Trade Promotion and Advertising
Retail spending on advertising in Austria stagnated at $6.9 billion in 2022, a significant year-on-year decline when the inflation rate of 8.6% is taken into consideration. While traditional ad spending on television, radio, and print were lackluster, digital spending grew by a stunning 22% to $2.5 billion, most of which went to international platforms like Alphabet, Meta, and Amazon. In January 2020, Austria instituted a digital advertising tax of 5% that equals the tax imposed on traditional (printed) advertising. This tax applies to companies earning EUR 750 million in annual global revenue, of which at least EUR 25 million are derived from online advertising in Austria. In 2022, this created $103 million in tax revenues for Austria, indicating a total spend of $2.05 billion.
Austrian cost of living ranks among the highest 30% among European Union countries with comparative price levels and 15% points above the EU average. Given the relatively high salaries and social infrastructure in Austria, citizens generally enjoy a comfortable lifestyle. In 2022, Austria’s average hourly labor cost of $41.73 ranked 8th highest in the EU, (the EU average is $35.10). This includes the cost of social benefits such as mandatory health insurance and pension fund contributions for employees. The value-added tax (VAT) on most products and services is 20% and is charged at point of sale. Some products have a lower VAT of 10%, including books, newspapers, food products and some pharmaceuticals. Special taxes are levied on luxury goods, fuel, drinks, tobacco, and other items. These costs and taxes should be considered when pricing products for sale in Austria.
Price levels have been strongly affected by a record high inflation rate of 8.6% in 2022. Economists expect only a slight decrease in 2023. The main sources of inflation are energy, fuel, and food, as well as recent wage adjustments as agreed in multiple sectors during the annual labor/management negotiating period.
Sales Service/Customer Support
Business customers demand a high level of support and most wholesalers or distributors offer excellent customer service. Timely service and maintenance capacities are important selling factors. U.S. companies should ensure that their prospective partners have the capacity and the intent to provide service and replacement part warehousing capacities.
Local Professional Services
The same type of professional services available in other highly developed market economies are readily available in Austria. In addition, the Commercial Service at the U.S. Mission to the European Union at https://useu.usmission.gov/ maintains a Directory of EU Service Providers focusing on EU law, consulting, and business development.
Principal Business Associations
Many of Austria’s leading business associations both at the federal and the provincial level are associated with political parties. The most important business associations are the Federal Economic Chamber (WKO - Wirtschaftskammer Österreich) and the Federation of Austrian Industries (Industriellenvereinigung).
The WKO is a semi-official organization that all licensed Austrian businesses are required to join and to which they pay membership fees. It is associated with Austria’s center-right People’s Party (OeVP), which nominates its leadership. The WKO advises the government on legislation that will impact business, and acts as the official representative of the business community for wage negotiations with official labor unions. They have offices throughout Austria and the world, with a broad scope of activity including the formulation of business certification requirements and export promotion. https://www.wko.at/.
The Federation of Austrian Industries, also associated with the conservative People’s Party, represents the interests of the manufacturing industry. This group differs from the WKO in that it has no official status, and membership of almost 5,000 industrial companies is voluntary. https://www.iv.at/.
Additional associations represent industries, professions, and labor organizations. The American Chamber of Commerce in Austria has a membership of approximately 350 companies of which 40% are U.S. subsidiaries doing business in Austria. https://amcham.at/.
Limitations on Selling U.S. Products and Services