A Legal and Economic Analysis of Austria's Double Tax Treaty Network with Developing Countries

To what degree developing countries gain from signing double tax treaties is being hotly debated. In this paper, we analyze the Austrian tax treaty policy. Combining legal and economic perspectives, we find that developing countries are likely to expect both positive and negative impacts from signing a double tax treaty (DTT) with Austria. On the one hand, the results of our econometric analysis suggest that middle-income countries that sign a DTT with Austria may expect an increased number of foreign direct investment projects from Austrian companies. On the other hand, the signatory states may suffer from limited withholding taxation rights established in the DTTs for the source country, which could lead to reduced tax revenues in the developing countries.