Economy and Banking Sector of Austria

Austria is a prosperous, democratic country located in Central Europe with well-developed market economy, skilled labor force, and high standard of living.

The Austrian economy has well-balanced sectoral structure. The largest share of gross value added (GVA) is generated by private sector services: quarrying, manufacturing, electricity and water supply, trade, transportation, hotels and restaurants.

The Austrian banks generate their profit largely from traditional interest income rather than from more risky trading income. The major Austrian banks have extensive operations in Central, Eastern, and Southeastern Europe. Private banking in Austria enjoys a long and successful history.

Location Central Europe
Population (2016)8 700 471 ↑ (+0.01%)
EU Status member since 1995
Economy
National Currency EUR (Euro) since 1 January 1999
GDP 
    Nominal GDP (2015)337.2 bln EUR ↑ (+0.02%)
    Nominal GDP per Capita (2015)39 100 EUR ↑ (+0.02%)
    Real GDP Growth (2015)0.9 % ↑ (2014: 0.3 %)
Inflation Rate 
    CPI, MoM (Sep 2016)1.0 % ↑ (Aug 2016: -0.2 %)
    CPI, YoY (Sep 2016)1.1 % ↑ (Aug 2016: 0.6 %)
    CPI, Year Average (2015)0.8 % ↓ (2014: 1.5 %)
Unemployment Rate (2015)5.7 % ↑ (2014: 5.6 %)
Government Bond Yield (Sep 2016)0.15 % ↑ (Aug 2016: 0.11 %)
Credit Ratings (as of Sep 2016)
    FitchAA+ very high credit quality, outlook stable
    Moody'sAa1 high grade, outlook stable
    S&PAA+ high grade
Taxation
Withholding Tax 0.0 - 25.0%
Double Taxation Agreements 87 signed agreements
Information Exchange 
    Exchange on Request 6 signed agreements
    Automatic Exchange starts in September 2018
FATCA IGA in effect since 29 April 2014, Model 2
Banking Sector
Financial Market Development 4.5 (max 7.0) rank: 34th out of 138 countries
    Banks' Soundness 5.0 (max 7.0) rank: 65th out of 138 countries
Banking Industry Country Risk 2(1 - lowest risk, 10 - highest risk)
    Economy Risk 2
    Industry Risk 3
Deposit Guarantee Scheme 
    Maximum Protected Amount 100 000 EUR
Country Ceiling for Deposits 
    Local Currency (Euro)Aaa prime
    Foreign CurrencyAaa prime
Deposit Rates (Aug 2016, EUR)0.33 % ↑ (Jul 2016: 0.31 %)
Banking Sector Structure 
    Number of Banks661
    Recent Changes (2015) new banks: 1, closed banks: 28
    Consolidated Assets (2015) 1 056.70 bln EUR ↓ (-2.05%)
Major Banks
 Erste Group Bank AG  Hypo Alpe Adria International
 Raiffeisen Zentralbank AG  Oesterreichische Volksbanken AG
 UniCredit Bank Austria AG  BAWAG PSK
 List of Banks in Austria

Austrian Economy

National Currency

Austria joined the Euro Area on 1 January 1999.

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GDP

According to Eurostat, nominal GDP of Austria in 2015 was 337.2 bln EUR.

Austria underperforms the European Union in terms of real GDP growth with the average annual differential coming to -0.4% over the past 10 years (2005 - 2015). In 2015 real GDP growth was 0.9% which was below the Euro Area average (1.6%) and below the European Union average (1.9%). Real GDP growth in 2016 - 2021 are IMF's estimates.

Real GDP Growth in Austria.
Chart 1. Real GDP Growth in Austria. Source: Eurostat, International Monetary Fund.

In 2015, nominal GDP per capita in Austria was 39 100 EUR.

Austria has an above-average level of wealth in terms of per-capita GDP at purchasing power parity (PPP); this economic welfare indicator has, on average, exceeded that of the European Union by 22.2% over the past 10 years (2005 - 2015). GDP per capita at PPP in 2016 - 2021 are IMF's estimates.

GDP Per Capita at Purchasing Power Parity in  Austria; European Union = 100.
Chart 2. GDP Per Capita at Purchasing Power Parity in Austria; European Union = 100.
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Inflation Rate

According to Eurostat, inflation rate in Austria in 2015 expressed as annual percentages of average consumer prices was 0.8% which was above the Euro Area average (0.0%) and above the European Union average (0.0%). Inflation rates in 2016 - 2021 are IMF's estimates.

Inflation Rate in Austria.
Chart 3. Inflation Rate in Austria. Source: Eurostat, International Monetary Fund.
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Taxation in Austria

Withholding Tax

Withholding taxes are imposed at source of income and are often applied to dividends, interest, royalties, rent and similar payments. The rates of withholding tax are often reduced by double taxation agreements.

Withholding tax rates applied on payments of interest and dividends in Austria are shown in Table 1.

Dividends Interest
Natural person, resident 25.025.0
Natural person, non-resident 25.00.0
Table 1. Withholding tax rates in Austria.
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Double Taxation Agreements

Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.

Austria signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Albania
 Algeria
 Armenia
 Australia
 Azerbaijan
 Bahrain
 Barbados
 Belarus
 Belgium
 Belize
 Bosnia and Herzegovina
 Brazil
 Bulgaria
 Canada
 China
 Croatia
 Cuba
 Cyprus
 Czech Republic
 Denmark
 Egypt
 Estonia
 Finland
 France
 Georgia
 Germany
 Greece
 Hong Kong
 Hungary
 India
 Indonesia
 Iran, Islamic Republic of
 Ireland
 Israel
 Italy
 Japan
 Kazakhstan
 Korea, Republic of
 Kuwait
 Kyrgyzstan
 Latvia
 Liechtenstein
 Lithuania
 Luxembourg
 Macedonia
 Malaysia
 Malta
 Mexico
 Moldova, Republic of
 Mongolia
 Morocco
 Nepal
 Netherlands
 New Zealand
 Norway
 Pakistan
 Philippines
 Poland
 Portugal
 Qatar
 Romania
 Russian Federation
 San Marino
 Saudi Arabia
 Serbia
 Singapore
 Slovakia
 Slovenia
 South Africa
 Spain
 Sweden
 Switzerland
 Tajikistan
 Thailand
 Tunisia
 Turkey
 Turkmenistan
 Ukraine
 United Arab Emirates
 United Kingdom
 United States
 Uzbekistan
 Venezuela
 Vietnam

There are also several agreements between Austria and other jurisdictions which were signed but haven't yet come into force (for agreements signed after after 01 January 2013 of signing the agreement is given in brackets):

 Chile
 Libya
 Syrian Arab Republic
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Information Exchange

There are 3 ways for jusrisdictions to exchange information on tax matters:

  • spontaneously;
  • on request;
  • automatically.

Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.

Austria signed TIEAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Andorra
 Gibraltar
 Jersey (Jun 2013)
 Monaco
 Saint Vincent and The Grenadines

There are also several agreements between Austria and other jurisdictions which was signed but haven't yet come into force (for agreements signed after 01 January 2013 of signing the agreement is given in brackets):

 Guernsey (May 2014)

Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.

Austria signed the automatic information exchange agreement on 29 October 2014 and committed to start the automatic information exchange in September 2018.

Further Information:
Automatic Exchange of Information on Financial Accounts
Countries Which Will Not Automatically Exchange Account Information

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FATCA

Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).

Austria has FATCA agreement with the U.S. in effect since 29 April 2014 (Intergovernmental Agreement Model 2).

Further Information:
FATCA and European countries

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Austrian Banking Sector

Financial Market Development

According to World Economic Forum's Global Competitiveness Report 2016-2017, financial market development in Austria is scored 4.5 out of maximum 7.0 and ranked 34th out of 138 analysed economies. Soundness of banks is scored 5.0 bringing Austria into the 65th place, trustworthiness and confidence of financial market is scored 4.4 (53rd place).

Financial Market Development in Austria.
Chart 4. Financial Market Development in Austria. Source: WEF.
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Banking Industry Country Risk

Banking Industry Country Risk Assessment (BICRA) is a methodology designed by Standard&Poor's "to evaluate and compare global banking systems". A BICRA is scored on a scale from 1 to 10, ranging from the lowest-risk banking systems (group 1) to the highest-risk (group 10). The BICRA methodology has two main analytical components: "economic risk" and "industry risk". Each of the components is then further divided into 3 "factors" that result in an economic and industry risk score for each country.

Austria is included into group '2' with economic risk scored '2' and industry risk scored '3'.

BICRA Group 2
Economic risk 2
    Economic resilience very low
     Economic imbalances low
    Credit risk in economy intermediate
Industry risk 3
    Institutional framework intermediate
    Competitive dynamics intermediate
    Systemwide funding low
Government support assessment supportive

Table 2. BICRA for Austria. Source: S&P's.

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Deposit Guarantee Scheme

Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.

From a depositor's point of view it is important to know:

  • if the depositor is eligible within the terms of the deposit guarantee scheme;
  • if the depositor's bank is a participant in the deposit guarantee scheme;
  • if the depositor's type of deposit is covered by the deposit guarantee scheme.

All these details about deposit guarantee scheme in Austria are summarised in Table 3.

Scheme Participantsall credit institutions operating in Austria (including branches of foreign banks), branches of Austrian banks abroad
Eligible Depositorsnatural persons, legal entities
Covered Accountsall balances on interest-bearing and non-interest bearing accounts
Covered CurrenciesEEA currencies
Maximum Protected Amount100 000 EUR
Paid In CurrencyEUR

Table 3. Deposit guarantee scheme in Austria.

EEA stands for European Economic Area and consists of all EU member states plus Liechtenstein, Norway and Iceland.

EEA currencies are all official currencies of EEA members. Switzerland is not a EEA member, but because CHF is the official currency of Liechtenstein, CHF also belongs to EEA currencies.

So, only the deposits made with Austrian banks in the following currencies are covered by the deposit guarantee scheme of Austria

 EUREuro
 BGNBulgarian lev
 CZKCzech koruna
 DKKDanish krone
 HUFHungarian forint
 ISKIcelandic króna
 CHFSwiss franc
 NOKNorwegian krone
 PLNPolish złoty
 RONRomanian new leu
 SEKSwedish krona/kronor
 GBPPound sterling

It should be also noted that deposits in non-EEA currencies (for example, USD and JPY) are not covered by the Austrian deposit guarantee scheme.

Further Information:
Deposit Guarantee Schemes in Europe

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Country Ceiling for Deposits

Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.

Local currency (Euro) deposit ceiling for Austria is set to Aaa (prime), foreign currency deposit ceiling is Aaa (prime).

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Deposit Rates

In Aug 2016, an agreed annualised deposit rate in local currency (Euro) of new contracts with agreed maturity up to 1 year between credit institutions and households was 0.33% which was below the Euro Area average (0.53%).

Deposit Rates in Austria.
Chart 5. Deposit Rates in Austria. Source: ECB.

Further Information:
Compare Bank Deposits in Austria

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Banking Sector Structure

Currently there are 661 credit institutions operating in Austria.

Recent structural changes (2013 - 2015) of the banking sector of Austria are summarised in Table 4.

201320142015
Number of Opened Banks111
Number of Closed Banks132428

Table 4. Recent structural changes in the banking sector of Austria.

All the credit institutions operating in Austria can be classified into several categories. Table 5 summarises the number of banks in each category.

CategoryNumber of Banks
Building and loan associations4
Central banks1
Institutions defined under § 9 BWG31
Joint stock banks and private banks39
Raiffeisen credit cooperatives471
Savings banks49
Special purpose banks23
State mortgage banks9
Volksbank credit cooperatives34

Table 5. Number of banks by category in Austria.

The list of the most recently opened banks in Austria is provided in Table 6.

NameStart Date
 Mizuho Bank Nederland N.V. Vienna Branch (new)July 2015
 FIL Fondsbank GmbH Zweigniederlassung Wien (new)October 2014
 Addiko Bank AG (new)June 2013

Table 6. The most recently opened banks in Austria.

There are 31 branches of foreign banks from 10 different countries in Austria. Table 7 shows the number of branches grouped by the country of origin.

Country of OriginNumber of Branches
 Germany13
 United Kingdom5
 Netherlands3
 France3
 Luxembourg2
 Belgium1
 Liechtenstein1
 Sweden1
 Hungary1
 Ireland1

Table 7. Number of branches of foreign banks in Austria grouped by country of origin.

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