In a press statement, the Commission said it wants to examine "whether the misrepresentation of Austria's national debt and deficit data over several years was a result of either intent or serious negligence".
In April 2014 the Austrian Statistical Office had to correct the country's national debt and deficit figures to take into account previously unrecorded financial transactions by the state of Salzburg.
The investigation launched this week follows an internal review of the situation by Eurostat, which ended with the recommendation that a formal investigation be carried out.
If the investigation from the Commission confirms that manipulation of statistics took place in Salzburg then they may recommend the Council impose a fine.
The maximum penalty that could be imposed is 0.2 percent of Austria's GDP, although European Commission spokesperson Christian Wigand emphasised to The Local Austria that decisions on fines are done on a "case by case analysis".
"We don't have a lot of precedent for this as it only the second time it has been done," Wigand said.
The investigation uses new "Six Pack" powers that were introduced following Europe's debt crisis. Under the new powers, the Commission will be able to ask authorities for information, interview people, do on-the-spot visits and look at the accounts as part of the investigation.
The only other investigation carried out under this new remit was into the manipulation of statistics in Valencia in Spain last year. In that case the Commission recommended the Council impose a fine of nearly €19 million.
The Commission has emphasised that the opening of an investigation does not prejudge the outcome and they are "not calling into question the accuracy of national statistics in Austria".