The tense economic situation has left its mark worldwide; now it seems to have reached the bottom of the trough. However, at the moment it is difficult to say how much effort will be required to catch up to the successful years. If the quality of the armaments is an indicator for the chances of success, Austria is certainly in a good position. With current stimulus packages and comprehensive funding tailored to the various industries, company sizes and business objectives, Austria is and continues to be an important business location – particularly with regard to the Eastern and South-Eastern European markets that are situated at Austria’s doorstep.

Good Reasons for Austria as a Business Location

Since the fall of the Iron Curtain, Austria has become a springboard into the booming markets of Eastern and South-Eastern Europe – and the other way around: Numerous companies from the former Eastern Bloc countries are setting up camp in Austria to launch their business activities in the West from here. Why do they choose Austria? Companies appreciate the stable economic climate, well-trained workforce, high-capacity infrastructure, efficient administration, business-friendly tax system and, last but not least, the various subsidy and funding offerings from the federal government and the provinces.

Tax Burden for Incorporated Companies in Europe

The current edition of the annual KPMG study “KPMG’s Corporate and Indirect Tax Rate Survey” for example shows that the average tax burden for incorporated companies in Europe is 23.2 percent – and for the first time in 13 years, it has not decreased compared to the previous year. In Austria, the corporate tax rate is 25 percent. Barbara Polster-Grüll, Director of KPMG, analyzes: “This puts Austria slightly above European average; however, the attractive group taxation system, preferential treatment for holdings and the confidence in the tax system’s stability still make Austria a highly attractive business location.”

Icing on the Cake for the Economy

The Austrian subsidy programmes provide comprehensive support for the implementation of innovative projects, business establishments or expansions. The services offered range from cash and interest-rate subsidies to the acceptance of liabilities, and can certainly be understood as “icing on the cake” for investments in the business location Austria. Within the EU, a general ban on grants for businesses is in place. Thanks to special regulations however, direct subsidies for businesses are possible and are common practice. This applies to the support of research and development projects, strengthening the competitive position of SMEs, improving regional structures, promoting environmental protection, education and training as well as seminars, and the implementation of renovation and restructuring measures. There are four EU subsidy pools for investment projects: regional subsidies, subsidies for small and medium-sized enterprises, technology subsidies and environmental subsidies.

Target Groups, Subsidy Instruments and Cap Values

The table “Regional Subsidy Areas in Austria 2007 – 2013” offers an overview of the regions in which businesses in Austria are subsidized, including the respective cap values. Generally, the EU considers all small and medium-sized enterprises a target group eligible for funding, even if they are not located in one of the regional subsidy areas. The cap for small enterprises (annual revenue of up to 10 million EUR) is at 20 percent, while medium-sized companies (annual revenue of up to 50 million EUR or a balance sheet total of 43 million EUR maximum) receive up to 10 percent. Among the subsidy instruments are low-interest loans (ERP funds, various provincial promotional banks), grants from Austria Wirtschaftsservice (national promotional bank) and EFRE (European Regional Development Fund), as well as the acceptance of liabilities by Austria Wirtschaftsservice and provincial special-purpose companies. In the area of technology subsidies, businesses can receive a maximum of 50 percent for their industrial research and development efforts; for experimental developments, the cap is at 25 percent. Investments in the field of environmental protection are also considered as generally eligible for funding. For environmental protection efforts in accordance with the new mandatory environmental standards, SMEs receive 15 percent; for measures that surpass the legal environmental standards, the subsidy cap is at 30 percent. Investments in renewable energy or energy savings measures are supported up to a maximum of 40 percent.[ IN ]