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As the episode makes clear, it is located in the north of the "province of Salzburg".
While the episode dialogue is slightly imprecise about Mondsee's location — in real life, it's on the border of the states of Upper Austria and Salzburg — some effort has been taken to reasonably approximate the real life location. When Steve has his fight with Tucelli's men, a lake can clearly be seen in the distance. This suggests the presence of Lake Mondsee, the town's namesake.