Investing In... 2026 Comparisons

The Austrian legal system follows the civil law tradition, based on codified statutes. Public companies are also subject to directly applicable EU law, including the Market Abuse Regulation and Prospectus Regulation. Judicial precedent is effectively binding upon lower courts but can be reversed by the highest courts on each type of matter.

Commercial disputes are handled by district, regional, and commercial courts, with appeals to Higher Regional Courts and ultimately the Supreme Court. Austria also maintains a well-regarded arbitration landscape.

Businesses are subject to sectoral regulation, including the Austrian Financial Market Authority (FMA) for financial services and the Federal Competition Authority (BWB) and the Federal Cartel Prosecutor for competition matters, in co-ordination with EU institutions where applicable. The legal system is predictable and highly codified, with effective regulatory oversight.

Foreign direct investments from non-EU/EEA/Swiss investors require the approval by the Federal Minister for Economy, Energy and Tourism (“BMWET”) in relation to transactions that are to provide control over an Austrian undertaking or its essential assets or grant voting rights of 25% in an Austrian undertaking (in sensitive cases such as defence, energy or digital infrastructure, data sovereignty and water, even 10%), unless the so-called “very small entity” exception applies. The scope of the FDI screening regime is very broad and the enforcement practice on scope is extensive. Non-exclusively, foreign direct investments in the following sectors typically require approval: infrastructure, energy, IT, transportation, healthcare, food, telecommunication, data and data processing, defence, constitutionally guaranteed institutions, finance, research and development (R&D), social systems, chemical industry, biotech, cybersecurity, raw materials and media. A standstill obligation applies until approval is granted. Remedies have been imposed in a small number of cases, while bans have been extremely rare.

Austria’s private M&A market is well-developed and broadly aligned with other EU jurisdictions, such as Germany. The Austrian market is particularly attractive to investors due to its geographical location at the crossroads of Eastern and Western Europe. Foreign investors rarely encounter unexpected hurdles in structuring transactions, obtaining necessary clearances, or completing deals, provided that applicable regulatory requirements are carefully considered and integrated into the transaction planning process.

After experiencing two successive years of recession linked to energy price shocks and monetary tightening, economic growth remained weak in 2025, with fiscal consolidation and global trade uncertainty weighing on activity. Despite these pressures, the Austrian financial market has performed well and reached an all-time high in December 2025. A return to stronger growth is expected from 2026 onwards, although risks from subdued external demand persist. Domestic investment patterns show that Austrian firms continue to invest, particularly in digitalisation and energy transition.

From the FDI perspective, Austria remains an internationally sought‑after business location, as evidenced by a significant increase in consultations with the Austrian Business Agency (ABA) and ongoing interest from international companies in investment, talent, and expansion opportunities. Austria’s Federal Government has recently emphasised measures to enhance the country’s competitiveness, including evaluating existing laws for efficiency, streamlining approval procedures, and facilitating international skilled worker mobility. Looking ahead, Austria’s business climate is expected to remain stable and attractive for foreign investors, while broader geopolitical and regulatory trends at the EU level – such as evolving FDI screening frameworks – could lead to further harmonisation and potential new obligations by 2026.

In Austria, private M&A transactions most commonly involve limited liability companies (Gesellschaft mit beschränkter Haftung – GmbH), the prevailing legal form for privately held businesses, which are therefore typical (direct or indirect) targets for both share and asset deals. The recent introduction of the so-called “flexible limited liability company” (Flexible Kapitalgesellschaft– “FlexKap”) has offered businesses a meaningful alternative, in particular the option to grant shares without voting rights. Publicly listed companies, by contrast, take the form of stock corporations (Aktiengesellschaft – AG). Depending on the transaction’s structure and purpose, other legal forms may also be relevant, such as limited partnerships, regularly structured with a limited liability company as the general partner (Gesellschaft mit beschränkter Haftung & Compagnie Kommanditgesellschaft – GmbH & Co KG).

• The acquisition of private companies is most commonly structured as a share deal. In recent years, the sale of private companies – particularly larger targets – has increasingly been conducted through auction processes.
• In contrast, asset deals occur less frequently and are typically used for the acquisition of smaller businesses or in distressed scenarios. It allows the investor to acquire specific assets or business units, particularly where liabilities are to be ring-fenced. Austrian law does not provide for a unified legal regime governing transfers of a business as a going concern. This can result in increased transaction complexity and execution risk, including the precise carve-out of the assets to be transferred, the risk of third parties objecting to the assignment of contracts, and typically limited advantages from a tax-structuring perspective.

Effecting the sale and transfer of a target by way of mergers or spin-offs of entire businesses or individual business units is rather uncommon in Austria but is sometimes employed for the sole purpose of internal reorganisations preceding the sale of shares or assets, or to enable joint ventures.

The relevant regulations governing private M&A transactions in Austria span civil and commercial law, corporate law, tax law, employment law, antitrust law, and investment control rules.

• Merger control clearances are typically handled by the Austrian Federal Competition Authority (Bundeswettbewerbsbehörde– BWB). Where the target group meets the applicable turnover thresholds, the European Commission may also have jurisdiction under the EU Merger Regulation.
• If the target operates in a regulated industry, additional approvals may be required from the relevant sectoral regulator. For example, banks and financial institutions require clearance from the Austrian Financial Market Authority (Finanzmarktaufsichtsbehörde– FMA) or, where applicable, the European Central Bank (ECB). Other regulated industries may also have specific approval or notification obligations, depending on the statutory framework.

Furthermore, the foreign direct investment (FDI) regime covers a broad range of sectors, including key technology areas. While approval under this regime generally does not constitute a material obstacle to a transaction, it requires that investors from outside the EU, EEA, or Switzerland review applicability and, where necessary, observe a statutory waiting period between signing and closing, which may in some cases exceed the timeframe for merger control clearance.

Public Companies

Public companies in Austria are organised as stock corporations (AG) with a two-tier board system, mandatory employee co-determination, and enhanced governance and disclosure requirements. Only two issuers listed on the Vienna Stock Exchange are structured as European Companies (SE), which allow for a single board structure.

Private Companies

Private companies are most commonly structured as companies with limited liability (GmbH), which offer greater flexibility in governance, shareholder rights, and capital structure and are therefore widely used for special-purpose vehicles (SPVs), subsidiaries, and joint ventures.

Particularly for start-ups and growth companies, Austria also offers the Flexible Company (FlexCo), accommodating the need for increased flexibility, particularly regarding employee participation by a way of non-voting stock.

Stock Corporations (AG)

A strict two-tier board system includes a management and supervisory board, with co-determination requiring one employee representative per two shareholders. Listed companies follow the Austrian Corporate Governance Code for best practice on board structure, independence, remuneration, and transparency; adherence is expected and monitored by investors.

Limited Liability Companies (GmbH)

Managed by one or more managing directors (appointed and removed by the shareholders). Management is subject to instructions by shareholders. A supervisory board is generally not mandatory, unless certain statutory size-related thresholds (eg, more than 300 employees) are met.

Minority investors’ rights are governed by statutory corporate law, capital markets law for public companies, contracts (eg, shareholder agreements), and general civil law principles.

Public Companies

• Voting & Participation: Rights at general meetings on key matters, including supervisory board elections, capital increases, and articles' amendments.
• Equal Treatment: Shareholders in the same position must be treated equally regarding dividends, capital measures, and takeover offers.
• Transparency: Extensive disclosure requirements, including financial reports, ad hoc disclosures, and major shareholding notifications.
• Minority Rights: Shareholders holding 5%–10% can convene meetings, propose agenda items or resolutions, and request special audits.
• Takeover Protection: Mandatory offer rules and minimum pricing protect minority shareholders in control changes.
• Limited Exit Rights: Squeeze-out and sell-out mechanisms provide compensation at an “adequate” price once thresholds are met.

Private Companies

Protection relies mainly on contractual arrangements, with statutory law as a baseline. Common negotiated rights include:

• veto or consent rights for key matters;
• enhanced information and reporting rights;
• board representation or nomination rights;
• transfer restrictions, tag-along/drag-along rights, options and exit provisions.

Austria enforces a mandatory FDI screening regime with low voting share thresholds – 10%, 25%, and 50% – in sensitive sectors. Foreign investors must disclose and notify authorities immediately post-signing. A standstill obligation applies until approval is granted, but thereafter no ongoing reporting applies (unless in rare cases imposed as a remedy). Each relevant acquisition step must be assessed separately.

Independently of FDI screening, Austrian public companies are subject to capital markets disclosure and notification rules:

• Post-closing major shareholding disclosure: Investors acquiring, holding, or disposing of shares must notify the issuer and the Austrian Financial Market Authority (FMA) within two trading days if voting rights reach, exceed, or fall below 4%, 5%, 10%, 15%, 20%, 25%, 30%, 35%, 40%, 45%, 50%, or 75%. The issuer must make the information public.
• Mandatory takeover offers: Triggered when an investor acquires control – generally at 30% of voting rights – or by other means (eg, acting in concert). Strict procedural, timing, and disclosure obligations apply under the Austrian Takeover Commission’s supervision.

The Austrian capital market is centred around the Vienna Stock Exchange (VSE), which is the sole securities exchange in Austria with a strong reputation, particularly among Central, Eastern and Southeastern European markets. The shareholder structure of Austrian issuers is typically characterised by the presence of a core shareholder or a controlling group of shareholders and a comparatively small free float.

The VSE is divided into several market segments, each catering to different types of securities and trading strategies.

• Official Market: The Official Market is a regulated market based on the EU regulatory framework. Issuers are subject to stringent disclosure and transparency standards. This segment is known for its high liquidity and trading of large-cap stocks of well-established Austrian and international companies.
• Multilateral Trading Facility (Vienna MTF): The Vienna MTF is governed by the Rules and Regulations of the Vienna MTF and offers a platform for small and medium-sized enterprises (SMEs) with lower market capitalisations. Compared to regulated markets, information and disclosure requirements are more limited. This segment offers comparatively rapid and straightforward access to the capital market.

In 2025, the VSE experienced significant growth in new bond listings, and the global market segment was significantly expanded.

While capital markets play an important role – particularly for larger corporates and financial institutions – bank financing remains the primary source of funding for most Austrian businesses. Austria has a dense banking landscape with strong universal, regional, and sectoral banks. As a result, many corporates rely mainly on bilateral or syndicated bank loans rather than market-based instruments, while equity markets remain relatively concentrated and relationship-driven.

The Austrian capital markets framework is primarily governed by EU law and supplemented by national legislation. Key EU regulations, including the Market Abuse Regulation (MAR), the Prospectus Regulation, and Markets in Financial Instruments Directive (MiFID) II apply directly in Austria and are complemented at the national level by, inter alia, the Stock Exchange Act (Börsegesetz – BörseG), the Capital Market Act (Kapitalmarktgesetz– KMG), and the Takeover Act (Übernahmegesetz– ÜbG).

Supervision of the capital markets is exercised by the Austrian Financial Market Authority (FMA), while the VSE operates Austria’s securities exchange and sets additional market-specific rules and admission requirements.

Foreign investors are generally subject to the same securities law requirements as domestic investors, including, depending on the structure and size of the investment, disclosure obligations and, for listed targets, mandatory offer requirements. In parallel, investments in certain sensitive sectors may also be subject to Austria’s foreign direct investment screening regime, which operates independently of securities law.

Foreign investors structured as investment funds who wish to invest in Austria by acquiring shares are not subject to specific regulations, other than the general rules set out in 7. Foreign Investment/National Security.

Austria has a mandatory and suspensory merger control regime governed primarily by the Cartel Act. Merger control notifications must be filed with the Federal Competition Authority (FCA). Merger control applies irrespective of whether an investment qualifies as a foreign direct investment, ie, no exemptions targeted to foreign investors are available.

Transactions Subject to Notification

A transaction requires clearance if it qualifies as a “concentration” and the (i) turnover thresholds or (ii) the transaction value thresholds are met.

The following types of scenarios qualify as a “concentration”:

• acquisition of an undertaking or a significant part thereof (note that the latter concept is rather wide and may cover various assets by virtue of which a market position is transferred), irrespective of the means of control;
• acquisition of shares establishing a stake of 25%, of exceeding 25%, of 50%, or of exceeding 50% in an undertaking;
• creation of interlocking board memberships representing at least 50% of the board in two or more undertakings;
• creation of a full-functioning joint venture.

The turnover threshold requires in the last business year:

• a combined worldwide turnover exceeding EUR300 million, of which at least two undertakings must achieve more than EUR5 million each; and
• a combined Austrian turnover exceeding EUR30 million, of which at least two undertakings must achieve at least more than EUR1 million each.

An exception applies if:

• only one undertaking achieved a turnover of more than EUR5 million in Austria; and
• all other undertakings achieved a worldwide turnover of no more than EUR30 million.

Media Merger Thresholds

If at least two undertakings concerned qualify as media companies or media service companies, for the purpose of calculating the worldwide EUR300 million threshold and the Austrian thresholds of combined EUR30 million and EUR1 million each, a turnover multiplier of 200x applies to media companies, and a multiplier of 20x applies to media service companies.

The transaction value threshold requires:

• a consideration of more than EUR200 million;
• a combined worldwide turnover of more than EUR300 million;
• a combined Austrian turnover of more than EUR15 million; and
• a significant activity of the target undertaking in Austria (the significance is assessed at the intended time of closing; a subsidiary in Austria indicates significance; turnovers of no more than EUR1 million indicate insignificance, but alternative criteria such as a high number of users can tip the assessment toward significance).

Standstill Obligation

A standstill obligation applies to notifiable transactions, until the transaction is finally cleared, ie, investments must be notified prior to closing.

Procedure and Timing

In complex cases, time-flexible pre-notification talks are encouraged by the FCA. After filing, the FCA and the Federal Cartel Prosecutor (“FCP”) carry out a first-level review and clear the majority of cases within a four-week phase 1 period. The notifying parties can extend phase 1 by two weeks if they need additional time to address questions by the FCA or FCP. Notifying parties can propose commitments to the FCA and FCP already in phase 1, but the FCA and FCP cannot themselves impose remedies.

Both the FCA and FCP have the power to submit an application for merger review to the Cartel Court if a transaction raises competitive concerns (phase 2). The Cartel Court has full power to review, to impose remedies, or to block a transaction, and decides within five months of receiving an application for review (for the substantive criteria, see 6.2 Criteria for Antitrust/Competition Review). The notifying parties may request a one-month extension. Decisions of the Cartel Court can be appealed to the Supreme Cartel Court within four weeks. Upon receiving service of the complaint, a reply can be submitted within four additional weeks. The Supreme Cartel Court issues its final decision upon appeal within two months of receiving the case file. While a firm deadline for the total duration of merger control cases is unavailable, in addition to potential pre-notification talks and 4–6 weeks in phase 1, investors can expect between 10–11 months in phase 2.

Below Threshold Review

Austria does not provide for below-threshold call-in powers. However, investments are subject to general competition law rules. A Towercast-type abuse of dominance enforcement against below-threshold acquisitions by dominant undertakings is possible but has not yet been tested.

The Cartel Act imposes two alternative substantive tests on investments:

• creating or strengthening a dominant position; and
• significant impediment to effective competition (“SIEC”).

These criteria support horizontal, vertical, and conglomerate theories of harm.

The assessment relating to the creation or strengthening of a dominant position incorporates presumptions of dominance that are specific to the Cartel Act and lower than in many jurisdictions. For example, at 30% combined market share, dominance is assumed. Moreover, collective dominance presumptions apply to oligopoly settings, eg, if four companies hold at least 5% individually and a combined 80% of the market.

The SIEC criterion was introduced in 2021 and adduces, inter alia, a review if an investment will give rise to co-ordinated or non-co-ordinated effects, in particular in oligopoly settings, ie, a review if an investment will give incentive and capability to raise prices unilaterally or together with other undertakings.

Despite one of the two alternative tests pointing toward blocking a transaction, the Cartel Court may grant clearance if an economic justification exists, in particular, out-of-market efficiencies. It is untested if a sustainability justification is also available.

For the power of the FCA and the FCP to accept commitments and the power of the Cartel Court to impose remedies, see 6.2 Criteria for Antitrust/Competition Review. Both structural and behavioural commitments/remedies have been used in recent years, although behavioural commitments/remedies dominate. Typical remedies include supply obligations for durations between three and seven years or non-discrimination obligations, but also divestitures of assets.

For information on authorities which are able to challenge foreign direct investment, see 6.1 Applicable Regulator and Process Overview and 6.2 Criteria for Antitrust/Competition Review. The consequences of making an investment without prior approval are fines of up to 10% of an undertaking’s global turnover in the previous year. Last year, the Supreme Cartel Court imposed a record-fine of EUR70 million on a large food retail company for a relatively minor case of non-notification.

Austria has a foreign investment/national security review regime applicable to FDI that is primarily governed by the Investment Control Act (“ICA”).

Competent Authority

Foreign direct investments are reviewed by the Federal Minister of Economy, Energy and Tourism (“Minister”). The review process is conducted by the Minister with the involvement of an inter-ministerial Investment Control Committee, which includes representatives from several Federal Ministries (notably interior, defence and foreign affairs). In politically or economically sensitive cases, the Federal Government may ultimately be involved in the decision-making process.

Relevant Investments

The regime applies to qualifying investments by “foreign investors” into Austrian undertakings that are active in a relevant sector or their significant assets, unless a European-investor exemption or a small-company exemption applies (for the definition of foreign investors, see the European-investor exemption under Foreign Investor and Exemption for European Investors in this section).

The Austria FDI regime has a broad scope that is set out by the annex to the ICA and distinguishes “sensitive sectors” and “critical sectors”. The following investments into Austrian undertakings require approval if the undertaking is active in a sensitive or a critical sector:

• acquisition of voting rights of at least 25% or at least 50%;
• acquisition of voting rights of at least 10% (only if active in a “sensitive sector”);
• acquisitions of control irrespective of specific voting rights;
• acquisitions of significant assets.

Sensitive Sectors (Part 1 of the Annex to the ICA)

The following sectors qualify as “sensitive sectors”:

• defence equipment and technologies;
• operation of critical energy infrastructure;
• operation of critical digital infrastructure, in particular 5G infrastructure;
• water;
• operation of systems that guarantee the data sovereignty of the Republic of Austria.

Critical Sectors (Part 2 of the Annex to the ICA)

All investments into undertakings that are active in or have an impact on

• critical infrastructures (facilities, systems, installations, processes, networks, or parts thereof);
• critical technologies and dual-use goods (Article 2 (1) Regulation 2009/428/EC);
• the security of supply with critical resources;
• access to sensitive information, including personal data, or the ability to control such information; and
• freedom of media and media pluralism. If an undertaking carries out activities in one of the following sectors, the Minister qualifies the activity as “critical” for the purpose of asserting jurisdiction, ie, without any up-front assessment of specific risks:
1. (i) energy;
2. (ii) information technology;
3. (iii) traffic and transport;
4. (iv) health;
5. (v) food;
6. (vi) telecommunications;
7. (vii) data processing or storage;
8. (viii) defence;
9. (ix) constitutional institutions;
10. (x) finance;
11. (xi) research institutions;
12. (xii) social and distribution systems;
13. (xiii) chemical industry;
14. (xiv) investments in land and real estate that are critical for the use of the infrastructure referred to in (i) to (xiii);
15. (xv) artificial intelligence;
16. (xvi) robotics;
17. (xvii) semiconductors;
18. (xviii) cybersecurity;
19. (xix) defence technologies;
20. (xx) quantum and nuclear technologies;
21. (xxi) nanotechnologies;
22. (xxii) biotechnologies;
23. (xxiii) energy supply;
24. (xxiv) supply of raw materials;
25. (xxv) food supply;
26. (xxvi) supply of medicines and vaccines, medical devices, and personal protective equipment, including research and development in these areas.

Small Company Exemption

Investments into very small undertakings, including start-ups, with fewer than ten employees and a turnover or a balance sheet of below EUR2 million, are exempt from the approval requirement.

Foreign Investor and Exemption for European Investors

Natural persons holding EU citizenship, the citizenship of an EEA-state or Switzerland and legal persons with a seat or head offices within the EU, EEA or Switzerland do not qualify as “foreign” investors and are therefore exempt from FDI screening – all other non-Austrian investors qualify as “foreign”. The exemption is sensitive to circumvention and will not apply if a transaction is opportunistically structured to use an exempted direct acquirer. Cases that involve an ultimate investor from an exempted jurisdiction, one or more layers of non-exempted companies, and an exempted director investor require a case-by-case analysis.

A Standstill Obligation Applies

Foreign investments therefore need approval before closing. Transactions are under statutory suspensory effect until approval is granted.

Certificate of Non-Objection

Investors seeking to clarify the jurisdiction of the Minister may request a “certificate of non-objection” (Unbedenklichkeitsbescheinigung) that confirms that the investment is not subject to an approval requirement. Such requests require similar amounts of information to an application. Upon submission of a request, within two months the Minister issues a certificate of non-objection or converts the application into an application for approval.

Requirements

Investors seeking approval must submit a complete application. The application consists of the formal German-language application (potentially an English working translation) and a completed standardised information template in English (Form B sheet). The formal application must provide the following information:

• name, address, and, if available, telephone number and email address of each investor;
• name, address and, if available, telephone number and email address of the target company;
• a detailed description of the business activities (including products, services, and business transactions) of the persons and companies referred to in the preceding two points, including a description of the market in which these business activities take place (competitors, market share);
• the name of the natural or legal person who ultimately owns or controls each acquiring person, pursuant to the criteria of the Beneficial Owner Register Act;
• a detailed description of the planned transaction and the exact ownership and shareholding structure of the target company;
• the other EU Member States in which each acquiring person and the target company carry out significant business transactions;
• the financing of the direct investment and the origin of these funds;
• the date on which the direct investment is planned to be made or was made;
• notification of whether the transaction must also be notified under the EU Merger Regulation;
• the names of one or more persons authorised to receive service of process for each acquiring person in Austria; and
• information as to whether the transaction has or may have an impact on a project or programme of European Union interest.

Depending on the activities of the target, in particular, if the target has relevant R&D, data-related or AI-related activities, further information may be required.

Process and Timing

FDI screening in Austria consists of a pre-screening phase, the EU co-operation mechanism, a phase 1 review and, potentially, a phase 2 in-depth review. While no firm overall timeframe exists, investors can plan timing, based on the following time-components:

• Pre-Screening. After submission of the application, the Minister checks the completeness of the application in the pre-screening phase within a few working days. The Minister then forwards the completed applications to the European Commission (“Commission”), kicking off the EU co-operation mechanism under the EU FDI Regulation 2019/452.
• EU co-operation mechanism. The EU co-operation mechanism consists of two stages. Stage 1 takes 15 days. If, after 15 days, no EU Member State indicates that it wants to submit a comment, the Minister initiates a phase 1 review in parallel to the ongoing EU co-operation mechanism. If a Member State indicates that it wants to submit comments on an investment within these 15 days, it may do so within a stage 2, which takes a further 20 days. The Commission can respond to comments within another five days. If the EU Commission or another EU Member State requests additional information, a “stop-the-clock” mechanism is available to extend the timelines of the EU co-operation mechanism. Therefore, depending on the complexity of the case, the EU co-operation mechanism extends the phase 1 review from 15 days to 35 days and longer. The Minister may only take a formal decision once the EU co-operation mechanism has concluded.
• Phase 1. The phase 1 review period takes one month. It cannot be extended and no “stop-the-clock” mechanism is available. During phase 1, the Minister assesses whether an investment poses a risk to security or public order in Austria. Within phase 1, the Minister can either grant approval or initiate a phase 2 review by giving notice to the applicant. In simple cases, phase 1 approval therefore typically takes between 35 and 55 days.
• Phase 2. The phase 2 review period takes two months as of the applicant receiving notice. The Minister carries out an in-depth review during phase 2 and can either grant approval, grant approval subject to remedies, or prohibit an investment.

The criteria for assessing investments are risks to the security and public order of Austria, including crisis prevention and services of general public interest (Daseinsvorsorge). In assessing these risks, the Minister further considers:

• whether an acquiring person is directly or indirectly controlled by the government, including government agencies or the armed forces of a third country, inter alia, on the basis of the ownership structure or in the form of substantial financial resources;
• whether an acquiring person, or a natural person who holds a senior position in an acquiring legal entity, is or has been involved in activities that have or have had an impact on security or public order in another EU Member State; and
• whether there is a significant risk that an acquiring person, or a natural person who holds a managerial position in an acquiring legal entity, is or has been involved in illegal or criminal activities.

In practice, security of supply is a relatively frequent concern. The Minister exercises broad discretion in assessing the risks associated with an investment.

If the Minister does not grant approval, typical remedies include supply obligations toward Austrian customers, obligations to continue R&D efforts, or reporting obligations on appropriate safeguards to avert specific threats.

The Minister has the authority to block an investment or to grant approval only, subject to remedies. Before taking such a decision, the Minister receives advice from the Investment Control Committee. Decisions by the Minister can be appealed to the administrative courts in the first instance and finally to the Supreme Administrative Court. Once a decision is final, the Minister cannot retroactively change its assessment.

Closing an investment without required approval is subject to a criminal penalty of up to one year and up to three years in more severe cases.

Since the suspensory effect of a required approval also implies civil nullity of a transaction, failure to obtain approval may also engender claw-back claims of the sellers in civil courts.

In addition to Austria’s FDI screening regime and merger control review, foreign investors should be aware of a number of other legal and regulatory frameworks that may impact an investment:

• Austrian and EU sanctions regimes may restrict acquisitions involving designated countries, entities or individuals.
• Investments in regulated industries – such as banking, insurance, energy, telecommunications, transport, healthcare or media – typically require approval from the relevant sectoral regulator, including the Financial Market Authority (FMA) or, for certain banks, the European Central Bank (ECB).
• Public company investments are also subject to capital markets and securities regulations, including mandatory offer obligations under the Austrian Takeover Act and disclosure requirements under the Market Abuse Regulation (MAR).
• Transactions involving real estate may require specific approvals, particularly for agricultural land, forestry or strategic sites.
• While Austria does not impose general foreign exchange controls, cross-border financing and repatriation of funds must comply with reporting and tax obligations.

Taken together, these requirements create a comprehensive regulatory landscape that should be carefully evaluated alongside FDI screening in the planning and execution of transactions in Austria.

Tax Residency

Under Austrian tax law, a corporation is considered tax-resident in Austria if either its statutory seat (Sitz) or its place of effective management (Ort der Geschäftsleitung) is located in Austria. The place of effective management is the location where the company’s day-to-day commercial decisions at the highest operational level are actually made and carried out. While older administrative practice focused heavily on formal factors (eg, the physical location of board meetings and/or where the resolutions are signed), current audit practice applies a more substance-based approach. The Austrian tax authorities now increasingly investigate where strategic decisions are implemented and where senior management performs its ongoing decision-making functions, rather than merely where resolutions are formally adopted.

Domestic corporations

Domestic corporations with either their statutory seat or their place of effective management in Austria are subject to unlimited tax liability, ie, are taxed in Austria on their worldwide income.

Foreign corporations

Foreign corporations with neither their statutory seat nor their place of effective management in Austria are subject to limited tax liability in Austria, meaning they are taxed only on income arising from Austrian sources (eg, income attributable to an Austrian permanent establishment, income from Austrian real estate, or certain service income). These domestic rules are further restricted by the 93 Double Taxation Treaties (DTTs) currently in force in Austria, which may limit Austria’s taxing rights.

Taxes

Corporations

Corporations (eg, GmbH, AG) are treated as separate legal entities and are subject to Corporate Income Tax (CIT).

• CIT rate: The current statutory CIT rate is 23%.
• Minimum CIT: Corporations must pay a minimum CIT (currently EUR1,750 per year for a standard GmbH, with reduced rates for newly formed companies such as start-ups during the first ten years). This minimum tax is creditable against future CIT liabilities without time limitation.
• Participation Exemption: Dividends from domestic subsidiaries are generally fully tax-exempt. For foreign shareholdings, dividends as well as capital gains derived from the disposal of shares are exempt if the participation meets statutory requirements (generally more than 10% holding for at least one year).

Partnerships (eg, OG, KG)

Austrian income tax law treats partnerships as tax-transparent. The partnership itself is not subject to income tax. Instead, its profits are allocated to the partners proportionally and taxed at their level.

• Corporate Partners: If the partner is a corporation, the profit shares are taxed at 23% CIT.
• Individual Partners: If the partner is an individual, the profit shares are subject to their progressive personal income tax rate (up to 55% for income exceeding EUR1 million). Certain types of income (eg, dividends) may be taxed at a flat tax rate of 27.5%.

Other Business Taxes

Businesses operating in Austria are typically also subject to:

• Value-Added Tax (VAT): Austria levies a standard VAT rate of 20% on the supply of goods and services (with reduced rates of 10% and 13% for specific goods/services). Input VAT deduction is available if the recipient qualifies as an entrepreneur.
• Municipal Tax (Kommunalsteuer): A 3% municipal tax on the total gross payroll of employees attributable to the Austrian business establishment is levied.
• Payroll-related charges: Employers must contribute to mandatory Social Security and other payroll-related taxes (eg, Dienstgeberbeitrag (DB), Dienstgeberzuschlag (DZ)).

Dividends

Under Austrian domestic law, dividends distributed by an Austrian corporation to non-resident investors are generally subject to a withholding tax (Kapitalertragsteuer) at a rate of 27.5% for individuals and 23% for corporate recipients. The Austrian distributing entity must withhold and remit the tax to the competent tax office. The domestic rate can be reduced or eliminated under the following regime:

• EU Parent Companies: With regard to dividends paid to EU-resident corporate shareholders, Austria has implemented the EU Parent/Subsidiary Directive according to which domestic withholding tax is reduced to zero, provided that
1. the recipient is an eligible EU-resident company;
2. the recipient directly or indirectly holds at least 10% of the distributing company’s share capital; and
3. the recipient maintains this participation for an uninterrupted period of at least one year.
• DTT: Most of Austrian DTTs reduce the domestic withholding tax rate, typically to 5% or 15% for corporate shareholders. Access to lower rates often requires a minimum (direct) shareholding (commonly 10% or 25%, depending on the applicable DTT).

Corporate shareholders resident in the EU/EEA may apply for a refund if

• the Austrian company was required to withhold tax at source; and
• the withholding tax cannot be credited in the shareholder’s state of residence under the applicable DTT.

Distributions funded from tax-recognised capital reserves (such as paid-in surplus or shareholder contributions) qualify as a repayment of capital (Einlagenrückzahlung) rather than a dividend. Consequently, such payments

• do not trigger Austrian withholding tax, and
• reduce the shareholder’s tax basis in the investment. If the distribution exceeds the remaining tax basis, the resulting “negative” amount is generally treated as a taxable capital gain, unless an applicable DTT provides an exemption.

Interest

In general, Austria is a very attractive location for FDI financing, as interest payments to foreign non-resident corporate recipients are not subject to withholding tax under Austrian domestic tax law. This exemption applies irrespective of whether a DTT applies, subject to general anti-abuse rules.

Treaty Shopping and Anti-Abuse Limitations

Eligibility for reduced or zero withholding tax rates – whether under the Austrian implementation of the EU Parent/Subsidiary Directive or under a DTT – is subject to strict anti-abuse and anti-treaty shopping regulations:

• Substance Requirements: To benefit for a relief at source (as opposed to a lengthy subsequent refund process), the non-resident corporate recipient must demonstrate:
1. an active business activity (beyond mere asset holding); and
2. qualifying substance, typically its own employees and its own office space at its disposal, appropriate to its business.
• Beneficial Ownership: The dividend recipient must be the beneficial owner of the income. Interposed "conduit" or "shell" companies lacking economic substance are generally disregarded for tax purposes.
• Documentation: Non-resident recipients must provide:
1. a certificate of tax residence; and
2. in the case of non-resident corporate investors, a declaration of substance.

If the Austrian distributing entity cannot verify beneficial ownership of the non-resident investor or substance without sufficient clarity, it must apply withholding tax in full. Relief can thereafter only be obtained through a formal refund procedure, during which the non-resident investor must demonstrate that the arrangement is not abusive. Once a refund is granted, a simplified relief process typically applies for the subsequent three years (subject to continued compliance).

Within the framework of Austrian tax law, standard tax optimisation strategies – particularly those involving the interest deductions and licensing payments or tax loss carry-forwards – are restricted by the following statutory rules:

Earnings Stripping and Interest Deductibility

Interest limitation rule

Based on the EU Anti-Tax Avoidance Directive (ATAD), Austria has implemented an interest limitation rule under Section 12a of the Corporate Income Tax Act. Under this rule, the taxpayer may deduct its interest surplus (ie, interest expenses in excess of interest income) only up to 30% of its tax-adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA).

There are four key exceptions to this limitation:

• De minimis threshold: Interest surplus of up to EUR3 million is fully deductible per year. The amount exceeding this threshold is subject to the interest limitation rule. For tax groups, this threshold applies to the group as a whole, not per each individual member.
• Standalone exception: The interest limitation rule does not apply to standalone corporations, ie, entities that:
1. are not fully integrated into consolidated financial statements;
2. have no affiliated companies; and
3. maintain no foreign permanent establishments.
• Equity-escape clause: The interest surplus can be fully deducted if the taxpayer demonstrates that its equity-to-assets ratio is equal to or exceeds that of the consolidated group to which it belongs. A tolerance of two percentage points applies.
• Grandfathering: Interests arising from debt instruments concluded before 17 June 2016 remained outside the interest limitation rule until 2025.

Intra-Group Share Acquisitions Ban

Interest expenses related to the debt-financed acquisition of shares are non-deductible if the shares are acquired from a related group company or a controlling shareholder. This prevents artificial debt push-downs through internal restructurings.

IP-Planning and Cross-Border Licensing

Payments to related entities in low-tax jurisdictions are subject to enhanced deductibility restrictions:

• Low-tax jurisdiction: Interests and licence fees paid to affiliated entities in low-tax jurisdictions may be wholly or partially non-deductible. In line with global minimum taxation standards (Pillar Two), full deductibility requires that the recipient be taxed at an effective tax rate of at least 15% (previously 10%).
• Arm’s-length principle: All intercompany transactions, including intellectual property (IP) licensing and management fees, must comply with the arm's-length principle. Excessive or non-arm’s-length payments are reclassified as hidden profit distributions (verdeckte Ausschüttung), resulting in:
1. non-deductibility for the taxpayer; and
2. potential withholding tax liabilities.

Net Operating Losses (NOLs) and Asset Basis

In Austria, loss carry-forwards are generally perpetual, but their utilisation is limited to 75% of the current year’s taxable income. However, loss carry-forwards lapse in the event of a “shell purchase” (Mantelkauf), which requires a substantial change determined by the "triple test”: a significant and simultaneous change in:

• the shareholder structure;
• the organisational structure; and
• the economic structure. If all three elements change significantly, the tax attributes are forfeited.

Austria does not generally provide a “step up” in the value of depreciable assets following a share deal. A step up (and higher depreciation deductions) is only achievable via:

• an asset deal; or
• specific reorganisations under the Austrian Reorganisation Tax Act, typically requiring the continuation of book values (ie, no step up).

Tax Consolidation (Group Taxation)

Austria maintains one of the most competitive group taxation regimes in Europe (Section 9 of the Corporate Income Tax Act), allowing the inclusion of foreign first-tier subsidiaries (within the EU or in countries providing comprehensive administrative assistance), cross-border loss utilisation of foreign group members, subject to a recapture mechanism, and a formation without a Profit and Loss Transfer Agreement (PLTA/EAV). The group is established via:

• a formal filing with the tax office; and
• a minimum duration of three years.

Treatment of Partnerships

Austria applies strict transparency to partnerships (Open Government (OG), Kommanditgesellschaft (KG)). Partnerships themselves are not subject to income tax; taxable profits are allocated to their partners. Austrian tax law currently provides no election for partnerships to opt into corporate taxation.

Generally, Austria does not provide a domestic statutory exemption for capital gains realised by non-resident investors from the sale of shares in Austrian corporations. Under domestic tax law, a non-resident investor becomes subject to limited tax liability in Austria on capital gains if they have held, at any time within the preceding five years, a 1% or greater participation in the Austrian corporation.

In practice, however, these capital gains are typically exempt under the applicable DTTs. Austria’s DTT network generally follows the Organisation for Economic Co-operation and Development (OECD) Model Convention, allocating taxing rights on the capital gains resulting from sale of shares exclusively to the investor’s state of residence. Therefore, while legally taxable under domestic tax law, the tax is usually waived by the applicable DTT (unless the applicable DTT includes a “real estate rich company clause”).

Investments made through Austrian partnerships are generally treated as direct investments in the underlying assets, due to the transparent tax treatment of the partnership. The sale of a share in a partnership is therefore treated as an “asset deal” (sale of the underlying assets), rather than a “share deal” (sale of corporate equity).

Transaction Taxes (RETT, VAT, Stamp Duty)

Real Estate Transfer Tax (RETT)

Asset Deals

Direct transfers of Austrian real estate (including land, buildings, and building rights, but excluding machinery and industrial equipment) are subject to a standard RETT rate of 3.5%. The tax base is typically the consideration (the purchase price plus any assumed liabilities). While reduced rates exist for transfers within the immediate family, commercial arm’s-length transactions are taxed at the full rate.

An additional 1.1% registration fee becomes due upon registration of the ownership change in the land register, calculated on the market value of the property. Preferential tax bases apply to (i) transfers within the immediate family, or (ii) corporate restructuring qualifying under the Austrian Reorganisation Tax Act (three times the tax assessment value, capped at 30% of the fair market value).

Share Deals

Direct change of shareholders:

• RETT is triggered if, within a seven-year period, at least 75% of the shares in the partnership or in the corporation are transferred directly to new shareholders.
• Transfers of publicly traded shares are excluded.
• The tax rate is 0.5% of the property value (as defined under the Austrian Real Estate Transfer Tax Act and, generally, lower than the fair market value of the real estate).

Consolidation of shares:

• RETT is also triggered if 75% of the shares in a real estate-owning entity are directly or indirectly unified within the hands of a single acquirer or an “acquirer-group” (Erwerbergruppe). This could apply if the shares in a real estate-owning company are not directly transferred but shares in a company higher up in the ownership chain are.
• An “acquirer-group” can be assumed where either partnerships and/or corporations operate under uniform management or are directly or indirectly controlled by a single (natural or legal) person.
• For indirect transfers, the participation along the ownership chain is multiplied to determine the effective stake. Own shares held by the company are to be excluded from the calculation, and the participation threshold should be determined based on the remaining shares held.

Group Clause

Restructurings under the Austrian Reorganisation Tax Act do not trigger RETT for indirect consolidation or the acquisition of shares if all parties involved belong to the same acquirer group. This exception only applies to indirect mergers or transfers of shares and does not apply to direct mergers and direct share transfers.

Real Estate Companies

If the company involved, which owns the domestic real estate of which shares are being transferred, is considered a “real estate company” (eg, the company’s assets consist predominantly of real estate that is not used for its own operational purposes or the company’s income derives predominantly from the sale, leasing, or management of real estate), then RETT applies at 3.5% (compared to the previous rate of 0.5%), and the tax base is the fair market value of the real estate (instead of the usually lower property value).

VAT

• Share deals are exempt from VAT.
• Asset deals involving real estate or operational assets may be subject to VAT unless the transaction constitutes a “Transfer of a Going Concern” (Geschäftsveräußerung im Ganzen), in which case VAT is not triggered.

Stamp Duty

Under the Austrian Stamp Duty Act (Gebührengesetz), Austria applies stamp duty based on a numerus clausus of specific legal transactions. Stamp duty arises when a signed deed (Urkunde) documenting a taxable transaction is executed, provided a sufficient Austrian nexus exists. Taxable instruments include, among others, commercial lease agreements (excluding residential leases), assignments of receivables, and security instruments such as suretyships and mortgages. The rates typically range from 0.8% to 1.0% of the underlying consideration. It is pertinent to note that share transfer agreements and – following legislative reforms effective 1 January 2011 – loan and credit agreements remain outside the scope of the Stamp Duty Act.

Under the prevailing legal framework, the trigger for stamp duty is the formal execution of a written deed. However, the definition of a “signed written deed” is subject to an expansive judicial interpretation: stamp duty may arise not only through the execution of a primary contract, but also via any signed instrument – including correspondence, emails, side letters or written confirmations – that serves as a record of the taxable arrangement. Furthermore, under the “bringing into Austria” rule, deeds executed abroad may become subject to stamp duty if (i) they are bought into Austria or (ii) they create legally relevant effects within Austria.

Because stamp duty is form-driven, transaction structuring in Austria requires careful document management to avoid unintended stamp duty exposure.

Austria has implemented a comprehensive anti-avoidance framework, largely driven by the EU Anti-Tax Avoidance Directives (ATAD) and OECD standards. The framework is intended to prevent tax evasion and ensure fair taxation of cross-border activities.

General Anti-Avoidance Rule (GAAR)

Under Section 22 of the Federal Tax Code, taxpayers must not circumvent tax obligations through the “abuse of legal forms.” An arrangement is considered abusive if it is artificial, lacks sound economic reasons, and its primary objective is to obtain a tax advantage that contradicts the intent of the relevant tax rules. Where abuse is identified, the tax consequences are recalculated as if an appropriate commercial structure has been used.

Anti-Hybrid Rules

Austria has implemented comprehensive anti-hybrid rules (Section 14 of the Corporate Income Tax Act) to neutralise tax mismatches arising from different legal characterisations of financial instruments or entities across jurisdictions. These rules apply to:

• Double Deduction Mismatches: Where the same expense is deducted in both jurisdictions.
• Deduction/No Inclusion Mismatches: Where a payment is deductible in Austria but not included in the taxable income of the foreign recipient.

To eliminate the mismatch, the rules require Austria either to deny the deduction of the expense or enforce the inclusion of the income, depending on whether Austria is the source or residence state.

Transfer Pricing Rules

Cross-border related-party transactions must comply fully with the arm’s-length principle, consistent with the OECD Transfer Pricing Guidelines, which Austria follows:

• Documentation Requirements: Under the Transfer Pricing Documentation Act (VPDG), multinational groups with a consolidated turnover exceeding EUR50 million in the preceding two consecutive years must prepare a Master File and a Local File.
• Country-by-Country Reporting (CbCR): Groups with a consolidated annual turnover of at least EUR750 million are required to file a Country-by-Country Report.
• Consequences: Any non-arm’s-length payment to a related party is recharacterised as a hidden profit distribution, resulting in denial of the tax deduction at the corporate level, and, in general, Austrian withholding tax on the deemed distribution.

Controlled Foreign Corporation (CFC)

Austria imposes special rules to capture passive income shifted to low-tax jurisdictions. CFC rules apply if:

• an Austrian corporation holds, directly or indirectly, more than 50% of the capital, voting rights, or profit participation in a foreign entity or permanent establishment;
• more than one third of the foreign entity’s income consists of passive income;
• its effective tax burden does not exceed 15% (considering the foreign income is calculated based on Austrian tax law and the factual paid foreign tax); and
• the foreign entity does not carry out any significant economic activity in terms of personnel, equipment, assets, and premises.

If these criteria are met, the passive income is attributed to the Austrian parent and taxed on a current basis.

Pillar Two (Global Minimum Tax)

Austria has enacted the Minimum Tax Act (Mindestbesteuerungsgesetz) for large multinational enterprise groups to implement the OECD Pillar Two global minimum tax. This ensures an effective minimum tax rate of 15%.

Transparency and Reporting (DAC6 & WiEReG)

• Mandatory Disclosure (EU-MPfG/DAC6): Intermediaries (lawyers, tax advisers) or taxpayers must report certain cross-border tax arrangements to the tax authorities if they meet specific “hallmarks” potentially indicating tax avoidance.
• Beneficial Owner Register (WiEReG): To prevent tax evasion through anonymous structures, all legal entities in Austria must identify and report their ultimate beneficial owners to a central register.
• EU Non-Co-operative Jurisdictions: Austria applies defensive measures (such as heightened CFC rules and the denial of certain exemptions) for transactions involving territories on the EU “blacklist”.

Austria has a highly regulated employment law regime, primarily based on statutory law, collective bargaining agreements (CBA), and works council provisions under the Austrian Labour Constitution Act. Employment law is largely mandatory, with limited scope for deviation to the detriment of employees. However, in contrast to other EU jurisdictions (eg, Germany), Austria’s termination rules are comparatively liberal, ie, termination without cause is generally possible, thereby providing businesses relatively more control over their headcount.

CBAs are nearly universal; approximately 98% of Austrian employees are covered by a CBA. CBAs are typically concluded at the sector level between trade unions and employer associations and provide for minimum wages, working conditions, and benefits by industry or sector. Works councils are also common in medium-sized and larger companies and have extensive information, consultation and co-determination rights. Trade union membership at the company level is less visible, but unions play a strong role via CBAs.

Foreign investors should be aware of strict rules on working time, paid leave, general termination protection, special protection of certain groups (eg, works council members, handicapped employees, pregnant employees), employee participation, and automatic transfer of employment in business transfers.

Employee compensation in Austria typically consists of fixed cash salary, usually subject to minimum pay scales provided for by CBAs, overtime premiums, and special payments (commonly a 13th and 14th monthly salary mandated by CBAs, typically paid in summer and before Christmas). Variable compensation is common for senior employees. Equity-based compensation exists but is less widespread than in Anglo-American markets, though increasing among start-ups and multinational employers.

Statutory benefits include paid vacation, paid public holidays, continued remuneration during illness, and mandatory social security contributions covering pension, health, unemployment, and accident insurance. Occupational pension schemes exist but are not universal, as they are voluntarily or in some cases mandated by CBA.

In acquisitions or other transactions, employee terms generally transfer automatically and unchanged if the transaction qualifies as a transfer of a business or part of a business. CBAs and works council agreements generally continue to apply or might be replaced by the CBA and works council agreements in place at the receiving entity. Harmonisation of compensation across merged entities often triggers works council consultation requirements. Change-of-control provisions in executive contracts may accelerate vesting or trigger severance, requiring careful due diligence.

Under Austrian law implementing the EU Acquired Rights Directive, employees transfer automatically to the acquirer if a business or part of a business is transferred as a going concern. Employment contracts, accrued rights, and most benefits continue unchanged. Employee consent is not required, and employees may only object to the transfer in very limited instances (eg, because the new employer does not assume the company pension commitments). Transferred employees may terminate their employment within one month post-transfer if working conditions deteriorate substantially. Severance typically does not arise from transfers or change of controls alone.

Works council involvement is mandatory in the case of a transfer of a business. The works council must be informed about the transfer, and if the works council requests, there must be a consultation about the envisaged transfer. While works council consent is generally not required to complete a transfer of a business or an acquisition, compliance with procedural requirements is critical.

Under the Investment Control Act (ICA), acquisitions of essential assets are subject to screening if they may affect national security. While the ICA does not explicitly list IP as a standalone category, controlling influence of an Austrian entity can also be exercised through ownership or usage rights to all or significant parts of the target's tangible or intangible assets. As a result, transactions involving strategic IP may trigger a mandatory filing with the competent authority (BMWET).

Pursuant to Section 3 of the ICA, the BMWET assesses whether an investment or acquisition could threaten national security or public order. Particular scrutiny is applied to the sensitive and highly sensitive sectors listed in Part 1 and 2 of the Annex to the ICA. Highly sensitive sectors include defence and military technology; the operation of critical energy infrastructure; critical digital infrastructure, in particular 5G infrastructure; water infrastructure; and the operation of systems ensuring the data sovereignty of the Republic of Austria. Examples for other sensitive sectors include manufacturing relevant to critical industries, research institutions in sensitive technologies, or financial infrastructure.

Austria is widely recognised for its strong, well-developed IP protection framework, fully aligned with EU and international standards. Austria provides robust protection across all IP categories, including patents, trade marks, copyrights, and design rights. Austria also demonstrates high levels of IP activity, with substantial domestic and international patent activity, reflecting both confidence and effective use of its system.

No specific industry in Austria is regarded as inherently difficult for obtaining IP protection. However, like all EU Member States, Austria is subject to general limitations under European IP law. These include exclusions from patentability for certain subject matters, such as mathematical methods, discoveries, algorithms “as such,” and medical treatment methods. To date, there is no indication that any particular sector is disproportionately affected by compulsory licensing requirements. Similarly, there is no evidence that Austria imposes sector-specific political approvals or ministerial authorisations for obtaining or enforcing IP rights, nor are there signs of unusual delays or systemic inefficiencies in the administration of those rights. Regarding AI generated works, current statutory law does not extend automatic copyright protection to content created without human authorship; human creative input remains a requirement for protection.

The General Data Protection Regulation (GDPR) is the main data protection framework in the EU and, therefore, also in Austria. Under the GDPR, jurisdiction is less related to the location where a business is incorporated or headquartered and more to the scope and location of business activity. It also applies to businesses outside the EU if their data processing activities relate to the offering of goods or services to individuals in the EU or to the monitoring of such individuals’ behaviour. Breaches of the GDPR can result in penalties of up to EUR10 million or 2% of the global annual turnover (in the case of breaches of the controller of processor obligations) or in penalties of up to EUR20 million or 4% of the global turnover (in the case of breaches of fundamental principles, eg, consent, processing conditions, violation of data subject rights, improper international data transfers, or non-compliance with supervisory authority orders).