Assignment on Identify and Banking Relationship

Austrian governmental and regulatory policies for the banking sector primarily aim at maintaining a stable and robust financial system. Transparency and trust in the stability of the banking and financial system are indispensable for the smooth and efficient supply of funds to the corporate, private and public sectors and must be consistently upheld. To this end, the entire financial market must observe a strict rule-based framework.

Regulatory Framework in Austria: The main goals of the regulatory framework for the banking sector are:

•      increasing transparency, the financial stability and the financial institutions’ loss-bearing capacity;

•      ensuring the efficient supply of credit to businesses and individuals;

•      strengthened harmonization of bank supervision, securities, insurance and financial conglomerates; and

•      requiring better and more effective institutional internal control by the management board.

Austrian Environment

Consumer Profile: The population is ageing in Austria and the median age was 44.2 in 2018 has been rising since 1995. The population growth rate is 0.42% with 24.8% of Austrians are under 24 and 33% of the population is over 55 years old. Households are composed on average of 2.2 people. One-person households account for 37% of the total and 41.6% are couples with or without children. The gender ratio is 96 men for every 100 women and 58.3% of the population lives in urban areas while Vienna is the main city. The northern and eastern regions are the densest in population. A total of 85% of adults aged 25 to 64 have completed secondary education and 31% of the same age have a higher education. The OECD estimates the level of education in Austria very high. Some 69% of the active population are civil servants.

Purchasing Power: The GDP per capita PPP is 41 143 euros in Austria. The average annual salary of a full-time employee is 42,852 euros. Austrian purchasing power is among the highest in Europe. In 2018 it has increased and should continue to grow in 2019 thanks to the reduction of a tax for households with children and the buoyancy of the labour market. The adjusted annual disposable income per inhabitant is approximately 28,500 euros. According to ING, consumption it should increase by 1.7% in 2019. The Gini index is in the European average and the pay gap between men and women is 20% in Austria. Immigrants are also more likely to have lower wages and to be unemployed. The highest wages are in Lower Austria and the lowest in Carinthia (about 8% difference).

Consumer Behavior: Austria is considered a consumer society. Price is an important element for consumers as well as brand awareness and quality. Some consumers are willing to pay more for a better product. Purchases are made in different types of locations, ranging from department stores and supermarkets to small retailers. Consumer confidence has largely suffered in 2018 but seems to be holding up in early 2019. Ecommerce is widespread in the country and should continue to grow. There are nearly 5 million online shoppers in the country. Brands from international companies are consumed but local products tend to be preferred.

Brand loyalty depends on the quality of the products sold and value for money. More than 60% of Austrians with Internet access and are active on social networks allowing them to discover and learn about products thanks to user comments. Data protection is important for Austrians, and a non-profit has even filed a lawsuit against several big players (Apple, Amazon, Netflix, Spotify etc.).

Due to an ecological awareness and sustainability, organic and local products are increasingly in demand. The share of organic products in total purchases is among the highest in Europe. Fresh produce are generally preferred to packaged products. The second-hand market is developed on the internet, notably on the Willhaben, Locanto and Bazar sites. The use of collaborative platforms such as Uber or Airbnb are starting to grow but remain behind compared to other European countries.

Taxation in Austria for foreigners

The Austrian tax system gives consideration to exceptional situations, such as special expenses and extraordinary burdens and it is therefore possible to receive a tax rebate. These include doctor’s fees and hospital costs, as well as cost for childcare and dental treatment. The individual can fill in an application known as ArbeitnehmerInnenveranlagung with the tax office.

Social Security Tax: Austrian social security tax is a compulsory element in employment taxation. It comprises of health insurance, pension insurance, unemployment insurance and accident insurance. These figures are determined as a percentage of total monthly earnings. The tax is partially paid for by the employee and partially by the employer.

The maximum contribution on a regular basis per month is €4,980. Special payments, which are those payments that do not occur monthly, such as a bonus, are also liable for social security tax. The taxation figure for these is capped at €9,960 a year.