Time and Location

Publication of the VIDC study "A Legal and Economic Analysis of Double Taxation Treaties between Austria and Developing Countries"

April 2014

Study: Austrian Tax Treaties signed with Developing Countries - a Legal and Economic Analysis

© Shutterstock/Khen Guan Toh
© Shutterstock/Khen Guan Toh

There is an increasing perception that governments are losing substantial tax revenues due to tax planning and tax avoidance. Double tax agreements (DTAs) may have a negative impact on the tax revenues of so-called developing countries as international standards favour residence-based taxation (residence countries being mostly so-called developed countries) and reduce taxation rights for source countries (usually developing countries).

Austria has an extensive double taxation network that consists of 87 agreements, of which 37 agreements were signed with developing countries. These treaties are mainly based on the standards embodied in the OECD Model Tax Convention on Income and on Capital.

The study of Julia Braun and Daniel Fuentes, published by the VIDC, aims at answering the question whether Austria´s DTAs are beneficial (or harmful) to those developing countries with which such agreements were signed.

The research is based on a multidisciplinary approach which combines a legal and an economic analysis. The legal approach analyses the potential effects and risks of Austrian tax agreements on developing countries. The economic approach analyses if signing a DTA attracts Austrian foreign direct investment.

The study finally provides conclusions and recommendations that developing countries may want to follow when (re)negotiating a tax treaty with Austria.