrictions
There are no restrictions on the amount of foreign exchange that may be
brought into Austria. Moreover, persons entering Austria may bring in
Austrian or foreign bank notes and coins without limit. Exchange receipts
from visibles, however, must be declared within eight days of the date of
collection. They may either be surrendered or be deposited with an
authorized bank and subsequently used in the same way as proceeds accruing
Monetary policy is within the purview of the central bank and the bank of
issue--the Austrian National Bank. The latter is empowered to introduce
measures it deems appropriate to protect the external value of the
schilling, or discourage speculative capital flows endangering price
stability at home.
Quotations. Since price quotations by European manufacturers are generally
"free Austrian border" or "delivered at Austrian point of destination," U.S.
exporters should normally quote prices on a "c.i.f. European point of entry"
basis. Austrian importers will rarely consider price quotations on "f.o.b."
or "ex factory" basis.
Payment Terms. Terms of payments for imports vary widely, with most
European exporters allowing their Austrian customers to settle their
accounts at net prices within periods ranging from 60 to 120 days after the
receipt of goods. This period may extend up to 6 months for imports of
machinery and other capital equipment. A discount of 3 to 6 percent of the
invoice price may be granted for prompt payment upon receipt of the goods.
This discount is often deductible from the customs value of the imported
merchandise if the importer can substantiate to the customs authorities that
the account was paid promptly. Commercial credits granted by European
manufacturers usually cost 1 to 2 percent per month after the net period has
Favorable credit terms have become an important factor in the choice of
supplier by Austrian firms. U.S. firms requesting payment upon receipt
without offering a special discount may find themselves at a disadvantage
selling in Austria. Even those Austrian importers who can afford to accept
such terms prefer long-term payment conditions.
Business Practice and Etiquette. Business practice and etiquette is not
basically different from American usage. Austrians are generally well
disposed toward Americans. As they expect understanding for their way of
doing things, it is well to observe certain unwritten rules of conduct and
thus avoid offending Austrian sensibilities. When making appointments with
prospective buyers or distributors, it is courteous to meet them wherever is
most convenient to them. Appointments for such meetings should be made in
writing or by telephone well in advance. Austrians tend to be
tradition-conscious and attach importance to titles and the recognition
implied through their use.
Correspondence and visits play a significant role in the conduct of business
in Austria. Prompt handling of correspondence, including the use of cables,
telexes, and facsimile machines, is very much appreciated and helps to
compensate for the distances involved. Prompt response is appreciated even
when the answer is negative. Buyers should be advised promptly of changes
in prices, models, or delivery times. When possible, offers and
documentation should be in German. U.S. exporters should guard against
conveying the impression that the Austrian buyer is given low priority in
filling orders, delivery schedules, or availability of merchandise. Clarity
and continuity in communications is very important. All too often, the
importer does not know whom to contact because of constant changes in
personnel for exports. Local firms have complained about having to deal
individually with too many organizational layers, such as export
departments, shipping departments, and sales offices.
Marketing and sales policies should be oriented toward establishing lasting
business relationships, rather than toward immediate sales. Hard selling is
As a rule, Austrian firms prefer to deal with the U.S. principals directly,
rather than representatives. Small orders should be accepted to remain
competitive; modest beginnings have been known to lead to very lucrative
business. Above all, the exporter should be prepared to provide training,
after-sales service, and parts as needed. Participation in a local trade
fair can be an ideal vehicle for introducing product lines to the Austrian
market. Since Austria is a major center for trading with the countries of
Central and Eastern Europe, such fairs invariably attract buyers from these
The official language of Austria is German. The importance of German
language trade literature, catalogs and instructions for the use and
servicing of products cannot be overemphasized. The agent or local
representative in Austria who has such material is in a far better
competitive position than one who must show prospective customers trade
literature in English. Most large commercial and industrial enterprises
can, however, correspond in English and French in addition to German.
The customary hours of business are Monday through Friday from 8:00 a.m. or
9:00 a.m. to 5:00 p.m. or 6:00 p.m. In most towns and cities, shops and
businesses remain open during lunchtime, while most banks close, usually
from 12:30 to 1:30 p.m. Shops and offices often remain open until 8:00 p.m.
on Thursdays and Fridays. Government and business officials are seldom
available for consultation on Saturdays.
Legal holidays in Austria in 1991 are: January 1 (New Year's Day), January 6
(Epiphany), April 1 (Easter Monday), May 1 (Labor Day--National Day), May 9
(Ascension), May 20 (Whit Monday), May 30 (Corpus Christi Day), August 15
(Assumption Day), October 26 (Flag Day--National Day), November 1 (All
Saints Day), December 8 (Immaculate Conception), December 25 (Christmas
Day), and December 26 (St. Stephen's Day).
In addition to national holidays, the following regional holidays are also
observed--mainly by schools, farmers, and local government authorities:
March 15 (Klemens Hofbauer: Vienna), March 19 (St. Joseph's Day: Carinthia,
Styria, and Tyrol); August 27 (St. Gebhard: Vorlarlberg), September 24 (St.
Rupert's Day: Salzburg); November 11 (St. Martin's Day: Burgenland); and
November 15 (St. Leopold's Day: Lower Austria, and Upper Austria).
SOURCES OF COMMERCIAL AND ECONOMIC INFORMATION
General information concerning the Austrian market may be obtained from the
Austria Desk, Europe/IEP, Room 3043, U.S. Department of Commerce,
Washington, D.C. 20230 or from any of the Department's International Trade
Administration district offices.
The American Embassy in Austria is located at Boltzmanngasse 16, A-1091
Vienna, telephone, (43)(1) 31-55-11; Telex, 114634; Fax, (43) (1) 341-261.
The staff of the Embassy's Economic and Commercial Sections are available to
brief and assist American business visitors in Austria.
Austrian Government Representation in the United States
The Austrian Embassy is located at 2343 Massachusetts Avenue, N.W.,
Washington, D.C. 20008; telephone, (202) 483-4474 (Embassy district:
Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky, Louisiana,
Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee,
Texas, Virginia, West Virginia, Puerto Rico, the Bahamas, and the U.S.
Consulates General are maintained at: 31 East 69th Street, New York, N.Y.
10021; telephone, (212) 737-6400, (Consular district: Connecticut, Maine,
Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode
Island, and Vermont); 400 North Michigan Avenue, Suite 707, Chicago, Ill.
60611; telephone, (312) 222-1515, (Consular district: Illinois, Indiana,
Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio,
South Dakota, and Wisconsin); and 11859 Wilshire Boulevard, Suite 501, Los
Angeles, Calif. 90025; telephone, (213) 444-9310 or (213) 473-4721,
(Consular district: Alaska, Arizona, California, Colorado, Hawaii, Idaho,
Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming). The
Embassy and the Consulates General are empowered to issue visas and
Austrian Consulates are located in the following cities: Atlanta, Boston,
Buffalo, Cleveland, Denver, Detroit, Honolulu, Houston, Kansas City, Miami,
Newark, New Orleans, Philadelphia, St. Paul, San Francisco, San Juan,
Seattle, and St. Louis. These offices do not possess the authority to issue
visas or passports.
Locations of the Austrian Trade Commissioners in the United States are: 150
East 52nd Street, 32 Floor, New York, N.Y. 10022, telephone, (212) 421-5250,
fax, (212) 751-4675; 500 N. Michigan Avenue, Suite 544, Chicago, Ill. 60611,
telephone, (312) 644-5556, fax (312) 644-6526; The World Savings Center
Building, 11601 Wilshire Boulevard, Suite 2420, Los Angeles, Ca. 90025,
telephone, (213) 477-9988, fax, (213) 477-1643; 1300 Post Oak Boulevard,
Suite 960, Houston, Texas 77056, telephone, (713) 850-8888, fax, (713)
850-7857; 1350 Connecticut Avenue., N.W., Suite 501, Washington, D.C.,
telephone, (202) 835-8962, fax, (202) 835-8960.
The Austrian Information Service is located at 31 East 69th Street, New
York, N.Y. 10021, telephone, (212) 288-1727. Additional information on
trade and investment may be obtained from: The Austrian Institute, 11 East
52nd Street, New York, N.Y., telephone, (212) 759-5165 or (212) 888-7614.
Austrian National Tourist Offices are located at: 500 Fifth Avenue, New
York, N.Y. 10110, telephone, (202) 944-6880 or (800) 223-0284; 500 Michigan
Avenue, Suite 544, Chicago Ill. 60611, telephone, (312) 644-5556; 1300 Post
Oak Boulevard, Suite 960, Houston, Texas 77056, telephone (713) 850-9999;
and 11601 Wilshire Blvd., Suite 2480, Los Angeles, Calif. 90025, telephone,
(213) 477-3332. The Austrian Food Center, representing Austrian dairy and
cheese industry products, is located at 1177 High Ridge Road, Stamford,
Conn. 06905, telephone, (203) 329-1513, fax, (203) 329-8422.
Federal Chamber of Commerce. The Austrian Federal Chamber of Commerce
(Bundeskammer der gewerblichen Wirtschaft, Wiedner Hauptstrasse 63, A-1045
Vienna) is a quasi-official body established by public law. All Austrian
business entities, irrespective of their type of business or political
affiliation, are required to belong. Associations of various industry and
trade groups form an important part of the Federal Chamber. Consequently,
the chamber exerts considerable influence on the government's political,
social, and economic decisions. All proposed legislation must be submitted
to the chamber for review, and its position may determine whether or not a
bill is passed.
The Federal Chamber of Commerce is the sponsor of Austria's trade promotion
program. Counseling, training, financial support, and trade promotion
events are among the services provided by the chamber to Austrian export
firms. The chamber also assists in setting up sales offices and other
foreign direct investments. Overseas representatives of the chamber's trade
promotion staff are known as Austrian Trade Commissioners. The addresses of
the five Trade Commissioners in the United States are listed under the
preceding heading, "Austrian Government Representation in the United
States." They assist Austrian firms to sell in the United States and help
U.S. firms establish business contacts in Austria.
Nine regional chambers affiliated with the Federal Chamber are located in
Vienna and the capitals of the eight federal states. Structurally, each
regional chamber is composed of six main sections: small business, industry,
trade, banking/insurance, transportation, and tourism.
Other Trade and Industry Associations. Other major associations in Austria
include the League of Austrian Industrialists (Vereinigung Oesterreichischer
Industrieller), the Association of Austrian Small Businesses
(Oesterreichischer Gewerbeverein), and the American Chamber of Commerce in
Austria (Amerikanische Handelskammer in Oesterreich). The address of the
American Chamber of Commerce in Austria is Porzellangasse 35, A-1090 Vienna,
Austria, telephone, 011-43-1-31 57 51 or 31 57 52, fax 011-43-1-31 51 51. A
branch is located in the city of Graz. Members of the American Chamber of
Commerce are persons involved with U.S.-Austrian trade, including exporters,
importers, bankers, Austrian representatives of U.S. manufacturers, and
employees of Austrian affiliates of U.S. firms. Among the chamber's
publications are the "Directory of American Business in Austria" and
"Austria in the USA," a list of Austrian companies in the United States. In
the United States, the U.S.-Austrian Chamber of Commerce is located at 165
West 46th Street, New York, N.Y. 10019, telephone (212) 819- 0117.
The Commercial Register. In addition to the obligatory membership in their
chamber of commerce, all businesses except small, individual proprietorships
must be entered in the Commercial Register (Handelsregister) maintained by
the local courts. Even smaller merchants show interest in being listed, as
registration improves a firm's credit rating. All entries in the Commercial
Register are public information.
General Information Publications
Austria: Facts and Figures. Published by the Federal Press Service, Vienna,
available from the Austrian Institute, 11 East 52nd Street, New York, N.Y.
10022, telephone (212) 759-5165.
Austria Today. Published quarterly by Austria Today VerlagsgmbH, Hofburg,
Schweizertor, A-1014 Vienna, Austria. Price per issue--AS 95, year's
subscription AS 300 including postage.
Austrian Information. Published up to once a month by the Austrian Press
and Information Service, 31 East 69th Street, New York, N.Y. 10021,
telephone (212) 288-1727.
Background Notes--Austria. Published by the U.S. Department of State, 1989.
The Economist publishes country surveys periodically. See "Fading
Illusions," a survey of Austria, the Economist, February 25, 1989.
Financial Times also publishes country surveys. See "Austria," the
Financial Times, June 25, 1990, pp. 11-14.
Modern Austria, Empire & Republic, 1815-1986, Barbara Jelavich. Cambridge
University Press, 1987.
Die oesterreichischen Bundeslaender. A series of publications, one on each
Austrian land (state) providing detailed descriptions and data on all
aspects of the economy. Contact: Creditanstalt-Bankverein, Schottengasse
6-8, A-1010 Vienna, Austria.
Statistisches Handbuch fuer die Republik Oesterreich. German language
statistical handbook (table headings in English) for all aspects of life in
Austria. Contact: Oesterreichischen Statistischen Zentralamt, Hintere
Zollamtsstrasse 2b, A-1033 Vienna, Austria.
Commercial and Economic Publications
Austria--Business and Economy. Published quarterly by PP'S
Verlagsges.m.b.H., Dominikanerbaster 21, A-1010 Vienna, Austria. Year's
Austrian National Bank publications:
a) Annual Report.
b) Reports and Summaries. Quarterly English language publication
with selected articles from the German language quarterly.
c) Statistisches Monatsheft. Monthly German language statistical
Contact: Oesterreichische Nationalbank, Otto-Wagner-Platz 3, Postfach 61,
A-1011 Vienna, Austria.
CA Quarterly--Facts and Figures on Austria's Economy. Includes articles and
economic data. Contact the Creditanstalt-
Bankverein, 245 Park Avenue, 27th Floor, New York, N.Y. 10167, telephone
Economic News from Austria. Published quarterly by the Austrian Press and
Information Service, 31 East 69th Street, New York, N.Y. 10021, telephone
EFTA Bulletin. For a subscription, contact the European Free Trade
Association, 9-11 rue de Varembe, Ch-1211 Geneva 20, Switzerland.
Europe. Magazine of the European Community. Published ten times per year
by the Delegation of the European Communities, 2100 M Street, N.W.,
Washington, D.C. 20037, telephone (202) 862-9500. Subscription for one year
$16.95, for two years $29.90, for three years $39.90.
Foreign Economic Trends and Their Implications for the United
States--Austria. Prepared annually by the U.S. Embassy in Vienna and
published by the U.S. Department of Commerce.
Handel Oesterreich--USA. Published triannually by the Commercial Section of
the American Embassy in Vienna to apprise the Austrian business community of
U.S. business opportunities, trade promotion events, and other trade
Jahrbuch der oesterreichischen Wirtschaft. Annual report in German on the
activities of the Federal Economic Chamber in Vienna. Contact: Bundeskammer
der gewerblichen Wirtschaft, Wiedner Hauptstrasse 63, A-1045 Vienna, Austria.
Laenderbank Report on the Austrian Economy. Appears quarterly in both
English and German language editions. Contact: Laenderbank, 767 Fifth
Avenue, New York, N.Y., telephone (212) 326-3000.
Market Indicators. Articles and data on the Austrian economy appear
quarterly. Contact: Girozentrale und Bank der oesterreichischen Sparkassen
AG, 65, East 55th Street, New York, N.Y. 10022, telephone (212) 644-0660.
Monatsberichte. Authoritative reports (in German) and statistics on the
Austrian economy published by the Austrian Institute of Economic Research
(WIFO). Contact: Oesterreichisches Institut fuer Wirtschaftsforschung,
Arsenal, Objekt 20, Postfach 91, A-1103 Vienna, Austria. Year's
subscription AS 1,850.
OECD Economic Surveys--Austria. Published annually by the Organization for
Economic Cooperation and Development, Paris.
Statistische Nachrichten. Monthly publication with articles (in German) and
statistics on the Austrian economy published by the Austrian Government's
Central Statistical Office. Contact: Oesterreichisches Statistisches
Zentralamt, Hintere Zollamtsstrasse 2b, A-1030 Vienna, Austria. Year's
subscription AS 1,250.
West-Ost Journal. Up to six issues per year published by the
Donaueuropaeisches Institut Wien. Political, economic and commercial
articles, many on Austria, most in German, some in English. Contact Jupiter
Verlag Ges.m.b.H., Robertgasse 2, A-1020 Vienna 2, Austria, telephone
011-43-1-214 22 94-0. Single issue AS 110, year's subscription AS 330.
Austrian Business Law: Legal, Accounting and Tax Aspects of Business in
Austria. Manz Verlag, Vienna, 1984, 528 pages. Distribution in the United
States: Kluver Law and Taxation, 190 Old Darby Street, Hingham, MA. 02043.
The Austrian Commercial Code, Unabridged Edition of the Commercial Code in
English and German, translated by Dr. Markus Andreewitch, 1987. Contact:
Manz Verlags- und Universitaetsbuchhandlung, Kohlmarkt 16, A-1014 Vienna,
The Austrian Law on Companies with Limited Liability (as of January 1,
1984), translated by Dr. Julie Goldberg. Contact: Manz Verlags- und
Universitaetsbuchhandlung, Kohlmarkt 16, A-1014 Vienna, Austria.
Investment, Tax, and Insurance Guides
Austria--International Tax and Business Guide, DRT International, 1990,
telephone (212) 489-1600.
The Austrian Alternative--A Guide for Foreign Investors, (financial
investors), 1989. Available from the Girozentrale und Bank der
oesterreichischen Sparkassen A.G., Schubertring 5, A-1011 Vienna, Austria,
or by telephone (212) 644-0660.
Doing Business in Austria, 1990, Price Waterhouse, telephone (212) 371-2000.
Corporate Taxation: A Worldwide Guide, Ernst and Young, 1989, telephone
The European Insurance Handbook, 1989, Deloitte, Haskins & Sells, telephone
Holdings in Austria, Austria as a Country of Domicile for Holding Companies,
1989. Available from the Girozentrale und Bank der oesterreichischen
Sparkassen AG, Schubertring 5, A-1011 Vienna, Austria, telephone (212)
Investing and Financing in Austria, 1986. Available from the Girozentrale
und Bank der oesterreichischen Sparkassen A.G., Schubertring 5, A-1011
Vienna, Austria, or by telephone (212) 644-0660.
Investment in Austria, 1984. Available from the Salzburg Company for
Business Development (Salzburger Betriebsansiedlungsgesellschaft m. B. H.),
Julius-Raab-Platz 1, A-5027 Salzburg, Austria.
Investors' Information Handbook, 4th Edition, 1987 English language
translation of the 1985 German language version. Prepared by the Austrian
Federal Ministry of Economic Affairs to provide an authentic and
comprehensive source of information on Austrian investment opportunities,
regulations, and promotional instruments. Copies are located at the
Austrian Embassy, Austrian Consulates General, offices of the Austrian Trade
Commissioners and ICD Austria, and the Austria Desk at the U.S. Department
Tax Aspects of Industrial Investments in Austria, 1988. Available from ICD
(Industrial Cooperation and Development) Austria, telephone (212) 980-7970.
Worldwide Corporate Tax Guide, with Directory of Tax Contacts, 1990, Ernst &
Young, telephone (212) 407-1500.
This file extracted from Dept. of Commerce National Trade Data Bank (NTDB)
CD-ROM SuDoc No. C 1.88:993/12. Processed 12/01/1994 by software developed
by RCM (UM-St. Louis Libraries) / OBR_0020