AUSTRIA Trends and Developments Contributed by: Raphael Holzinger, Julia Hochreiter, Matthias Jancura and Claudia Synek, Grant Thornton Austria
Current Economic, Political and Legislative Factors Relevant to Transfer Pricing in Austria Digitalisation is fundamentally changing the labour market in Austria. Digital skills are increas - ingly in demand. Flexible working models are gaining in importance. During the past couple of years, inflation in Aus - tria has risen drastically, mainly as a result of the COVID-19 pandemic and its economic impact as well as the crisis in Ukraine. The inflation forecast shows positive developments for 2025 and further. The inflation rate fell from 4.5% in June 2024 to 2.3% in November 2024. Experts expect prices to stabilise further. An inflation rate of 2.4% is forecast for 2025. It is expected to fall to 2.0% by 2027. Austria’s economic growth remains challeng - ing, with a moderate growth of 0.8% expected in 2025. The UniCredit Bank Austria Purchasing Manager Index rose to 44.5 points in Novem - ber 2024. This indicates a slight improvement in economic activity. European Central Bank (ECB) policy continues to influence inflation and price stability in Austria. Energy prices and wages remain important fac - tors that need to be monitored. Investment climate and corporate outlook Austria’s investment climate remains cautiously optimistic despite challenges. The OECD pre - dicts economic growth of 0.9% for 2025. This indicates a slow recovery. The corporate outlook is characterised by caution. Different sectors are showing different trends, as follows. • Construction industry and property market – the construction industry is gaining through infrastructure projects and residential con - struction but is still under economic pressure.
The property market remains stable despite regional differences. Experts expect moderate development. The general economic situation and interest rate policy have a strong influ - ence on these sectors. • Industrial sector and production develop - ment – moderate investment in digitalisation and automation is expected in the industrial sector. Production is proving challenging, with a decline of 3.7% in the third quarter of 2024. Companies are increasingly focusing on increasing efficiency, as this is how they want to remain competitive. • Start-up ecosystem and innovation – Aus - tria’s start-up ecosystem is growing stead - ily. Government funding programmes and venture capital support innovative companies. The focus is on greentech, fintech and digital health. New political environment In Austria, there have been a lot of political changes during the past couple of months due to a newly elected Parliament and therefore a newly elected Chancellor. The new government presented its government programme in March, which included various tax-related areas. In this regard, the following areas are set to be covered in the upcoming legislative period. • Efficiency within the local tax authorities – the attractiveness of the tax authorities is to be enhanced by enforcing the use of digitalisa - tion, more HR, and the use of AI. • Simplification of tax law – the federal gov - ernment is committed to simplifying the Austrian Income Tax Act, payroll accounting and employee tax assessment by reducing bureaucracy and digitalising payroll account - ing as well as employee tax assessment. • Non-wage labour costs are set to be reduced in order to strengthen competitiveness.
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