ABA business location austria 2013

Business Location Austria

Austria Bringing a Fresh Wind to Companies www.investinaustria.at

INVEST IN AUSTRIA

BUSINESS LOCATION AUSTRIA

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Austria’s central location in Europe makes the country the business interface hub for East-West business relations 2

Invest in Austria

Dynamic Business Location The Austrian business location stands out in international comparison. Companies profit from good business environment, qualified employees and a modern infrastructure.

Austria ranks among the most prosperous and innovative countries in the European Union, and has more effectively coped with the economically turbulent period prevailing since 2008 than most other European nations. The business location scores points thanks to its modern infrastructure, top-notch technologies, well-educated and highlymotivated employees, and also offers a high reliability of energy supplies in addition to political, social and economic stability. Moreover, Austria is the ideal base for ensuring market access to the dynamic markets of South East and Eastern Europe.

For the twelfth straight year, growth of the Austrian economy will exceed the comparable average in the eurozone. Due to the good conditions, Austria also outperforms the global average with respect to foreign investment in the country. For example, investors benefit from broad-based research promotion programs, a business-friendly tax system and high productivity. Despite this good positioning, we are continually working on creating an even more favorable business environment for companies.

In this spirit we would like to welcome you to Austria.

Reinhold Mitterlehner Federal Minister of Economy, Family and Youth

Contents 5 6 7 9 10 12

Austria – A Profitable Location A Secure Location for Your Investments Austria is a World-Leading Business Location People as a Success Factor Ideal Conditions for R&D New Medicine from Vienna

14 17 18 20 22 25

East-West Interface Positive Economic Climate and Quality of Life Austria – A Country of Specialists Lower Taxes, Higher Profits Productivity as a Trademark Value Creation with Recreational Value

Editorial: December 2012; Owner&Publisher: Austrian Business Agency, Opernring 3, A-1010 Vienna; Editor-in Chief: René Siegl; Associate Editor: Maria Hirzinger, Karin Schwind-Derdak; Design: www.november.at; Photos: APA, BuenosDias, Julius Silver, Otto Bock, Phoenix Tree HSC; Print: Gugler

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BUSINESS LOCATION AUSTRIA

A profitable location: International investors take it for granted that the business location of Austria will enable them to exploit top-notch know-how and quality, high performance technologies, a state-of-the-art infrastructure and EU membership with close proximity to Eastern and South Eastern Europe. They decide for surefire success, and thus choose Austria.

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Invest in Austria

Austria – A Profitable Location The success factors: stability, CEE know-how, and a prosperous market in the heart of Europe

The German semiconductor company Infineon produced a surprise in 2012 by investing EUR 250 million in its Austrian subsidiary. The investments were designed for the production plant in Villach and the research facility in Graz. “In this way one can quickly and flexibly react to the wishes voiced by customers”, said Infineon Austria CEO Monika Kircher. Not only Infineon but other prominent firms invested in Austria during the crisis year 2012. General Motors upgraded its Austrian subsidiary at a cost of EUR 100 million, joined by Lam Research, Mondi, Siemens and Takeda Pharmaceutical, which also expanded their Austrian operations. What makes the small country of Austria located in the heart of Europe so attractive as a business location?

All advantages at a glance. One thing is certain: for a profitable company many of the basic conditions must be suitable for business on a long-term basis.

Investors can exploit a comprehensive package of competitive advantages: • Outstanding level of energy security and reliability and low industrial electricity prices • Political and social stability as well as a low crime rate • Hardly any strikes thanks to the excellent relationships between employers and employees • Third most prosperous country in the EU – an attractive market with above-average purchasing power on the part of consumers • Highly developed infrastructure with the best-performing airport with respect to flight connections to the Central and Eastern European region • Ideal basis for business in South East and Eastern Europe with more than 1,000 CEE coordination headquarters of foreign companies • Tax advantages based on a low corporate tax rate, a Group taxation scheme and attractive research promotion incentives • Efficient location with high labor productivity and low unit labor costs • Highly-qualified employees with practice-oriented vocational training

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BUSINESS LOCATION AUSTRIA

Secure Location for Your Investments Stability, predictability and security of the energy supply are outstanding features of Austria as a business location.

No machines stand still. Companies operating internationally can rely on Austria’s extremely high level of political stability. Austria is ranked 7th among 59 industrial countries by the World Competitive Yearbook. In the economic risk ranking compiled by the renowned magazine “Euromoney”, Austria is also in the top ranks, placing 11th among 100 nations. Austria’s economic and social partnership between management and labor representatives is not only the basis for one of the lowest strike rates anywhere, with only 0.8 strike days annually per 1,000 employees, but also ensures a low unemployment rate and a policy of wage restraint.

In Austria businesspeople are on safe ground. Climate change and natural catastrophes increasingly influence business location decisions. Austria ranks third in Europe concerning the security of energy supplies. Electricity is available more than 99 percent of the time. Austria is relatively free from natural catastrophes. Accordingly, it is not even listed in the risk evaluations of prominent international insurance companies.

High level of personal security. The high level of legal certainty is not the only factor which is particularly attractive to companies. Austria is one of the safest countries in the world with a low crime rate. Even in big cities, it goes without saying that people can safely use public transportation late at night or take a stroll around town after attending a theater performance.

Annual unplanned non-availability of the electricity supply in minutes 2010 Germany Denmark Austria Netherlands Italy Slovenia France UK Sweden Hungary Czech Rep. Portugal Poland Slovakia

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14.90 16.95 31.77 33.70 47.77 51.00 62.90 70.02 78.90 102.38 106.24 172.98 316.10 465.40

Source: CEFR Benchmarking Report, April 2012

Social peace Working days lost per 1,000 employees Annual average 1999 - 2008 Austria Switzerland Germany Poland Netherlands Hungary USA United Kingdom Finland Japan Italy Denmark France *) Spain

0.8 3.0 4.3 4.9 9.0 17.7 21.9 25.3 58.3 73.6 75.3 100.1 103.4 127.6

Source: Eurostat, IW-Köln, ILO 2011, *) 1999 - 2007

Invest in Austria

Austria is a World-Leading Business Location Conflicts among different interests are fought out at the bargaining table, not on the streets

During such turbulent times as we have now, it has become even more important that business-friendly policies are being implemented. What do you consider to be the advantages of Austria in international comparison?

A pro-business climate, reliable conditions and legal certainty are key factors underlying the attractiveness of Austria as a business location. Moreover, the social partnership strengthens the position of the business community. This is a priceless competitive advantage. In addition, our dual education system makes a major contribution to ensuring that Austria continues to have one of the highest employment rates for young people in all of Europe. In the current tension economic situation, it is particular important to safeguard and continually enhance the competitiveness and attractiveness of the Austrian business location.

The availability of qualified skilled employees is absolutely essential. We have achieved a milestone on the basis of transparent immigration criteria thanks to the Red-White-Red Card.

Christoph Leitl President of the Austrian Federal Chamber of Commerce

In what ways does the Austrian economy stand out?

996 out of 1,000 Austrian companies are SMEs. Even if the industrial sector’s share is very high, the Austrian economy is increasingly oriented to the service sector. This can be demonstrated by the growing volume of service exports.

Little Austria is ranked sixth in the world in per capita service exports. Every euro of service exported is accompanied by six euros of merchandise exports.

When I talk about services, I have long stopped referring only to tourism, but also promising future-oriented fields such as power engineering and environmental technology. Austrian companies rank among the global leaders in these sectors. To sum up, one can say that Austria is naturally tops in high-technology and medium-tech industries. However, with our well trained employees, we also continue to be an outstanding production location.

→ www.wko.at

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BUSINESS LOCATION AUSTRIA

Innovative small and medium-sized enterprises Corporate structure in Austria

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Employees

% of companies

0-9 10 - 49 50 - 249 250 or more

6.2 1.2 0.3

92.3

Source: Austrian Federal Economic Chamber, 2012

Prosperity in the EU GDP per capita 2011 in purchasing power standards (PPS), EU-27 = 100 Luxembourg Netherlands Austria Irleland Sweden Denmark Gemany UK France Italy EU-27 Czech Republic Hungary Poland Bulgaria Source: Eurostat 12/2012

271 231 129 129 127 125 121 109 108 100 100 80 66 64 46

Invest in Austria

People as a Success Factor Austrian employees: top qualified and top motivated

Exemplary education. There is a close connection between the educational system and economic success of a country. That is why Austria focuses on providing sound education and training at all levels.

Dual education. Similar to Germany, Austria offers young people a dual education system, which combines practical vocational training with vocational schooling. In cooperation with companies, the schools make sure that training matches the requirements of the business community. In additional to vocational schools, higher technical schools provide courses of study in all fields. The education provided usually corresponds to a Bachelor’s Degree. A full two-thirds of all 14-18 year olds attend vocationally-oriented schools. Upon graduation, students can either start their professional careers or continue their education and study at one of the 21 universities of applies sciences, 22 public universities or 13 private universities. The universities of applied sciences, which offer 372 different courses of study, are particularly tailored to the specific needs of companies. More than 47 percent of the study programs offered by the universities of applied sciences enable people to continue their education alongside work.

Low youth unemployment – motivated employees. The sound educational system has a positive effect. Austria has the second lowest youth unemployment rate within the EU, at 8.5 percent. It particularly important to note the strong identification of Austrian employees with the companies. In this regard Austria is ranked third worldwide.

Youth unemployment (15-24 years) in percent

Germany Austria Denmark Great Britain EU-27 France Ireland Italy Spain Greece

Source: Eurostat 2012

Job-oriented training in the educational system Share of pupils in the upper secondary level in percent

8.1 8.5 13.7 20.6 23.4 25.6 29.9 36.5 55.9 57.0

Austria Czech Republic Belgium Netherlands Switzerland Italy Sweden Germany Poland OECD France UK Hungary Japan

76.7 73.1 73.0 67.0 66.2 60.0 56.1 51.5 48.2 46.0 44.3 32.1 25.8 23.5

Source: OECD, Education at a Glance, 2012

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BUSINESS LOCATION AUSTRIA

Ideal Conditions for R&D Innovative ideas and customized solutions from Austria

Phoenix Tree HSC Investment Group acquired Steyr Motors in 2012. What do you consider Austria’s strengths to be as a technology location?

Jonathan Chu, Executive Vice President Europe

I primarily see Austria’s strengths in the close networks and cooperation of the scientific and business communities. Upper Austria in particular is internationally leading in the field of engine development. This applies to all areas and not only to product development. For example, top performance is also evident in the production of more technology-intensive engine components or electronic control. A decisive factor is that as a company one has access to an excellent development network in the region. This is the only way one can sustainably maintain the product at the cutting edge of technology. For instance, these conditions do not exist in China. We also evaluated other locations such as Germany or Italy, but ultimately decided in favor of Upper Austria. Steyr has a very long tradition in engine development. This is also the basis for highly qualified employees, not only in development work but also in terms of specialized staff.

The higher technical schools train top professionals. This educational system is unique in the world.

Will you develop your business on the European market from Austria?

Yes, Austria is a key hub for us. In particular, the geographical proximity and historical ties to Central and Eastern Europe and the related cultural understanding characterize Austria as a business location. This know-how pool is an ideal starting point to develop our business in the CEE markets. This would not be possible to such an optimal extent from Asia, especially as a comparable level of cultural know-how does not exist.

Steyr Motors is the specialist for the development and production of highperformance diesel motors for a broad range of applications, from light utility vehicles, SUVs and hybrid trolley buses to motor boats and work boats. Phoenix Tree HSC Investment (Wuhan) acquired STEYR MOTORS in 2012. Phoenix Tree HSC Investment will upgrade the Steyr facility to make it the global development and production center.

→ www.steyr-motors.com

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Invest in Austria

“Global players such as the BMW Group invest in those locations where all the basic conditions are just right. This includes the quick and unbureaucratic handling of administrative procedures involving public authorities. In this regard we have had very good experience in Austria.�

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BUSINESS LOCATION AUSTRIA

New Medicine from Vienna Ottobock develops high-tech prostheses in Austria

World-class. The German company Otto Bock HealthCare Products has always been a cutting-edge trend-setter in the field of arm and hand prostheses. The latest brilliant breakthrough is the “Michelangelo ® Hand”. This new type of prosthetic hand comes closer than ever before to precisely resembling the human hand. The Michelangelo® Hand will enable the user to enjoy an enhanced quality of life that would have been previously unimaginable. The artificial hand was developed in Vienna. In the field of prosthetic leg systems, Ottobock’s microprocessor-driven prosthetic C-Leg and Genium, the next generation of intelligent leg prostheses, also allows for more natural maneuverability and a higher quality of life. According to Hans Dietl, Managing Director of Ottobock Austria, new innovations expected in the future include implants in the field of high-tech prosthetic systems, as well as artificial intelligence designed to coordinate prosthetic systems.

The Vienna workshop. Ottobock has operated a subsidiary in the Austrian capital since 1969, employing a work force of over 500 employees, a third of whom are involved in research and development. The leading specialist in the field of prosthetics has developed important milestones thanks to the research conducted in Austria. “Vienna offers us the required proximity to research facilities and clinics now as it did in the past“, says Hans Dietl, explaining the decision in favor of Austria. At the end of the 1960s, the Vienna subsidiary was the first step in the internationalization process of this medical pioneer.

Customized labor market policies. According to Hans Dietl, ensuring optimal conditions in the working environment as the pre-requisite for ongoing top-notch performance in the field of research is extremely dear to his heart. “My top priority has always been the implementation of labor policies tailored to today’s business world. In order to conduct research, it is very important for research companies to be able to recruit a sufficient number of specialists and employ them at terms and conditions which will not endanger the international competitiveness of the company”. These pre-requisites exist in Austria.

Further expansion of the Viennese facility. The company is upgrading its facility in Vienna. Ottobock is investing a total of EUR 25 million to build a new building. On balance, the expansion project will create 200 new jobs.

Otto Bock headquarters Corporate headquarters are in Duderstadt (Germany). Ottobock has sales and service companies in 44 countries around the world, employing more than 4,800 people globally.

→ www.ottobock.at

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Invest in Austria

“Vienna is the driving force for innovations in our company, and one of the growth drivers.�

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BUSINESS LOCATION AUSTRIA

East-West Interface EU foothold for CEE companies, CEE headquarters for Western companies

Austria is internationally considered to be the top business location for building up business ties to South East and Eastern Europe. As a headquarters location, Austria boasts a total of 309 headquarters, far ahead of the competitive CEE locations of Poland, Slovakia, Czech Republic and Hungary. A study carried out by the law firm Wolf Theiss concluded that only 84 international companies have set up their headquarters in all the four above-mentioned locations combined.

On balance, about 1,000 international companies such as Siemens, Beiersdorf, Hewlett-Packard, Eli Lilly, Henkel and FedEx coordinate their CEE business operations from Austria. Approximately 40 international institutions with a focus on the CEE region are based in Austria.

Location advantages. Outstanding Central and Eastern European know-how on the part of Austrian service providers such as banks and law firms, an historically matured cultural understanding of Austrians for the CEE region, political stability and security as well as transparent laws make Austria the ideal East-West business interface. This is complemented by a high share of employees with Eastern European language competence, based on the fact that 19 percent of the population, after all, has a migration background.

Austria is the investment champion. Eastern Europe ranks among the most popular targets of foreign direct investment. Tiny Austria is the largest single foreign investor in Slovenia, Bosnia, Croatia and Serbia, and ranks second in Romania, Bulgaria and Slovakia. In 2011, 21 percent of all Austrian merchandise exports were destined for Central and Eastern Europe. The growth rate for exports comprised an impressive twelve percent in 2011.

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Invest in Austria

Headquarters in Austria Head office of the parent company, in percent

Headquaters of international companies 2011

Germany USA 7.1 Switzerland France 4.2 3.9 Italy 3.6 Japan 3.6 Sweden 3.2 UK 2.9 Canada 2.9 Netherlands

34.0 18.4

Source: List of Headquarters in Austria, September 2012

Austria Poland Hungary Czech Rep. Slovakia

309* 25 24 23 12

Source: Wolf Theiss Rechtsanw채lte GmbH, 2011, *2012

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BUSINESS LOCATION AUSTRIA

Boom in start-ups from Eastern Europe. Prominent companies from Central and Eastern Europe such as Lukoil, VTB Bank and Agrotec have long decided in favor of Austria as an EU location. Austria is a reliable partner for EU expansion, with the required know-how and competent service providers. The number of firms established by Eastern European companies in Austria increased four-fold in the period 2001 to 2011, rising from 66 to 364.

Austria’s bonus points at a glance: • A high level of interconnectedness • Well-educated and loyal employees with Eastern European language skills • Transparent legislation • Excellent infrastructure • Competent consultants, tax advisors, lawyers and financial service providers • High quality of life • High level of legal certainty and personal security CEE junior executives “Made in Austria“. Three-quarters of all migrants in Austria come from Central and Eastern Europe. These immigrants have aboveaverage qualifications, and the proportion of college graduates is also above average. Austrian universities and educational institutions offer tailor-made training programs, often developed in cooperation with the business community. An increasing number of Austrian educational institutions also offer training programs in Eastern Europe.

The Red-White-Red Card for highly qualified employees. The Red-White-Red Card has been available to highly qualified individuals, specialists and university graduates from non-EU member states since July 2011. This enables companies to employ, for example, technicians, chemists or managers as well as university graduates from non-EU countries educated in Austria without requiring any further permits.

Austria: Investment champion in Central and Eastern Europe

Investment ranking Slovenia Croatia Bosnia-Herzegovina Serbia Romania Slovakia Bulgaria Czech Republic Hungary Albania

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1 1 1 1 2 2 2 3 3 3

CEE companies discover Austria Start-ups 2001-2011 2001 total: 66; 2011 total: 364 Total in EUR million 10.8 26.2 4.9 12.8 52.6 37.6 36.2 96.2 67.9 2.6

Austria’s share in percent 47.9 28.9 19.7 18.5 17.8 16.0 15.4 12.9 12.8 13.7

Source: WIIW Database on FDI 2012: Short-lived Recovery

Russia Ukraine Rest of CIS Bulgaria Poland Romania Slovakia Slovenia Czech Republic Hungary

Source: Compass Verlag, 2012

2001

2011

11 2 2 1 6 7 10 5 9 13

59 10 10 17 10 21 51 17 34 135

Invest in Austria

Positive Economic Climate and Quality of Life Corporate tax rate and group taxation are particularly attractive to international companies.

Henkel Central Eastern Europe based in Vienna is responsible for coordinating business operations in 32 countries of Central and Eastern Europe and in parts of Asia and a work force of about 9,000 employees. Why did Henkel Group select Austria as its CEE headquarters?

Henkel has had a production plant in Vienna for 85years and produces detergents and cleaners at the Vienna-Erdberg plant. Since 2005 we have also been operating a central warehouse in Vienna-Meidling for Austria, Czech Republic, Slovakia, Slovenia and Croatia and most recently also for Hungary. Moreover, there is also a factory located in Ebensee, Upper Austria, which mainly manufactures joint mortar products. In 1987, even before the fall of the Iron Curtain, Henkel also began to successively build up its business in the Eastern European region. In this regard, we take advantage of the cultural proximity to Austria’s neighboring countries as well as existing long-term contacts. Then as now, the central geographical location, the positive economic climate and the quality of life are the most important assets of Vienna and Austria.

GĂźnter Thumser President, Henkel Central Eastern Europe

At present, companies are quite cautious in making investments. Does Austria have a special status within the Henkel Group?

No, not at all. Every company, and Henkel is no exception, has to define its priorities. In Austria we have an investment program totaling 8 to 10 million euros annually. Most recently, 30 million euros were invested, primarily for our central warehouse in Vienna-Meidling, which was expanded in 2012 to serve the Hungarian market as well. Investment promotion initiatives as well as the attractive corporate tax rate and the group taxation system are particularly business-friendly measures in Austria for international groups of companies.

Henkel Central Eastern Europe Henkel CEE headquartered in Vienna is one of the most important growth drivers for the German Henkel Group. Henkel CEE with its approximately 9,000 employees is responsible for 32 countries in Central and Eastern Europe, and operates more than 30 production facilities in the region. The Viennese location is being continually upgraded. Henkel produces more than 230,000 tons of detergents and cleansers annually here, of which 75 percent is designed for export.

→ www. henkel.at

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BUSINESS LOCATION AUSTRIA

Austria – A Country of Specialists Innovative small and medium-size companies as global market leaders

Austria as an industrialized nation. Tiny Austria has surprises in store for everyone, serving as the location for numerous niche players in all sectors such as ENGEL, Rosenbauer and Doppelmayer, which produce cutting edge products and are world market leaders. GREENone Tec has supplied the collectors for the world’s solar power plant at the Riad University for Women in Saudi Arabia. The Salzburg-based high-tech company Skidata equipped four out of the eight stadiums at the 2012 UEFA European Football Championship with its access technology. Firms such as Red Bull, Swarovski and Manner have gained international fame, conquering global markets from their base in Austria.

The Austrian business location is attractive. Measured in terms of purchasing power, Austria ranks among the most prosperous countries in the world and is rated third in the EU. Foreign investments have been rising continuously since 1993 in spite of cyclically-related fluctuations. In the year 2011 foreign direct investments in Austria reached a level of EUR 11 billion, the second highest in the country’s history. On balance, the value of passive direct investments is close to 36 percent of GDP, higher than the global average of 29 percent.

Industrialized Country Production sectors as percentage of GDP, 2010 in percent Austria Germany Japan Switzerland EU-27 Netherlands Great Britain USA France

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Source: OECD, Eurostat

29.2 27.8 27.3 27.2 24.7 23.7 21.8 21.3 18.8

Industrial Production by Sector in 2011 in percent Mechanical engineering Chemicals Electronics Gas supply Automotive Mineral oil Food and beverage Mining Wood processing Construction

22.6 9.7 9.2 8.9 8.2 7.7 6.4 5.4 5.2 3.8

Source: Austrian Federal Economic Chamber

Invest in Austria

World Market Leaders from Austria Company

Industry

Internet

Alpina

Race track protection

alpina.at

Andritz

Plants for paper and special industries

andritz.com

Anton Paar

Measuring technology and analytical devices

anton-paar.com

AT&S

Mobile phone circuit board

ats.net

AVL List

Drive systems and engine development

avl.com

Bachmann electronic

Controls systems for wind turbines

bachmann.info

Binder+Co

Glass sorting machines

binder-co.at

Doppelmayr

Cable cars

doppelmayr.com

Engel

Injection moldling machinery

engel.at

Frequentis

Communication systems for air traffic control

frequentis.com

GREENone TEC

Solar collectors

greenonetec.com

Kapsch TrafficCom

Fully electronic toll systems

kapsch.net

Komptech

Waste treatment and biomass processing

komptech.com

Lenzing

Cellulose fibers

lenzing.com

nxp Sound Solutions

Mobile phone loudspeakers

nxp.com

PALFINGER

Truck knuckle boom cranes

palfinger.com

Plansee

High-performance powdered metal materials

plansee-group.com

Plasser & Theurer

Track tamping machines

plassertheurer.at

Red Bull

Energy drinks

redbull.at

RHI

Refractory materials

rhi-ag.com

Riedel Glas

Quality glass

riedel.com

Rosenbauer

Special fire-fighting vehicles

rosenbauer.com

Schoeller-Bleckmann Oilfield (Sbo)

High precision components for the oilfield service

sbo.at

Schiebel

Helicopter drones, mine detectors

schiebel.net

Swarovski

Crystal glass jewelry

swarovski.com

Swarco

Traffic telematics

swarco.com

voestalpine

Track switch technology, specialty stainless steel

voestalpine.com

Wienerberger

Bricks and brick wall systems

wienerberger.at

Zumtobel

Electronic lighting technology

zumtobel.com

Source: GEWINN, June 2012

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BUSINESS LOCATION AUSTRIA

Lower Taxes, Higher profits Tax incentives for research and education create a business-friendly tax system in Austria

Since the corporate tax rate was reduced to 25 percent, Austria has been catapulted into the top ranks of the world’s most business-friendly nations. Among the EU-15, only Ireland offers more favorable tax provisions. But Austria also makes a strong showing in comparison with the new EU member states that are enticing investors with major tax reductions.

Lower effective tax burden. A comparison of the effective tax burden compiled by BAKBASEL and the Center for European Economic Research (ZEW) concludes that Austria continues to boast extremely business-friendly conditions within the EU despite massive tax competition from Eastern Europe. With a total tax burden of 22.1 percent, the taxes paid in Vienna are lower than in London, Madrid, Brussels, Milan or Luxembourg.

No more inheritance tax since 2008. The abolition of the inheritance tax in Austria and the related tax relief for family-owned businesses is another good reason for international investors to decide in favor of Austria as a business location.

Companies operating in Austria are only subject to a unified corporate tax of 25 percent and nothing else. Taxes commonly levied in other countries, such as the trade tax or wealth tax, do not exist in Austria.

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Invest in Austria

Group taxation scheme a major competitive advantage for headquarters.

Holdings represent an advantageous legal form of setting up Eastern European headquarters. The group taxation scheme is extremely attractive for multinational companies. If an Austrian company has a direct or indirect participatory stake in a foreign firm amounting to 50 percent plus one share, then the group taxation system may be applied by forming a tax group. In this case, the total taxable profits and losses of all the group members (including subsidiaries) are allocated to the group leader (parent company). In the case of acquisitions, the capitalized goodwill of acquired companies can be written off over a period of 15 years, an advantage not available in other countries. The existing far-reaching network of double taxation treaties ensures minimal taxation at the source for dividends, interest and licensing fees.

Research more, pay less. This principle applies to all companies operating in Austria. Companies can take advantage of the ten percent “research premium� for R&D expenditures as well as contract research. These subsidies are paid in cash.

Education pays off. For the education and training of employees, employers can reclaim a tax-exempt educational allowance of up to 20 percent. Alternately, firms can claim a six percent education credit for education expenditures.

BAK Taxation Index 2011 for companies Effective average tax burden in percent

Corporate income tax rates Corporate taxes on undistributed profits in percent

Ireland Czech Republic Poland Hungary Netherlands Denmark Austria Sweden Luxembourg Belgium Great Britain Italy Germany Spain France USA

Ireland Slovenia Poland Slovakia Czech Republic Hungary Great Britain Austria Netherlands Sweden Germany Italy Belgium France Japan USA

14.1 16.2 17.0 18.9 21.8 22.1 22.4 22.6 24.2 24.7 26.3 26.7 28.0 31.2 31.9 34.7

Source: BAK Basel Economics and the Centre for European Economic Research, 2011

12.5 18.0 19.0 19.0 19.0 19.0 24.0 25.0 25.0 26.3 29.5 31.4 34.0 34.4 38.0 40.0

Source: KPMG International 2012

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BUSINESS LOCATION AUSTRIA

Productivity as a Trademark Austria among the top three for labor productivity

Leading in productivity. With respect to labor productivity per employee in manufacturing industry, Austria is ranked third among the EU-27. According to the EU study, Austria thus outperforms such industrial nations as Germany, France and Great Britain. The level of industrial productivity n Austria is traditionally high.

The underlying reason is a future-oriented economic policy, which creates good conditions, especially the optimally trained and highly motivated employees in international comparison.

Moderate unit labor costs. The relatively high labor costs are frequently used by critics as arguments against Austria in its role as a business location. However, these costs are more than offset by the enormous productivity gains which have been achieved. An EU-wide comparison by the European Commission shows that nominal unit labor costs in Austria only climbed by 2.7 percent annually on average in the period 1999 to 2009. Thus the cost increases are far below the EU average.

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Unit Labor Cost Development in Manufacturing Industry Annual change in percent, average 2006 - 2011

Labor Productivity 2011 in EU Comparison GDP per employee in PPS, EU-27=100

-2.3 Poland United Kingdom -1.0 -0.7 Czech Republic Netherlands Hungary France Austria Sweden Slovenia EU trading partner Belgium Slovakia Germany Italy Luxembourg

Luxembourg Ireland Belgium Austria France Sweden Netherlands Italy Euro area Germany UK EU-27 Czech Republic Hungary Poland Bulgaria

0.1 0.5 0.6 0.7 1.3 1.4 1.5 1.6 1.8 2.5 2.8

Source: European Commission (Ameco database), Austrian Institute of Economic Research Sept. 2012

4.1

1 2 3 4 5 6 7 9 12 13 20 21 22 27

169.8 142.0 127.4 116.3 115.5 115.2 111.5 109.7 108.5 106.5 104.2 100.0 74.1 70.8 68.8 43.5

Source: European Commission, Eurostat, Nov. 2012

Invest in Austria

“In addition to the highly-qualified employees, the very high level of work motivation (few strikes) and productivity rank among the success factors in favor of Austria as a production location.“

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BUSINESS LOCATION AUSTRIA

“Vienna is absolutely a cosmopolitan city. It completely fascinated me. I was never in so many museums, exhibitions, musicals etc. before in such a short period of time. I enormously benefited from this as a person. “ Football trainer Christoph Daum

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Invest in Austria

Value Creation with Recreational Value Unsurpassed in the world: Austria’s quality of life Managers working across the globe confirm it again and again: Austria has everything required by highly qualified individuals. A well-preserved environment, green meadows and mountain pastures, crystal-clear waters, good air quality combined with one of the most diverse cultural offerings and the world’s highest quality of life make Austria a country which is pleasant to live in. According to the most recent “Quality of Living Survey 2012” prepared by Mercer Consulting Group, Vienna is the most livable city in the world.

International educational opportunities, extensive recreational offering.

Foreign investors do not have to dispense with having their children educated in their mother tongue. All required facilities are available, from the Vienna International School and the Japanese School Association in Vienna to the Swedish School. Close to 5,000 tennis courts, around 80 golf courses, 22,000 kilometers of ski slopes, 50,000 kilometers of hiking paths 10,000 kilometers of biking paths and much more make Austria a leisure paradise.

Personal security. Quality of life also encompasses the highest possible level of personal security, based on a low crime rate. There is hardly any other country in the world which matches Austria in respect to security of persons and property. In addition, forward-looking climate protection policies, a pronounced environmental awareness and ecologically-compatible production technologies make Austria an environmental role model.

The most livable capital city in the world Ranking by quality of life Rang

Stadt

Land

1 2 3 12 16 20 22 29 38 44 44 52 69 74 84

Vienna Zurich Auckland Amsterdam Berlin Stockholm Brussels Paris London New York Tokyo Rome Prague Budapest Warsaw

Austria Switzerland New Zealand Netherlands Germany Sweden Belgium France UK USA Japan Italy Czech Rep. Hungary Poland

Source: Mercer Quality of Living Survey 2012

Unmatched quality of life 10 = Quality of life is very high Switzerland Austria Norway Denmark Germany Netherlands France USA Japan Great Britain Czech Republic Italy Poland Hungary

1 2 3 4 7 10 17 19 21 24 25 27 39 53

9.76 9.65 9.45 9.42 9.28 9.09 8.16 8.13 7.77 7.48 7.33 7.19 5.26 4.05

Source: World Competitiveness Yearbook, 2012

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BUSINESS LOCATION AUSTRIA

ABA-Invest in Austria offers you comprehensive service – from investment subsidies and market opportunities to tax laws. A team of 25 qualified employees put its know-how at your disposal to provide you with unbureaucratic support, but at no cost to you.

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Invest in Austria

The Best Contact Partner for Business Location Issues As a consulting company set up by the Republic of Austria, ABA-Invest in Austria (ABA) is the top choice of international investors

• Experienced investment consultants personally serve you and provide all the necessary contacts required in Austria. Contact us when you start to consider expanding so that we can provide you with optimal support.

• ABA-Invest in Austria offers customized information on Austria as a business location – sectors, technologies and markets, political and economic conditions.

• We are happy to advise you on important issues relating to site selection such as labor and tax regulations, incentives or real estate prices.

• Employees of ABA-Invest in Austria assist and support you in handling formalities such as applying for public funding or operating licenses – also in cooperation with the regional investment promotion agencies in the federal provinces.

• ABA-Invest in Austria also provides extensive services to support expansion investments after project completion.

• Investors can also benefit from the international network of ABA-Invest in Austria’s offices in Vienna, New York and Tokyo as well as the foreign trade centers of the Austrian Federal Economic Chamber.

• Specialized brochures. More detailed information on different topics and industries can be found in numerous specialized brochures such as:

• • • •

Business Location Austria Automotive Industry Research and Development Environmental Technologies & Renewable Energies • Information Technology • Life Sciences • Tourism

• Private Equity & Real Estate • Chemicals / Plastics • Machine Construction / Mechatronics / Electronics • Logistics • Starting a Business in Austria • Tax Aspects of Industrial Investments in Austria

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Invest in Austria

ABA – Invest in Austria Opernring 3 A-1010 Vienna Tel.: +43-1-588 58-0 Fax: +43-1-586 86 59 E-Mail: office@aba.gv.at

Internet: www.investinaustria.at www.investinaustria.cn www.investinaustria.jp www.investinaustria.ru

INVEST IN AUSTRIA

www.investinaustria.at