Lyla Lindsey
Austria has a high cost of living, with prices 15% above the EU average. This is reflected in the cost of goods and services, which are subject to a 20% value-added tax (VAT). In 2024, Austria's economy suffered from high inflation, declining real wages, and a slump in investment, leading to a projected second consecutive year of recession. Despite this, some sectors, such as the apparel and footwear markets, continued to demonstrate resilience and even growth in some areas. The country's business landscape is heavily influenced by political parties and business associations, with the Federal Economic Chamber (WKO) and the Federation of Austrian Industries being the most prominent.
| Characteristics | Values |
|---|---|
| Recession | 2024 is the second consecutive year of recession in Austria |
| GDP | Expected to decline by 0.6% in 2024 |
| Inflation | High |
| Investment | Expected to recover in 2025 |
| Exports | Lower than expected |
| Private consumption | Close to zero |
| Real wages | Increasing |
| Unemployment rate | Expected to increase to 5.3% in 2024 |
| Cost of living | Among the highest 30% in the EU |
| Average hourly labour cost | $41.73 in 2022 |
| Value-added tax | 20% on most products and services |
| Advertising spending | $6.9 billion in 2022 |
| Digital advertising tax | 5% |
| Business associations | Federal Economic Chamber (WKO), Federation of Austrian Industries |
| Popular American artists | P!nk, Anastacia, Nelly Furtado, Timbaland, Justin Timberlake, The Black Eyed Peas |
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What You'll Learn
SPAR Austria Group's sales revenue
SPAR Austria Group has reported steady growth in sales revenue over the past few years. In 2023, the company achieved a gross retail turnover of €9.88 billion, with a market share of 36.8% in Austria. This marked a significant increase from their sales in 2020, which totalled €8.3 billion, already making them the market leader in the Austrian grocery trade.
The SPAR Austria Group's impressive performance continued into 2024, with total sales revenue reaching €21.4 billion ($23.3 billion), representing a 4.5% year-on-year growth. This growth was driven by strong performance across all markets, including Austria, Northern Italy, Hungary, Slovenia, and Croatia. In Austria alone, food retail sales exceeded €10 billion for the first time, with SPAR managing a network of 1,497 stores and employing 52,000 people.
The company's pre-tax earnings (EBT) also demonstrated positive growth, hitting €255 million in fiscal 2024, resulting in an EBT margin of 1.7%. This growth can be attributed to SPAR's focus on continuous development, particularly in the area of fresh products and SPAR Own Brands. The company has developed over 7,500 own-brand products, contributing to more than 40% of its food retail sales.
Looking ahead, SPAR Austria has earmarked €900 million for investments in infrastructure and technology enhancements in 2025. This includes investments in return machine installations and software updates to comply with new regulations on single-use beverage containers. SPAR's commitment to innovation and customer satisfaction positions them well to maintain their market leadership and deliver exceptional service to their customers.
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Advertising taxes
Advertising tax in Austria must be paid on advertising services rendered for payment by an advertiser. This includes any promotion of the benefits of services offered on the market that aims to have a direct or indirect marketing effect. The advertising must take place within Austria or involve foreign adverts intended for an Austrian audience.
The taxable party is the party that is entitled to a fee in return for performing an advertising service. This party must calculate and pay the tax themselves. The tax calculation is based on the fee within the meaning of section 4 of the Umsatzsteuergesetz 1994 (UStG 1994) that the client is charged by the party receiving the order. The tax becomes chargeable at the end of the month in which the taxable service was rendered and must be paid by the 15th day of the second month after the tax became chargeable. The taxable party must also submit an annual tax declaration for the previous year electronically three months after the end of the marketing year.
Entrepreneurs who calculate their revenue in accordance with section 17 of the UStG (actual taxation) must calculate tax in accordance with monies received. They are also entitled to deduct Austrian input VAT, as long as it does not result from goods or services directly linked to VAT-exempt sales. To be entitled to this deduction, the entrepreneur must obtain an invoice from the supplier that fulfils certain formal requirements.
In addition to the standard advertising tax, Austria also has a digital services tax that came into effect on 1 January 2020 with the publication of the Digital Tax Act. This tax applies to large multinational companies with a worldwide revenue of at least EUR 750 million and a yearly domestic revenue of at least EUR 25 million from providing online advertising services in Austria. The tax rate for this digital services tax is 5%.
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Business associations
Austria is a well-developed market economy with a high standard of living and a relatively small market. Many Austrian business and consumer trends originate in Germany, so it can be a good strategy to establish a US franchise there first before expanding into Austria.
Austria has a range of business associations that support Austrian businesses and those looking to invest in the country. These include:
- Austrian Federal Economic Chamber (WKO): With over 540,000 member companies across sectors, the WKO is a semi-official organisation that all licensed Austrian businesses must join and pay membership fees to. It is associated with Austria's centre-right People's Party (OeVP) and advises the government on business-related legislation. It acts as the official representative of Austrian businesses for wage negotiations with labour unions and has a broad scope of activity, including formulating business certification requirements and export promotion.
- Federation of Austrian Industries (IV): The IV is the voluntary and independent interest group of the Austrian manufacturing industry. With a membership of over 4,400 industrial companies, the IV represents 80% of manufacturing in Austria.
- Austrian Franchise Association: Maintains an informative website and co-organises seminars and trade shows such as the Franchise Expo in Frankfurt.
- Austrian Business Agency (ABA): The Austrian government's official investment promotion agency, offering free information and expert advice on all subjects related to opening an office or production facility in Austria.
- American Chamber of Commerce in Austria (AmCham): AmCham has a membership of approximately 300 companies, including around 100 US subsidiaries doing business in Austria.
- Austrian Regulatory Authority for Broadcasting and Telecommunications: This authority governs federal and EU regulations, including the EU General Data Protection Regulation (GDPR), which has governed the EU's data protection policy since May 2018.
- Federal Association of Commercial Agents: This association has an online database where businesses can search for a sales representative in Austria.
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Sales of cars
In recent years, the Austrian car market has seen a mix of positive and negative growth. In 2024, the market experienced a year-on-year improvement, with 239,150 new cars finding buyers, representing an 11.2% increase. Volkswagen remained the most popular carmaker, despite a steep year-on-year fall, with a 14.1% share. The Skoda Octavia was the best-selling vehicle for the second year in a row.
The Austrian car market started 2025 on a positive note, with June witnessing a 25.2% year-on-year improvement as 30,693 new cars hit the roads. Volkswagen continued its dominance with a significant market share of 16.7%. The Mitsubishi Space Star soared to second place overall. However, the previous month, May, saw a dip in new car sales, with a 3.9% year-on-year decline. Nevertheless, the year-to-date volume remained positive, with a 2.2% increase.
Looking at specific months, in March 2025, the Austrian car market experienced a small setback, with a 2.3% year-on-year drop in sales, resulting in 25,701 new car purchases. Volkswagen retained its top position, albeit with a 2.9% decline in sales. The Mitsubishi ASX, a rebadged Renault Captur, made its way into the Austrian Top 10. February witnessed a rebound, with an 11.8% year-on-year improvement and 20,010 new car sales. Volkswagen strengthened its lead with a substantial 24.7% increase in sales.
The month of January 2025 saw a weak start for the Austrian new car market, with a 6.9% year-on-year decline in sales, totalling 17,552 units. Despite this, Volkswagen maintained its position as the leading brand, although it experienced a steep fall in sales, dropping to a 13.4% share. The VW Golf was the most popular vehicle in the country during this month.
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Sales of clothing
Clothing sales in Austria are influenced by various factors, including economic conditions, consumer behaviour, and seasonal trends. While there are no set periods for sales, with retailers having the discretion to hold sales at any time of the year, certain patterns and trends can be observed.
Typically, winter sales in Austria commence in late December or early January, often starting on the 26th of December, a bank holiday known as Boxing Day. The winter sales period usually extends until the end of January or early February. During this time, shoppers can take advantage of discounted prices on a range of clothing items to update their winter wardrobes.
On the other hand, summer sales in Austria generally kick off in late June or early July and last throughout most of July. This timing aligns with the seasonal demand for summer apparel, allowing consumers to purchase clothing suitable for the warmer months at reduced prices.
In recent years, economic factors have impacted the clothing sales landscape in Austria. High inflation has influenced consumer behaviour, leading to a cautious approach to spending. Despite this, certain sectors within the clothing industry have demonstrated resilience. For example, in 2024, the retail value sales of menswear and womenswear in Austria exhibited modest increases, although these were largely driven by price hikes rather than significant growth in consumer demand.
Additionally, specific clothing categories have shown mixed performance. Jeans sales in Austria, for instance, experienced a 2% growth in retail value in 2024, while retail volume declined by 1%. Similarly, hosiery sales recorded a modest uplift in retail value, but a significant drop in retail volume, indicating that shoppers were selective in their purchases due to economic challenges.
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Frequently asked questions
The Austrian economy is currently in recession, with a projected GDP decline of 0.6% in 2024. High inflation, declining real wages, and a slump in investment have contributed to this downturn. However, there are signs of improvement, with GDP growth expected to pick up to 1% in 2025 and 1.4% in 2026.
The recession has led to a decrease in consumer confidence and purchasing power. This has resulted in a general decline in retail volume sales across various sectors, including apparel, footwear, and appliances. However, certain sectors, such as sportswear and small cooking appliances, have demonstrated resilience or continued growth in value sales.
Austria has a relatively high cost of living and high labour costs compared to other EU countries. The value-added tax (VAT) on most products and services is 20%, but some items, like books and food products, are taxed at a lower rate of 10%. Special taxes are levied on luxury goods, fuel, drinks, and tobacco. Additionally, digital advertising in Austria is subject to a 5% tax.
The Federal Economic Chamber (WKO) and the Federation of Austrian Industries are two of the most important business associations in Austria. The WKO is a semi-official organisation that all licensed Austrian businesses must join, while membership in the Federation of Austrian Industries is voluntary. These organisations represent the interests of businesses and industries and are associated with political parties.
