10 Things You’ll Need To Know To Successfully Expand Your Startup To Austria

Austria’s capital Vienna is the second most liveable city in the world, it is home to a growing number of startups and with a large number of government grants available for new businesses, politicians aim to increase the country’s standing as a startup hotspot (#Gruenderland) – great preconditions to expand your business into the “heart of Europe”!

But let’s get something straight: without so much as a hint on what you will really need to know before planning to expand your venture to Austria, it’s going to be hard. So we’ll share some tips to make your life & business start easier:

#1 Find Your Strategy

Ok, that goes for founding a startup in general but we cannot stress it enough. First off, you’re going to need a business plan – and yes, you might already have one when you’re thinking of expanding. But settling down in a new country is like opening a new business. So you’ll need a business plan that not only clarifies what you’re actually going to do and where your money will come from but also one that makes the basis to convince potential investors and keeps track of the goals you want to reach. And don’t just stop at the current situation: plan ahead for possibilities to be prepared.

#2 Do Your Market Research

Again, this sounds obvious but could be another nail in your coffin if not taken seriously enough.

Focus on market size and potential, market trends and above all, a detailed analysis of your competitors – the better you know them the better you can distinguish yourself from them and prove to your clients why they should go with your services. Some other essential questions to figure out before you expand your business are: how high are the local labor costs, property prices, and ongoing operating costs?

#3 Build Your Network

Well, what can I say? We’re still a face-to-face folk. When in Austria, build your network as early as possible, you’ll need strong connections to get the word about your business out there, even before entering the market.

The more people you know (and I’m not talking about a “Hi, how are you?”-basis) the better. The good news? Austria isn’t all that big so chances are you’ll run into the same people at most events giving you a solid chance to deepen relationships. But make no mistake, Austrians are not like Germans – there’s a lot being said in between the lines so be careful to strike the right note.

#4 Prepare For Salary Negotiations

Austria has an increasing number of people graduating from universities, enriching the local talent pool and startup community. It’s likely you’ll find them over a job ad (or personal referrals) and once you’ve hired them it’s recommended in any case to negotiate salaries on an annual basis and not on a monthly basis.

Bonus tip: Due to valid labor laws, the annual gross salary in Austria is divided into 14 parts which are taxed at different rates (twelve installments are paid as monthly salary and taxed at the prevailing rate, the 13th & 14th salary are so-called “special payments” that enjoy a tax advantage). Hence local people are used to referring to the total annual salary in job ads and when negotiating.

#5 Get A Statutory Manager

A company in Austria definitely requires a statutory manager in contrast to other countries like Germany. Appointing this manager is the pre-requisite for obtaining a business license but not only that: apart from professional qualifications they are also required to have a valid residence permit in Austria.

But there’s reason to rejoice: “With the appropriate qualifications, the managing director under commercial law, can also serve as the statutory manager”, says Friedrich Schmidl, Director for Northern Germany at ABA-Invest in Austria in regards to startups thinking to expand.

#6 Severance Pay For All Employees

All working contracts finalized after January 1st, 2013 entitle employees to severance pay (or “Abfertigung” – not be mistaken for the negotiated termination benefits (“Abfindung”) employees receive in other countries) – even if they resign.

How much “Abfertigung” employees get? Starting in the second month of employment, employers are required to pay 1.53% of the employee’s gross salary (including bonus payments each month) into a severance payment fund. This fund manages a severance pay account for each employee and can be used by them in different ways after an employment contract has been terminated.

#7 Know The Labor Law

Austria has made an effort to increase flexibility on terminating employment relationships to fight possible periods of unemployment.

As an employer, you can end employment without stipulating the reasons for the decision, whereby the notice period depends on the length of the work relationship and the type of employment (for salaried employees anywhere from six weeks to five months). In case an employee wants to end the working relationship they have to give you at least one month’s notice, independent of the duration of their employment.

#8 Know The Commercial Law

What we already know from labor law continues in commercial law: different regulations in different countries.

In Austria, there’s a general distinction between regulated & unregulated trades that may differ from what you know of your own domestic market. Now, what are regulated trades? Carpenters, metal technology or engineering firms for example. Overall you can say trades the require a certificate of competence are regulated.

There are a couple of things you’ll need to get said certificate:

• citizenship or citizenship in an EEA/EU member state
• legal capacity (minimum age of 18)
• the lack of any reasons for exclusion (e.g. fiscal law felonies, court conviction)
• designation of the site
• an operating license

Because of all these requirements, it’s important to decide early on (before entering the Austrian market) which trade will you’ll be operating in with your company, and what steps you have to take. In case you need a more practical approach, the “Liste der reglementierten Gewerbe” (List of Regulated Trades) presents all trades requiring a certificate & the “Bundeseinheitliche Liste der freien Gewerbe” (National List of Unregulated Trades) contains all trades that don’t require a certificate. Also note that, unlike other countries, Austria does not levied trade tax.

#9 Register Your Company Car

Because Austria’s laws differ from other European countries,  you’ll have to pay NoVa, the standard fuel consumption tax (or Normverbrauchsabgabe), when first registering your company (or private) car. This tax is levied depending on the level of CO₂ emissions, and calculated as a percentage of the net vehicle value.

In case you are getting a new car, NoVA is paid directly to the seller who will then pay the tax to the respective tax office. Keep in mind that you’ll also have to pay NoVA when relocating a car to Austria!

#10 Have A Consultant That Knows Both Sides

Last but not least: you’re not in this alone.

Whether you’re opting for a lawyer, property or tax consultant – make sure they have an understanding of your home market as well as the situation in Austria. Not only will they be familiar with the specialized terminology (especially in terms of law) but you can also be sure they will provide you with the best information to help your new venture become a success!

Need more tips to expand your business to Austria? ABA – Invest in Austria is our specialist in this area & happy to assist!

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