Direct investment from the US, the Netherlands, Switzerland and Germany was found to have been particularly lucrative.
While the most profitable sectors were chemicals and plastics, automotive and electronics concerns also yielded considerable earnings during the year. Retail trade and real estate were strong performers in the service sector. A lion's share of the foreign companies' earnings were reinvested in Austria, with only a small fraction going back out of the country.
Multinationals have been impressed by these developments, as demonstrated by a further rise in Austria's traditionally high level of foreign investment. Investment volume hit ATS 177 billion (US$ 14.6 billion) as of the end of 1995, and the National Bank forecasts a rise to ATS 200 billion (US$16 billion) by year-end 1996.
The reason for this positive development (as previously reported in the April 1997 issue of Business Monitor): Austria's continuing integration into the markets of the European Union. As a result, companies based in EU member states - led by Germany - are the dominant force in inward equity investment, though the US, Japan and Switzerland also invest in the Austrian economy.
The study results indicate continuing growth in the European Union's share of direct investment in Austria, which is expected to rise to two-thirds of total investment in coming years.
Direct investments in Austria took place in essentially three forms:
- equity participation in existing or start-up concerns involving cash outlays, tangibles and intangibles
- equity participation financed by loans, and
- the favoured alternative in Austria, reinvestment of profits - allowing earnings to remain in the concern rather than withdrawing them to the home country.
The National Bank found that in addition to the strong purchasing power in Austria, foreign investors value the favorable tax environment.
Companies from North America, Italy and Switzerland are particularly keen to exploit the low corporate tax rate of 34 percent.
By the end of 1995, more than 3600 foreign companies had established operations in Austria, employing around 368,000 workers.
1995 earnings of foreign direct investors by country in ATS million (US$)
Source: Austrian National Bank, 1997
GER 9026(722) USA 4082(327) NL 2746(220) SWI/LIE 2423(194) GB 1336(107) J 623(50) OTHER NATIONS 1842(147)
Visit Austrian Business Agency's website at Click Contact Link
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.