Anti-tax Avoidance Provisions as a Factor in Modern Tax Planning? - Inequalities Arising from Differing Double Tax Conventions from the Austrian Perspective

In light of the omnipresent peril of profit shifting and loss in tax revenues, which are the downsides of increasing globalization and digitalization, industrialized countries have shown remarkable determination in adapting existing tax treaties and, most notably, introducing anti-tax avoidance provisions. These measures may appear in diverse forms, ranging from detailed limitation-on-benefits clauses and general anti-abuse reservations to isolated anti-tax avoidance provisions tailored for specific inappropriate circumstances. Their differing scopes, however, are prone to leading to different results in the valuation of probably abusive schemes: Whereas some clauses are designed to address all existing schemes of undesirable arrangements (and those yet to be invented), others seem to be concretized to an extent that allows taxpayers to effectively plan their activities in a way to avoid triggering the anti-abuse mechanisms. This paper aims to shed light on the similarities and differences between anti-abuse measures in existing double tax treaties using examples of Austrian tax treaties. In this comparative analysis, the relevant EU tax law –has usually heavily influenced the assessment of cross-border arrangements in the Member States’ tax jurisdictions – as well as domestic anti-tax avoidance regulations are further taken into account. The emphasis of this paper is laid upon the likelihood of differing anti-tax avoidance provisions to create inequality in regional and global competition and to foster “aggressive” tax planning efforts.