Weyzig (2013) uses microdata from Dutch ad hoc vehicles to analyse geographical patterns and structural determinants of FDI reorientation. It notes that tax treaties are a key determinant for foreign direct investment transiting through the Netherlands, with the reduction of dividend tax rates being a driving mechanism. 4. In the event of a tax dispute, agreements may provide a two-way consultation mechanism and resolve current issues. Anderson, J. E., &Yotov, Y. (2016). The Terms of Trade and the Overall Effectiveness of Free Trade Agreements, 1990-2002. Journal of International Economics, 99, 279-298. We show that tax treaties can only influence foreign investment if they reduce the tax burden on the existing global network of double taxation treaties, i.e. where they are relevant.
Any treaty between third countries can undermine the relevance of a national network of contracts, which means that countries lose some of their ability to set tax policy. Baker, P. L. (2014). An analysis of double taxation treaties and their impact on foreign direct investment. International Journal of the Economics of Business, 21(3), 341-377. Ireland has signed comprehensive double taxation (SAA) treaties with 74 countries; 73 are in force. The agreements concern direct taxes which are in the case of Ireland: this paper examines the impact of double taxation (DTT) treaties on foreign direct investment (FDI) after verifying their relevance in the presence of contract purchases. . . .