Austeria takes place during the opening days of World War I, in the Austro-Hungarian province of Galicia. Tag, played by Franciszek Pieczka, is a Jewish innkeeper whose inn (austeria means inn in the Polish dialect) is located near the border with the Russian Empire. War has broken out and local civilians are fleeing the advancing Russian Army. A number of refugees have taken shelter in Tag's inn for the night. A group of Hassidic Jews from the neighboring village arrive, followed by an Austrian baroness, and a Hungarian hussar, cut off from his army unit.