Investing In... 2021

Last Updated January 18, 2021


Law and Practice


BINDER GRÖSSWANG Rechtsanwälte GmbH has been ranked among the leading commercial law firms in Austria for more than 50 years. The firm focuses on international matters, especially M&A and financing transactions, major arbitration and litigation, and advises on matters concerning corporate, banking, restructuring and insolvency, public procurement, IP, competition, and real estate law. Binder Grösswang’s teams in Vienna and Innsbruck comprise a total of more than 170 individuals, including approximately 100 lawyers. Binder Grösswang’s strategy is based on outstanding professional expertise combined with teamwork. The firm has gained an excellent reputation for its sophisticated and business-oriented approach and individually tailored solutions. Its more than 100 highly specialised legal experts are widely connected and rank among the best in their various practice areas.

Austria has a civil law system with roots in Roman and German law traditions. Austrian substantive law is primarily codified in comprehensive legal codes for three core legal areas:

  • public law, mainly governed by the Austrian Federal Constitution;
  • private law, primarily set forth in the Austrian General Civil Code; and
  • criminal law, mainly codified in the Austrian Criminal Code.

Influence of the Austrian Courts and the ECJ

As a member state of the European Union (EU), Austria is strongly influenced by legal acts of the EU and decisions of the European Court of Justice (ECJ). Although case law is less significant for the development of the Austrian legal system as compared to common law jurisdictions, decisions made in particular by the three highest courts in Austria, ie, the Supreme Court (generally competent for civil and criminal law matters), the Constitutional Court, and the Supreme Administrative Court, have a significant impact on the outcome of future court proceedings. Therefore, decisions by the Austrian courts and the ECJ are crucial when interpreting Austrian law and considering investments in businesses based or operating in Austria.

The Austrian Court System

The formal administrative head of the Austrian judicial system is the Federal Minister of Justice (Bundesministerin für Justiz). The Austrian court system is divided into two branches: (i) general courts, competent for civil, competition, and criminal law; and (ii) public law courts, competent for administrative procedures, acts, and decisions by the authorities. Regulatory authorities exist for specific business activities, such as the FMA (Austrian Financial Market Supervision Authority), as an integrated “one-stop shop” authority and supervisor of banks, insurance companies, investment funds etc, e-control for the energy sector, RTR for telecommunications etc.

Social Partnership

Austria has had a lasting tradition of social partnership (Sozialpartnerschaft) since the post-war era, which essentially means a co-operative relationship among the major Austrian economic interest groups of employers (ie, businesses) and employees, with the goal of resolving and avoiding conflicts through consensus. The main associations representing the respective economic interest groups are the Austrian Federal Economic Chamber (Wirtschaftskammer Österreich) and the Austrian Industrial Association (Österreichische Industriellenvereinigung) and also, to a lesser extent, the Austrian Chamber of Agriculture (Landwirtschaftskammer Österreich) for employers, on the one hand, and the Federal Chamber of Labour (Bundesarbeiterkammer) and the Austrian Trade Union Association (Österreichische Gewerkschaftsbund) for employees, on the other hand. A prominent feature of the social partnership is the annual negotiation of collective bargaining and wage agreements (see 10.1 Employment and Labour Framework) for certain core economic areas (eg, the iron and metalworking or trading industry), which is also followed by the media. In addition, the social partnership representatives submit proposals on draft legislation, participate in political and advisory councils and committees, are frequently involved in proceedings in front of labour and social security courts as well as the Cartel Court (see 6.1 Applicable Regulator and Process Overview), and perform lobbying activities.

Private Law

Austrian private law is of particular relevance for investments in businesses based or operating in Austria and, inter alia, covers commercial, corporate, employment, and civil (contract) law. Despite recent efforts by the legislator to simplify the establishment of Austrian corporations, respective procedures are relatively complex as compared to other jurisdictions. For example, Austrian limited liability companies (Gesellschaft mit beschränkter Haftung – GmbH) require substantial initial share capital (EUR35,000 for the incorporation of an Austrian private limited liability company, at least half of which must be paid in). Efforts by the legislator in recent years to increase the attractiveness of establishing a GmbH in Austria, such as a special foundation privilege reducing the initial share capital required for a GmbH to EUR10,000 (at least half of which must be paid in) for a limited period of time or the possibility to incorporate very basic GmbHs with one shareholder at banks have had modest effects. The required documents for incorporation (eg, identity verification, payment of initial share capital, sample signature etc) are provided to the respective bank. Currently, the legislator is contemplating the introduction of a new company form with limited liability (a so-called Austrian Limited). Whether this will be implemented and how it will be received by foreign investors remains to be seen.


Austria has established one of the most in-demand arbitration venues worldwide. In particular, the adoption of an arbitration-friendly legal system in line with the UNCITRAL Model Law, the well-established Vienna Rules of Arbitration and Mediation of 2018, and the International Arbitral Centre of the Austrian Federal Economic Chamber, being one of the leading international arbitration institutions, provide an environment fit for high-class arbitration proceedings. Traditionally, parties from Central and Eastern Europe choose Austria as their place of arbitration. However, Austria’s popularity as a place of arbitration has gradually increased across the globe. 

FDI from non-European Economic Area (non-EEA) and non-Swiss investors requires prior authorisation by the Austrian Federal Minister of Digital and Economic Affairs (Bundesministerin für Digitalisierung und Wirtschaftsstandort – BMDW), if the Austrian target company is operating in a critical sector (by statute, an acquisition of such Austrian target company may pose a threat to security or public order). The highly critical sectors are listed in an Annex to the Federal Act on the Control of Foreign Direct Investment 2020 (Investitionskontrollgesetz 2020 – InvKG), which are:

  • defence equipment and technology, 
  • critical energy infrastructure;
  • critical digital infrastructure (eg, 5G infrastructure);
  • water;
  • systems to ensure Austria’s data sovereignty; and
  • (mainly due to the COVID-19 pandemic) research and development in the fields of pharmaceuticals, vaccines, medical devices, and protective equipment.

The second part of the Annex to the InvKG contains a non-exhaustive list of “merely” critical sectors, which may still be notifiable if considered to pose a potential threat to Austria’s security or public order. Examples of such sectors are finance, telecommunications, traffic and transport, food supply, artificial intelligence, and investment in land and real estate essential for Austria’s energy and chemical industry.

Effects of COVID-19

The Austrian economy, a main pillar of which is the tourism industry, was hit hard by the COVID-19 pandemic. Despite swift and decisive action by the Austrian government, including substantial state aid packages, the Austrian GDP is estimated to contract by about 7.1% in 2020 (as compared to 1.4% growth in 2019), with a gradual recovery of about 3.6% expected in 2021/22. However, this is still far below the GDP level projected for 2021/22 prior to the COVID-19 pandemic. Inflation is projected to reach about 1.4% in 2020 with an additional slight increase in the inflation rate expected for 2021. Although the Austrian government introduced subsidised short-time working schemes (Kurzarbeit), the unemployment rate is expected to increase dramatically from about 4.5% in 2019 to about 5.5% in 2020. Mainly due to the state aid packages, Austria is facing a significant budget deficit of an estimated 9.6% of GDP with a government debt ratio of about 84.2% in 2020 (as compared to a budget plus of about 0.7% and a government debt ratio of about 70.5% in 2019).

Austria's New FDI Regime

In light of the EU Foreign Direct Investment Screening Regulation ((EU) 2019/452) and accelerated by the effects of the COVID-19 pandemic, Austria has introduced a completely new FDI regime. Direct and indirect investments by foreign, ie, non-EU/EEA/Swiss, individuals or corporations in a company with a registered seat or central administration in Austria now require the prior authorisation of the BMDW if such investment could pose a risk to security or public order. Such risk is assumed, if the target operates in a field of business defined as “critical” (see 1.2 Regulatory Framework for FDI). The transaction must involve the acquisition of minimum voting rights (10%, 25% and 50% in highly critical sectors, 25% and 50% in other critical sectors) or the acquisition of control over all or significant assets. The Investment Control Act (Investitionskontrollgesetz – InvKG) came into force on 25 July 2020. 


The COVID-19 pandemic has brought both liberation as well as restriction to the legal framework for businesses based or operating in Austria. A broad variety of laws and regulations have been issued since mid-March 2020, when the first lockdown hit Austria’s public and economy. On the one hand, significant steps were taken to further digitalise businesses and improve their interaction with the Austrian authorities. Corporate law has experienced a broad variety of innovations, eg, by newly enacted laws and regulations to give shareholders, as well as executive and supervisory board members, the possibility to hold virtual corporate meetings via video and/or telephone conference, and pass legally binding resolutions while maintaining physical distance. Furthermore, such new laws and regulations allow for the virtual execution of notarial deeds, which is especially relevant for Austrian corporate law and M&A transactions, where Austrian notarial deeds are often required to effect a share transfer or the incorporation of Austrian companies. Although many of these laws and regulations have been limited until the end of 2020, their long-term introduction into Austria’s pre-COVID-19 existing legal framework is highly likely and would be another step towards a much-awaited further digitalisation in Austria.


In July 2020, new rules on FDI were introduced in Austria. The InvKG significantly expanded the scope of the Austrian FDI regime. In contrast to the old law, the new regime:

  • covers indirect acquisitions and asset deals; 
  • introduces a distinction between highly critical and “merely” critical sectors (while the list of highly critical sectors is exhaustive, the merely critical sectors list is non-exhaustive with no further definition or guidance, causing considerable legal uncertainty as to the applicability of the regime;
  • decreases the threshold for notification to 10% of the voting rights in highly critical sectors;
  • takes into account the identity of the investor; and
  • grants the competent FDI authority extensive rights of inspection and control.

While the COVID-19 pandemic might have served as a catalyst on a national level (in particular, with regard to the healthcare sector), the new Austrian regime is part of a broader trend towards stricter FDI-rules in the EU and elsewhere.

New relevance of FDI proceedings

While FDI proceedings used to be a side note on the check list of cross-border M&A transactions in Austria, times have certainly changed: FDI clearance has become a closing condition in numerous M&A deals where the direct or indirect acquirer is a non-EU, non-EEA or non-Swiss person and the Austrian target company operates in a critical sector. The parties to an M&A deal, including their legal advisers, are faced with a quickly developing area of law that lacks legal certainty, may considerably delay closing a transaction, and may result in commitments being imposed upon the acquirer (or in the worst case scenario, prohibition of a transaction). The Austrian FDI review is not fully transparent. On top, the benchmark for intervention (threat to security and public order) leaves wide discretion to the authorities and also takes the concerns of the European Commission or other EU member states into account. As a result, a filing in one jurisdiction may well generate a domino effect (ie, filing in all jurisdictions affected by a transaction), making a global/EU-wide FDI strategy tantamount.

Overall, the new FDI rules disincentivise foreign direct investment from third countries, unless the FDI authority takes a balanced approach. But whether this will happen, still remains to be seen.

Share or Asset Deals

M&A transactions are typically structured as share deals or asset deals in Austria, ie, the acquisition of a part or the entire share(s) in the target company (and thereby indirect acquisition of the company’s assets); or acquisition of the assets comprising the business of the target (or part thereof) by acquiring the respective assets and liabilities such as inventory, customers, machinery, employees, IP, real property etc directly from the target. Under Austrian law, an asset deal through which the entire business of the target is acquired, usually also involves transfer of all legal relationships and also liabilities pertaining to such business by operation of law, which general rule may be excluded to a certain extent only, in particular vis-à-vis third parties.

Acquiring a controlling share in an Austrian company listed with the Vienna Stock Exchange or VSE (Wiener Börse) may require a public takeover bid subject to the regulations of the Austrian Takeover Act or TOA (Übernahmegesetz). The TOA applies to stock corporations (Aktiengesellschaften – AGs) listed at the regulated market of the VSE, with a registered office in Austria, and sets forth the rules for public takeover bids, competing offers, and notification duties if certain shareholding thresholds are exceeded (“creeping-in”). 

Required disclosure

The Stock Exchange Act or SEA (Börsegesetz) requires disclosure by a holder of (cumulatively): (i) shares with voting rights, or financial instruments (rights to acquire and instruments with similar economic effect), or a combination of both; (ii) holding 4% (subsequent disclosure thresholds also apply) with disclosure at 3% if such 3% threshold is optionally imposed by the issuer in its articles of association; (iii) in an issuer which has Austria as its home member state and has shares admitted to trading on an EEA regulated market; (iv) promptly but no later than two trading days from the day that follows the date on which the disclosing person learns or should have learnt of the need to make the disclosure; and (v) to the issuer, exchange operating company (if listed securities on the VSE) and the FMA. 

Thresholds for disclosure

The thresholds for disclosure are the excess or shortfall of a person's holding of voting rights or financial instruments over or below 4%, 5%, 10%, 15%, 20%, 25%, 30%, 35%, 40%, 45%, 50%, 75%, and 90% of the total voting rights attached to the shares of the issuer. 

The following legal provisions are most important for foreign investors considering M&A transactions in Austria.

  • Depending on the type of companies involved in an M&A transaction, the respective underlying corporate law applies (particularly in share deals), eg, the Act on Companies with Limited Liability (GmbH-Gesetz – GmbH-Act) for GmbHs, the Joint Stock Corporation Act (Aktiengesetz – AG-Act) for AGs, and the Austrian Commercial Code (Unternehmensgesetzbuch) for general partnerships and limited partnerships. Such underlying corporate laws, inter alia, regulate the share capital, shares and their transferability, corporate governance and rights and obligations of shareholders, as well as the management of the company. 
  • Listed companies are further governed by the SEA. Particularly for M&A transactions, the rules on disclosure duties regarding ad hoc publications and the procedure on insider trading are relevant. Certain acquisitions may be subject to the TOA (see 3.1 Transaction Structures), setting forth rules for the acquisition of a controlling share in a listed company.
  • The Squeeze-Out Act (Gesellschafter-Ausschlussgesetz) governs the squeeze-out of minority shareholders owning up to 10% of the shares in a GmbH or an AG. As a squeeze-out may occur in connection with a reorganisation, eg, merger by conversion into the majority shareholder (verschmelzende Umwandlung), establishing conversion (errichtende Umwandlung), or non-proportional de-merger (nicht verhältniswahrende Spaltung), the relevant provisions of the GmbH-Act and AG-Act must also be considered in this respect. If the M&A transaction involves a reorganisation, special laws such as the Austrian Conversion Act (Umwandlungsgesetz) may apply. 
  • The InvKG regulates (direct and indirect) investments by foreign investors in Austrian companies and requires approval by the BMDW for the acquisition of Austrian target companies, operating in business fields considered to be systematically relevant to Austria. 
  • For cross-border mergers of an Austrian GmbH or AG with other EU companies, the EU Merger Act (EU-Verschmelzungsgesetz) provides a comprehensive legal procedure. 
  • When a merger is not subject to the merger control procedure by the European Commission (EC), the Austrian merger control rules must be observed (see 6 Antitrust/Competition).

The Austrian FDI regime, ie, the InvKG, is neutral as regards the choice of legal form. The decisive question is only whether an Austrian target with activities in a critical sector is acquired.

A minority investment in an Austrian target company is subject to Austrian FDI control if the target is active in a critical sector and the applicable voting rights threshold is reached (10% if the target is active in a sector listed in Part I, Annex to the InvKG, or 25% if the target is active in a sector listed in Part II, Annex to the InvKG).

The acquisition of a minority investment may also be subject to Austrian merger control if the investment covers the acquisition of shares/voting rights of at least 25% in a target company with activities in Austria and the investor and the target company reach certain turnover thresholds.

A foreign investor may have to submit (i) an application for authorisation by the Austrian FDI authority, in case the InvKG applies; or (ii) a merger notification to the Austrian competition authorities, where the Austrian merger control rules apply (see 4.2 Relationship between Companies and Minority Investors).

In both cases, the FDI may not be implemented prior to clearance by the Austrian authorities. A breach of such reporting obligation and implementation prohibition (so-called "gun-jumping") may trigger serious administrative or criminal sanctions. In addition, the agreements on the transaction would not be enforceable under civil law rules.

The VSE is divided into a regulated market and a non-regulated market. The Official Market (Amtlicher Handel) is the only regulated market operated by the VSE within the meaning of the Markets in Financial Instruments Directive (2004/39/EG), the primary legal basis of which is outlined in the SEA. The VSE's non-regulated market is the Vienna MTF, an exchange-regulated market that functions as a multilateral trading facility (MTF). The Vienna MTF covers securities that are not admitted to the Official Market.

Just under half of the financial liabilities of Austrian companies are raised by equity. Equity financing, in the form of crowdfunding, business angels, private equity and venture capital, etc, is a sought-after way of financing Austrian companies. Debt financing instruments such as corporate bonds, including hybrid and green bonds, both on the regulated market and on the MTF are gaining popularity. 

Off-market promissory note loans (Schuldscheindarlehen) also figure in companies’ financing portfolios. Finally, state forms of debt financing, such as subsidised loans and crowdlending, have become effective financing tools. 

The key laws on securities and their exchange over capital markets in Austria are the following. 

  • The Capital Market Act 2019 (Kapitalmarktgesetz 2019), which implements the EU Prospectus Regulation ((EU) 2017/1129) into Austrian law and constitutes the primary legal basis for the public offering of securities in Austria. An issuer planning to publicly offer securities is required to prepare a comprehensive prospectus, containing key information on the issuer and the securities to be issued. Such prospectus is subject to approval by the FMA. 
  • The SEA regulates the admission of securities to a regulated market in Austria and has been amended to, inter alia, implement the Market Abuse Regulation ((EU) 596/2014) into Austrian law, the EU Transparency Directive (2013/50/EU), the EU Markets in Financial Instruments Directive II (2014/65/EU) as regards commodity markets, and the EU Regulation on Short Selling and Certain Aspects of Credit Default Swaps ((EU) 236/2012) towards a harmonisation of the capital markets regulations in the EU member states. Foreign investors in companies listed on the regulated market of the VSE will be required to comply with the notification provisions of the SEA (see 3.1 Transaction Structures). 

The key laws on investment funds in Austria are:

  • the Austrian Investment Funds Act 2011 (Investmentfondsgesetz 2011), which implements the UCITS Directive (2009/65/EC) into Austrian law; and
  • the Austrian Alternative Investment Funds Manager Act (Alternative Investmentfonds Manager-Gesetz), which implements the AIFM Directive (2001/61/EU) into Austrian law.

Investment funds may only be set up and sold in Austria in accordance with these laws, depending on the type of fund. FDI by foreign investment funds in Austria is generally not subject to regulatory review (insofar as shares of the funds are not sold in Austria).

Austria has a merger control regime with rather low thresholds compared to other jurisdictions, which may trigger a filing obligation even in cases where the target has only little or no turnover in Austria, a requirement for filing even in cases where mere shareholdings of 25% or more (without conferring control) are acquired, and a rather strict attitude to gun-jumping on the part of the competition authorities.

Definition of Concentration

The following types of transactions qualify as concentrations under the Austrian Cartel Act 2005 or CA (Kartellgesetz): 

  • the acquisition of an undertaking or a substantial part thereof, especially by merger or conversion; 
  • the acquisition of rights in another undertaking by operational management or operational lease agreement; 
  • the (direct or indirect) acquisition of shareholdings of 25% or 50%;
  • the establishment of cross-directorships if at least half of the members of the management or supervisory boards of two or more undertakings are identical;
  • any other concentration which allows for controlling influence over another undertaking; and 
  • the establishment of a full-function joint venture.

The majority of concentrations notified under the CA consist of the acquisition of a shareholding or a (jointly) controlling influence.

Merger Filing Thresholds

Concentrations, as described above, are required to be notified to the Austrian Federal Competition Authority or FCA (Bundeswettbewerbsbehörde), if the following turnover thresholds have been met in the preceding business year:

  • the combined worldwide turnover of all concerned undertakings exceeded EUR300 million;
  • the combined Austrian turnover of all concerned undertakings exceeded EUR30 million; and
  • the individual worldwide turnover of at least two of the concerned undertakings each exceeded EUR5 million.

According to the de minimis exemption, concentrations meeting the above thresholds are not notifiable if only one of the concerned undertakings had a turnover of more than EUR5 million in Austria, while all other concerned undertakings had an overall worldwide turnover of not more than EUR30 million. If these thresholds are exceeded, it might still be possible to avoid a filing by arguing no-effects of the concentration in Austria. However, the authorities are very strict in this regard, which is why they generally recommend a filing, whenever such thresholds are met.

Concentrations which do not meet the turnover thresholds set out above may, nonetheless, be notifiable under the relatively new transaction value threshold (in force since November 2017), namely – provided the overall worldwide threshold of EUR300 million is met – in the case of an overall Austrian turnover of more than EUR15 million, if the value of the consideration (ie, essentially the purchase price) exceeds EUR200 million and the target company is active in Austria to a significant extent, which is evaluated on a case-by-case basis.

Not only the turnover of the entire group, up to the ultimate beneficial owner, must be considered for the turnover calculation, but also 100% of the turnover(!) of all undertakings connected by a (direct or indirect) shareholding of 25% or more. 

Like the EU Merger Act, the CA exempts certain transactions undertaken by financial institutions or investment companies from a filing obligation, provided that voting rights may not be exercised to determine the competitive behaviour and, in the case of financial institutions, the shares must be resold within certain deadlines. Separate rules also exist for media concentrations, where the companies’ turnover is multiplied by a factor of 200 or 20 with regard to some of the above thresholds.

Competent Authorities and Procedural Issues

Filings can be made as soon as the parties have reached an agreement on the main aspects of the transaction (ie, even before signing a final agreement, but already on the basis of an LOI or the like) and are required to be submitted to the FCA, which is in charge of the first review (Phase I), together with the Federal Cartel Prosecutor or FCP (Bundeskartellanwalt). The FCA and FCP are also known as the “Official Parties”. Phase I lasts for four weeks as from filing and can be extended for another two weeks upon application by the filing party (eg, if more time is required to deal with follow-up queries of the Official Parties, provided that clearance in a prolonged Phase I still appears possible). If the Official Parties see material issues, they will apply for an in-depth investigation of the transaction with the Cartel Court (Phase II). Otherwise, clearance results due to the lapse of time. In urgent cases, the filing party can apply for a waiver, which shortens Phase I to a minimum of about 17 days as from filing (14 days plus mail routing). This requires sound reasons for urgency and no material concerns with the concentration. The vast majority (approximately 98%) of the concentrations filed (about 450 concentrations per year and, thus, a very high number in relation to the total number of transactions) are cleared within Phase I in Austria. In Phase II, the Cartel Court generally appoints an expert to determine the market definition and economic impact of the transaction, and in most cases, also follows such expert’s opinion.

Prohibition of Implementation prior to Clearance (“Gun-Jumping”)

Concentrations which have to be notified must not be implemented before clearance by the competition authorities. Any agreements infringing such standstill obligation (“gun-jumping”) will be null and void. In addition, the Official Parties will initiate proceedings for the imposition of fines if gun-jumping comes to their attention (see 6.2 Criteria for Review through to 6.4 Enforcement).

Where the relevant thresholds as set out in 6.1 Applicable Regulator and Process Overview are met, Austrian merger control applies. No overlap criteria or other competitive concerns are required to give rise to the jurisdiction of the Austrian competition authorities. Once filed, the material test is whether or not the concentration will create or strengthen the dominant position of a merged entity on any relevant market. There is a rebuttable presumption of dominance in the case of a market share of at least 30%. Obviously, horizontal overlaps are in the focus of the assessment, but vertical issues may also arise if the parties are active on upstream/downstream/neighbouring markets and have a strong market position on these markets enabling them to foreclose customers or competitors. If the 30% threshold is exceeded, parties have to provide good arguments to convince the authorities that competition will not be restricted as a result of the concentration (ie, potential competition/low barriers to market entry, strong buying power, efficiency gains etc). In order to remove these concerns, conditions can already be imposed on the merging parties in Phase I. If the 30% threshold is reached and no commitments can be agreed upon, in most cases Phase II proceedings will be initiated, where a court expert is appointed to provide an economic opinion on the likely impact of the concentration on competition.

The parties may offer remedies (conditions or obligations, or both) in Phase I and/or Phase II. Even after clearance of the transaction, the Cartel Court may impose measures on the parties to alleviate competition concerns if clearance has been obtained based on incorrect or incomplete information, or if remedies are not complied with. The CA does not specify which remedies are acceptable and in the past both structural and behavioural commitments have been accepted, as long as they sufficiently address the competition concerns identified by the competition authorities. Recently, there appears to be a growing tendency to favour structural remedies, such as divestments of (parts) of the overlapping business, as opposed to behavioural remedies (eg, the supply obligation of third parties, licences etc) (in line with the approach of the EU Commission and, eg, the German Federal Cartel Office). Non-compliance with commitments is equivalent to a breach of the standstill obligation (see 6.4 Enforcement).

A concentration subject to Austrian merger control may only be implemented after clearance, ie, (i) both Official Parties have waived their right to request a Phase II review; (ii) neither Official Party has requested Phase II proceedings within the four-week period of Phase I (or within the approximately six-week period in the case of an extension); or (iii) in the case of initiation of Phase II proceedings, under a final decision of the Cartel Court or Cartel High Court. Agreements infringing the standstill obligation are null and void. Parties (intentionally or negligently) implementing a concentration which has to be notified prior to clearance (“gun-jumping”) can be sanctioned with fines of up to 10% of their overall worldwide turnover. However, in practice, the respective fines are much lower, ranging from about EUR50,000 to EUR150,000, with the highest fine imposed so far amounting to about EUR1.5 million. The amount of the fine depends, inter alia, on the duration and gravity of the infringement, the degree of fault, and the economic capacity of the undertakings involved. Another unpleasant consequence is the publicity of the infringement, as the failure to notify by the parties and the amount of the fine are published on the FCA’s website. Fines are imposed by the Cartel Court upon application of the Official Parties. Usually, the Cartel Court follows the Official Parties’ application, and it cannot impose a higher fine than applied for. The decision can also be appealed at the Cartel High Court.

Austria operates a tight FDI regime, ie, the InvKG, in regard to investments by non-EU, non-EEA, and non-Swiss investors. The relevant authority is the BMDW, which is assisted by the Investment Control Committee. An FDI is subject to the InvKG if it cumulatively fulfils the following criteria:

  • The Austrian target entity pursues a commercial activity that may pose a threat to security or public order (see the list of critical sectors in 1.2 Regulatory Framework for FDI); and 
  • The foreign investor must acquire:
    1. controlling influence over a legal entity or its assets (or material parts thereof);
    2. at least 10% of the voting rights (if the target is active in a “highly” critical sector); or
    3. 25% of the voting rights (if the target is active in a “normal” critical sector).


The FDI regime is not applicable to a foreign investment in a micro-enterprise.


An application for authorisation to the BMDW is mandatory and must be made immediately following signing. The target is subsidiarily obliged to apply for authorisation, if the foreign investor does not apply for FDI clearance.


The EU co-operation mechanism with the EC and other member states takes up to 35 days (additional 20 days in the case of RFIs). Thereafter, the national proceedings that follow take up to one month in Phase I and up to two months in the case of a detailed investigation (Phase II). A transaction requiring FDI authorisation may only be implemented following authorisation by the BMDW. A transaction requiring authorisation that is implemented without FDI authorisation is void under civil law. In addition, criminal sanctions may be triggered.

The substantive test is whether or not the foreign investment may pose a risk to security and public order. In this assessment, investor-related factors are taken into account.

The BMDW may impose conditions or obligations (eg, supply obligations, maintain production/storage in Austria) if the threat to security or public order can thereby be adequately reduced. 

The BMDW may indeed block (ie, prohibit) a foreign investment through FDI proceedings initiated upon application by the foreign investor. If no application was submitted, despite the FDI coming within the scope of Austrian FDI control, the BMDW may initiate proceedings ex officio and impose commitments or even discard a foreign investment post-closing.

The decree of the Federal Minister may be appealed to the Federal Administrative Court, the decision of which may in turn be contested before the Administrative Court (and the Constitutional Court). The effectiveness of a review by such courts is limited given the discretion of the BMDW when security or public order is threatened.

In addition to the previously outlined legal framework on effecting FDIs in Austria, foreign investors might also be required to take the following legal regimes into account. 

Real Estate Transactions

The transfer of real estate-related property rights to foreign investors may require the approval of the respective land transfer authority. This generally includes: 

  • acquisition of ownership of land (direct or indirect);
  • acquisition of superficies structures (ie, buildings erected on the land but owned by another person);
  • acquisition of building rights;
  • usufruct rights;
  • easements; and
  • tenancy rights and other rights of use.

In this respect, each Austrian federal province has its own legal framework defining the applicable restrictions and approval processes, typically governing both asset and share deals (eg, the direct or indirect acquisition of shares in companies holding real property rights). 

With few exceptions, (i) individuals who are not Austrian citizens; and (ii) legal persons, either having their registered seat outside of Austria, or having their registered seat in Austria, but being ultimately controlled by non-Austrian citizens or legal entities domiciled abroad, are generally considered as foreign investors under the applicable land transfer regulations. EU and EEA persons and corporate bodies have the same status as domestic persons and corporate bodies. For certain federal provinces, the creation of an Austrian holding structure is sufficient to fulfil the requirements of the applicable land transfer regulations. 

If the necessary approval is not obtained, a transfer of ownership cannot be registered in the respective land register (in case of asset deals) and the contemplated transaction may not be carried out (as real estate ownership is generally obtained only through registration of the new owner in the land register). Furthermore, administrative fines may be imposed for violations of the applicable land transfer provisions, and the validity of the underlying contracts may be impacted.

Foreign Exchange Regulations

FDI transactions in Austrian target companies which reach or exceed EUR500,000 (or the accumulated equivalent in euro per transaction) are to be reported by the Austrian target company to the Austrian National Bank (Österreichische Nationalbank) for statistical purposes. The report must be made at the latest on the 15th of the month following the completion of the FDI transaction. A reportable transaction comprises all FDI transactions relating to that transaction that take place within a reporting period and that involve either a change in equity relationships, a distribution of profits, or an acquisition/sale of equity between a reporting resident and a non-resident, even if that transaction is settled in several individual steps or, if applicable, is split into several payment tranches.

Corporations are subject to unlimited corporate income taxation (“unlimited” meaning worldwide taxation) if they have their seat or place of effective management in Austria. Other, non-resident corporations are only taxed on income that has a particular nexus to Austria (eg, a business operation, dividends paid from Austrian corporations, or payments made on patents or trade marks registered in Austria). The corporate income tax rate is 25%. In 2019 and again in 2020, two different government coalitions expressed the intention to reduce the corporate income tax rate to 21% as of 2023. Partnerships are treated as tax transparent; their income is attributed to the respective partners. 

In addition to corporate income tax, some other taxes are important for business activities in Austria, eg, value added tax (VAT), real estate transfer tax, or stamp duties. For such taxes, partnerships are also recognised as legal entities and therefore as taxpayers. While VAT with its standard rate at 20% is usually refunded to or credited to businesses, this is not (fully) the case in the context of the banking or insurance sector.


Dividends (ie, profit distributions) to foreign investors are subject to a 25% withholding tax if received by corporations and 27.5% if received by other recipients. Most tax treaties (Austria has concluded more than 90) reduce the withholding tax rate to 15% or 10%, or even less for corporations holding a certain stake (eg, for Germany and the US the withholding tax rate is 15% or, if at least a 10% stake is held, 5%; for the UK the withholding tax rate is 10% or, if at least a 10% stake is held, 0%). Reductions of the Austrian withholding tax rate apply also to various Middle Eastern countries (eg, there is no withholding tax for the UAE).

Tax Treaty Relief

Tax treaty relief can be obtained as relief-at-source or a refund. Relief-at-source is possible if a tax residence certificate is provided to the distributing corporation stating that a substance requirement is fulfilled by the recipient. Within the EU, there is no Austrian taxation of outbound dividends if at least a 10% stake is held for at least one year. The tax treaties with the UK and with Switzerland try to accomplish the same tax treatment. Measures against treaty shopping and, generally, against tax avoidance are implemented in Austria also based on the EU Anti-Tax Avoidance Directive ((EU) 2016/1164 – ATAD). In summary, substance is needed for relief-at-source; for a refund, substance may not be required if an underlying business purpose exists. Furthermore, under the Multilateral Instrument (MLI), Austria has opted for the Principal Purpose Test (PPT).

Interest Payments

Interest payments made by Austrian borrowers are generally not subject to withholding taxation, not even regarding interest linked to a loan secured by Austrian real estate. Generally, withholding tax may apply at a rate of 25% or 27.5% in the context of publicly offered securities, if the paying agent is in Austria. If the recipient is a corporation, such withholding tax does not arise if an exemption certificate is provided.

Capital Distributions

In Austria, it can be freely chosen to distribute capital if sufficient amounts are shown on the relevant capital account; capital distributions are free of any withholding tax and, to the extent that they do not exceed the relevant tax basis, they are also free of capital gains taxation.

Generally, tax planning measures are only accepted under Austrian tax law if in line with EU ATAD and the MLI. Therefore, a chosen structure or arrangement must have a business purpose and reflect economic reality. Against this background, a common tax measure when acquiring Austrian targets is to use or establish an Austrian acquisition company that debt-finances the acquisition and subsequently forms a tax group with the target. This allows for a tax effective debt push-down (interest payments on the acquisition financing offset the target’s profits).

Austria has a rather broad participation exemption regime that exempts dividends and capital gains from taxation in Austria if at least a 10% stake in foreign corporations is held for at least one year. The exemption may not apply if the foreign corporation has only passive income which is taxed at less than half the Austrian corporate income tax rate in the country in which such foreign corporation is tax resident. The combination of participation exemption and a large tax treaty network make Austria an attractive country for holding companies. The reduction of the Austrian tax base by interest payments or royalty payments is generally not possible if the recipient of such payments is a related party and taxed at a low rate (less than 10%). Austria also allows for the carrying forward of losses and, in certain cases, for a limited carrying backwards. However, losses carried forward may only offset up to 75% of the profits of a year (ie, at least 25% will be taxable). In the course of reorganisations and of acquisitions carried forward, losses may vanish. In a tax group, losses of foreign group companies can offset Austrian profits to a certain extent.

Generally, Austrian tax law does not provide for debt-equity ratios, but group internal loans might be treated as equity. Furthermore, as mentioned, interest payments are not deductible if the related-party recipient is taxed at less than 10%. Finally, legislation has implemented an interest barrier regime as of 2021. The interest barrier results in the non-deductibility of an interest surplus exceeding 30% of the corporation’s EBITDA. However, the interest barrier does not apply if the debt leverage in Austria is not higher than in the total group, to the first EUR3 million of interest surplus, or to standalone corporations.

Capital gains relating to participations in Austrian companies of at least 1% (held at any time five years prior to the disposition) are taxable in Austria unless a double-taxation treaty disallows taxation. Other Austrian assets may only attract capital gains taxation if they are Austrian real estate or if held through a permanent establishment.

Austria has a general anti-avoidance rule (Anti-Missbrauchsbestimmung) and the substance-over-form concept also applies by statutory rule. Furthermore, the arm’s-length principle is standard. In addition, as already noted in 9.2 Withholding Taxes on Dividends, Interest, Etc, Austria has adopted the measures of the EU ATAD and of the MLI. Furthermore, the Austrian Corporate Income Tax Act (Körperschaftssteuergesetz) contains a special anti-evasion provision relating to the above-described international participation exemption.

In addition, the transfer pricing rules of the OECD are recognised in Austria.

The Austrian rules on controlled foreign corporations or CFC rules (Hinzurechnungsbesteuerung) attribute low-taxed passive income earned by a controlled foreign entity to an Austrian parent company, and these rules apply if passive income exceeds one third of the CFC’s annual income. Finally, in Austria rules exist for hybrid mismatches.

Collective Bargaining Agreements

In addition to EU laws, Austrian federal statutes govern the majority of employment and labour law regulations, most of which are mandatory in nature. In addition, almost all employers in the private sector are subject to collective bargaining agreements or CBAs (Kollektivverträge). CBAs are usually negotiated and concluded on an annual basis between the competent divisions of the Employee Union and the Chamber of Commerce, ie, the bodies representing the interests of employees and businesses, for a specific sector (eg, trade, industry, IT). The provisions of the CBAs are mandatory and cannot be amended to the detriment of an employee.

Works Councils

A works council may be elected in every business in which at least five employees are permanently employed. Austrian law distinguishes between two different types of employees: (i) white-collar employees (Angestellte), essentially performing office work, commercial activities (eg, sales, marketing, finance), and complex activities of a non-commercial nature (eg, consultant, IT specialist, medical staff); and (ii) blue-collar workers (Arbeiter), who  work in a crafts trade (eg, butcher, waiter, mechanic). Blue-collar workers and white-collar employees may have separate works councils. There is no obligation on the employer to establish a works council, rather, it is a right of the workforce. On a company level, shop agreements are concluded between the works council and the company regarding certain topics specified by law.

In Austria, employees are entitled to a minimum salary which is generally determined by the applicable CBA. If no CBA applies, an adequate salary shall be paid. It is common for employees to receive 14 salaries per year. Although not stipulated by law, almost every CBA contains an entitlement to holiday and Christmas remuneration (one gross monthly salary each), which are paid out with substantial tax benefits. The salary is usually paid in arrears at the end of each month. 

Employees whose employment started before January 2003 are probably subject to an old severance system (unless they switched to the new system by agreement). Such employees have direct entitlement to a statutory severance payment from the employer upon termination of their employment relationship. The amount ranges between two and 12 monthly remunerations, depending on the duration of employment and the grounds of termination. 

In addition, employees may be entitled to mandatory premiums, jubilee grants, or other benefits under the applicable CBA. The employer can also voluntarily grant remuneration in the form of variable components (eg, bonuses or commissions, premiums, equity compensation, pension contributions, retirement benefits, benefits in kind etc), which is common practice in Austria. 

Austrian employees are automatically covered by the social insurance system, which includes health, accident, unemployment, and pension insurance.

Where an acquisition or investment transaction constitutes a business transfer within the meaning of the EU Acquired Rights Directive (2001/23/EC), implemented into Austrian law in Section 3 of the Employment Contract Law Amendment Act (Arbeitsvertragsrechts-Anpassungsgesetz), all employment agreements of employees of such business or business part automatically transfer to the purchaser, by operation of law. 

Generally, employees affected by a business transfer are not entitled to object to the transfer of their employment; such right only exists in very limited circumstances. However, employees do have an extraordinary termination right where their working conditions are considerably worse after the business transfer. In addition, the termination of employees shortly prior to, or after, the business transfer is not permitted if such business transfer is the main reason for such termination. However, personal or economic reasons may justify a termination, triggering statutory and contractual termination entitlements. 

The works council (or, if no works council is established, in some cases the individual employee) is required to be informed and, at the works council’s (or employees') request, consulted regarding an envisaged business transfer. However, in general there is no legal possibility for the works council to prevent or delay a transaction. In the case of negative effects for considerable parts of the workforce, the works council may request the conclusion of a social plan, with the aim of mitigating the impact of the business transfer on the workforce.

The Austrian FDI regime also applies to critical sectors in which intellectual property (eg, patents for medicinal products or vaccines), know-how or sensitive information (eg, personal data) play an important role. The critical sectors are listed in the Annex to the InvKG (see 1.2 Regulatory Framework for FDI). 

Austrian law provides strong protection for intellectual property rights. Certain intellectual property rights (eg, patents, designs, trade marks) come into existence upon registration with the competent registration authority, other intellectual property rights (such as copyrights) come into existence upon creation and there is no registration of these intellectual property rights. Infringements of intellectual property rights can be pursued before the civil courts and can also trigger criminal liability. 

Under Austrian law, there are no exceptions for the protection of intellectual property rights in or concerning certain sectors. Furthermore, the enforcement of intellectual property rights does not depend on the sector. If there are exclusions from protectability, such exclusions are of a general nature and do not depend on or relate to specific sectors. Austrian patent law requires certain compulsory licences, but again, these do not depend on or relate to specific sectors.

The GDPR and Austrian Data Protection Act

The General Data Protection Regulation (GDPR) provides a uniform legal framework within the EU in the field of general data protection law which is directly valid and applicable in each member state. The Austrian Data Protection Act or DPA (Datenschutzgesetz) supplements the GDPR. The GDPR comprises rules on the processing of personal data, such as the principles of processing, the rights of the data subjects, and the responsibilities of the controllers and processors. Personal data is any information that relates to an identified or identifiable natural person. A natural person is deemed identifiable if he or she can be identified directly or indirectly, for example, by means of a name or an identification number (eg, tax identification number, social security number and account number).


The GDPR is applicable to the processing of personal data by controllers and processors with an establishment in the EU, irrespective of whether the actual processing is carried out inside or outside the EU. The ECJ ruled that “any real and effective activity – even a minimal one – being exercised through stable arrangements” may suffice to qualify as an establishment. However, the GDPR also applies when controllers and processors are not established in the EU but process personal data of individuals who are within the EU. Such processing activities must relate to the offering of goods or services for payment or for free to these individuals (eg, via a website targeting EU markets) or to the monitoring of the behaviour of these persons, as long as this behaviour takes place in the EU. According to recital 23 of the GDPR, the mere accessibility of a website in the EU is not sufficient to ascertain the intention that a company envisages to target EU markets.

Non-EU data controllers and data processors that fall under the scope of the GDPR are obliged to appoint a representative in the EU, who will serve as the point of contact for inquiries by national data privacy authorities. The responsibility and liability remain with the non-EU organisation.

Fines and compensation

In Austria, the Data Protection Authority (Datenschutzbehörde) can or must assess fines for specific data protection violations in accordance with the GDPR. The fines must be effective, proportionate, and dissuasive for each individual case. For the decision of whether and what level of penalty can be assessed, the authorities keep a statutory catalogue of criteria which they must consider for their decision. Among others, intentional infringement, a failure to take measures to mitigate the damage which occurred, or lack of collaboration with the authorities can increase the penalties.

Non-compliance with the principles for data processing activities, as set out in the GDPR, is subject to fines of up to the higher of EUR20 million or 4% of the annual worldwide turnover of the company. A sanctionable situation can be revealed through proactive inspection activities conducted by the authorities, by an unsatisfied employee or customer, through the company making a self-denunciation, or by the press through investigative journalism. Moreover, individuals may claim compensation if a company has infringed the GDPR and such individuals have suffered material damages, such as financial loss or non-material damages, such as reputational loss, or psychological distress.

There are no further significant issues in this jurisdiction.


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Trends and Developments


BINDER GRÖSSWANG Rechtsanwälte GmbH has been ranked among the leading commercial law firms in Austria for more than 50 years. The firm focuses on international matters, especially M&A and financing transactions, major arbitration and litigation, and advises on matters concerning corporate, banking, restructuring and insolvency, public procurement, IP, competition, and real estate law. Binder Grösswang’s teams in Vienna and Innsbruck comprise a total of more than 170 individuals, including approximately 100 lawyers. Binder Grösswang’s strategy is based on outstanding professional expertise combined with teamwork. The firm has gained an excellent reputation for its sophisticated and business-oriented approach and individually tailored solutions. Its more than 100 highly specialised legal experts are widely connected and rank among the best in their various practice areas.

Austria’sEconomy in 2020 – a Promising Outlook That Went Sour

The year 2020 started with modest, but stable economic growth for Austria, right before the COVID-19 pandemic hit Austria hard. In fact, the three years preceding the year 2020 showed GDP growth of 2.4% (2017), 2.6% (2018) and 1.4% (2019). Observing the public health system of the northern provinces of Italy collapse in early March, Austria – where the first COVID-19 cases were confirmed on 25 February 2020 – acted swiftly and decisively to avoid similar scenarios. Strict travel restrictions, a prohibition of public events and social distancing obligations were put in place on 10 March 2020, followed by the closing of schools and universities, shops, restaurants, bars, and a general hard lockdown in mid-March.

The economic consequences were dramatic: Austria’s GDP for Q2 2020slid by about 14.1%, and from February to April 2020 the production index dropped from 102.9 points to 87.8 points and the economic sentiment indicator fell from a strong 103.2 points to 61.9 points. From February to June 2020, unemployment surged from 4.5% to 5.9%. Despite some recovery and easing of restrictions during the summer, the second wave came with a new set of restrictions from mid-September, with a light lockdown from the beginning until mid-November and a fully fledged hard lockdown – with occasional interruptions – until mid-January 2021. The economic consequences of the COVID-19 pandemic will loom large for years to come, with only gradual recovery of the GDP (estimated at 3.6%, 4.0% and 2.2% for 2021, 2022 and 2023, respectively). 

Joining ranks with other countries and to avoid the collapse of the Austrian economy, the Austrian government released unprecedented massive state aid packages, including direct subsidies (eg, compensation of revenues) to tax and social security cuts and relief (eg, stopping certain debt collection measures) and introduced subsidised short-time working schemes (Kurzarbeit). As a consequence, Austria is facing a significant budget deficit of an estimated 9.6% of GDP with a government debt ratio of about 84.2% in 2020 (as compared to a budget plus of about 0.7% and a government debt ratio of about 70.5% in 2019). 

The COVID-19 pandemic had a modest impact on M&A transactions, at least in H1 2020: The number of M&A transactions fell from 153 to 133; however, total deal volume increased from EUR4.4 billion to EUR8.2 billion, mainly due to four blockbuster deals – the acquisition of 39% of Borealis by OMV (increasing its share to 75%) from Mubadala alone accounts for EUR4.2 billion. The number of M&A transactions is generally expected to increase next year, especially distressed M&A transactions if government support fades out beginning to mid-2021. 

Digitalisation of Legal Transactions out of Necessity

Social distancing measures, which have been in force (in one way or another) since mid-March 2020, have had a significant impact on legal transactions usually involving personal meetings. Consequently, the government of Austria was quick to implement a set of laws and regulations aimed to facilitate meetings via alternative communication methods. In particular, civil, criminal, and administrative procedural law was amended to include the possibility of conducting mandatory oral court hearings via videoconferencing technology. With respect to physical hearings, social distancing rules and obligations were put in place (ie,wearing of protective masks and keeping a distance between participants). Furthermore, the interaction between parties, courts, and the authorities has become more digital than it used to be. Certain appointments, which could previously only be held in person, may now be replaced by submitting respective documents (only), making certain legal procedures less time-consuming for the parties.  

Austrian corporations have also experienced a digital renaissance, especially with regard to holding corporate governance meetings via methods that were previously considered legally impossible or at least cumbersome. Meetings of shareholders, supervisory boards, and management boards are only a few examples of mandatory corporate meetings, which can now be held easily via video or telephone conference. Resolutions adopted in the course of such meetings in absentia are legally permissible. In addition, Austrian notaries were authorised to legalise signatures in online meetings, a procedure saving time and money on travel or (often tedious) compliance with form requirements. 

A New Company Form on the Horizon

Another long-contemplated initiative by the Austrian government, which will hopefully be propelled by the COVID-19-fuelled desire to kick-start business activity in Austria, is the introduction of a new form of private limited liability company (“Austrian Limited”). The Austrian Limited – currently subject to political and public discourse – is expected to feature lower initial share capital, an easier and less formal (digital) establishment procedure, lean “digitalised” corporate governance, and less complex possibilities for employee participation programmes. 

A main topic on the agenda is the reduction of the minimum share capital requirements from EUR35,000 down to EUR5,000. Current regulations regarding contributions in kind by a shareholder instead of cash (eg, real estate, securities, or sweat capital) are to be loosened, to provide more flexibility while maintaining a sufficient level of creditor security. Furthermore, most of the incorporation procedure will be performed digitally (not least, also due to social distancing measures enacted in the wake of the COVID-19 pandemic). The option of concluding the articles of association in English or German language is also to be included. Adopting circular resolutions (in English language) by using widespread digital signing software (eg, HelloSign or DocuSign) will also be made possible. As start-ups are regularly unable to offer adequate remuneration to their employees, a purely economic participation is often sought, excluding rights to influence the company’s direct business (eg, shareholder voting rights). Therefore, the introduction of non-voting shares is being considered, with which only a minimum of shareholder rights will be associated (eg, the right to be provided with a copy of the annual financial statements). The corporate governance structure, including one management body and the shareholders’ general meeting, is to be kept as simple as possible which, in turn, will lower running costs. 

However, some critics have raised issues with the implementation of the new “Austrian Limited” with regard to Austria’s legal framework. In particular, the courts, usually responsible for reviewing the articles of association for possible legal faults or inconsistencies with legal requirements, would no longer complete an examination in advance of the company being incorporated and fully functional. An “Austrian Limited”, incorporated with irreparable defects, would have to be deleted after its incorporation. Furthermore, bearer shares are being considered for the new company type. For Austrian private companies this would be a novelty, but it has been received critically in terms of transparency requirements.

A Trend Towards Restrictions

On 25 July 2020, an entirely new set of rules on FDI came into force. The so-called Investment Control Act (Investitionskontrollgesetz – InvKG) significantly expands the scope of the Austrian FDI regime and obliges foreign persons (non-EU/EEA/Swiss investors) to seek prior authorisation from the Austrian Federal Minister for Digital and Economic Affairs for certain investments in Austrian entities or assets. Investments are considered “critical” if the Austrian target operates in a field of business mentioned in the Annex to the InvKG. The Annex contains two lists of activities with a very broad scope of application (eg, operation of systems that guarantee the data sovereignty of the Republic of Austria, critical infrastructure, critical technology, dual-use goods, security of supply of critical resources, access to sensitive information). In turn, this leaves the parties and their legal advisers with a significant amount of legal uncertainty.  

The timeline for such authorisation proceedings is approximately two months (EU screening mechanism, thereafter one month, being the so-called “Phase I”) and may extend to an additional two months (in the case of “Phase II” proceedings). A substantive test is performed to assess whether the foreign direct investment poses a threat to Austria’s security or public order. The Austrian authority may impose commitments or, if the threat to security or public order cannot be mitigated with commitments, may even block the acquisition. The Austrian Federal Ministry for Digital and Economic Affairs does not shy away from using its powers on FDI restrictions, as was observed by legal advisers in Austria’s first-ever Phase II initiated procedure. The case was eventually cleared with commitments (in particular, supply obligations). 

From a practical perspective, the new FDI rules significantly impact the M&A process whenever foreign persons acquire voting rights of at least 10% or 25% (depending on the sector involved) in an Austrian target operating in a critical sector. 


The year 2020 started with Austria’s economy poised to show modest, stable growth. Hit hard by the COVID-19 pandemic in Q1 2020, the government struggled to keep the country's economy alive and did so by releasing unprecedented massive state aid packages. The full extent of the damage to Austria’s economy remains to be seen, probably at the beginning or mid-2021 when state aid fades out. It is expected that not all businesses based or operating in Austria will survive the economic consequences of COVID-19. 

For years, lawyers have wanted the legislator to facilitate legal interactions with the help of digital means. Born out of necessity at the beginning of the COVID-19 pandemic, improvements such as the digitalisation of mandatory corporate meetings and improved digital accessibility of authorities and courts were quickly implemented. Such improvements may have a long-lasting positive effect on the way legal transactions are conducted in Austria – provided that the government does not let such measures expire. 

Very interesting from a corporate law perspective is the government’s plan to introduce a new form of limited liability company. Clearly inspired by the “limited” liability companies of other jurisdictions that require a lower share capital and offer more flexibility as compared to the Austrian GmbH (which is the smallest form of a limited liability company available in Austria), the new company form is supposed to boost the start-up sector, in particular. Currently subject to political and public debate, the Austrian Limited may fill a niche largely neglected over the past years of corporate law legislation. 

Other measures put in place in 2020 seek to restrict (uncontrolled) foreign direct investments in Austria. It became evident in Austria’s first-ever Phase II initiated procedure that the government considers the regulations an effective tool to control (and potentially limit) FDI in certain sectors. Foreign investors would be well advised to keep this development in mind. 


Sterngasse 13
1010 Vienna

+43 1 534 80

+43 1 534 80 8
Author Business Card

Law and Practice


BINDER GRÖSSWANG Rechtsanwälte GmbH has been ranked among the leading commercial law firms in Austria for more than 50 years. The firm focuses on international matters, especially M&A and financing transactions, major arbitration and litigation, and advises on matters concerning corporate, banking, restructuring and insolvency, public procurement, IP, competition, and real estate law. Binder Grösswang’s teams in Vienna and Innsbruck comprise a total of more than 170 individuals, including approximately 100 lawyers. Binder Grösswang’s strategy is based on outstanding professional expertise combined with teamwork. The firm has gained an excellent reputation for its sophisticated and business-oriented approach and individually tailored solutions. Its more than 100 highly specialised legal experts are widely connected and rank among the best in their various practice areas.

Trends and Development


BINDER GRÖSSWANG Rechtsanwälte GmbH has been ranked among the leading commercial law firms in Austria for more than 50 years. The firm focuses on international matters, especially M&A and financing transactions, major arbitration and litigation, and advises on matters concerning corporate, banking, restructuring and insolvency, public procurement, IP, competition, and real estate law. Binder Grösswang’s teams in Vienna and Innsbruck comprise a total of more than 170 individuals, including approximately 100 lawyers. Binder Grösswang’s strategy is based on outstanding professional expertise combined with teamwork. The firm has gained an excellent reputation for its sophisticated and business-oriented approach and individually tailored solutions. Its more than 100 highly specialised legal experts are widely connected and rank among the best in their various practice areas.

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