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partner’s business. In respect to Austria, the basic corporate structures and rules are setout in chapter two of this Guide.3. More than TaxesTax planning is the next essential step to be understood by a foreign investor and theiradvisors. Tax planning is complex, as not only the rules of the host jurisdiction have to betaken into account but also the rules of international taxation to be applied between thejurisdiction of the investor and the host jurisdiction. While these international rules arefrequently reduced to writing in bilateral tax treaties on the avoidance of double taxationit is important to understand the actual application and practice of these rules.Frequently, tax planning is understood only as how to minimize a tax burden for aproposed business activity. While this is certainly an aspect to be borne in mind, thereare more important issues which may be overlooked in the enthusiasm for profits withlower tax expected by the foreign investor or from the foreign investment.More important are those issues which are not expressed in terms of tax rates andbrackets but other problems which might arise in a trans-border situation such as taxablepermanent establishments, transfer pricing, cost plus taxation, deductibility of interest,rentals, licence fees and royalties, deductibility of commissions payable to third parties,etc. Above all, the exit strategy which is the tax burden in case of relocation of theenterprise out of the host jurisdiction, the sale of the business interest in the hostjurisdiction, trans-border mergers and liquidation must be examined.Foreign investments also have an upside aspect of taxation, in particular the availabilityof reducing tax exposure within a group, tax exemption of foreign dividends, in particularthe participation exemption and the Parent-Subsidiary Directive of the European Union.These aspects are covered in chapter three - Tax Planning.4. Cover Your BackThe main purpose of foreign investment is frequently the expectation of making profits ina foreign and promising market. The investor has interesting know-how or a profitablebusiness model and expects to boost the success by taking their products, know-how andbusiness models international, in particular to markets such as the European Union,Eastern Europe, Central Asia or Russia.This can be done by going solo or cooperating with a local partner. The choice isfrequently to do it with a local partner as the partner in the host jurisdiction has the localmarket knowledge, customer base or networks to turn the venture into a success. Beforefinalizing and making commitments, a foreign investor is strongly advised to protect theirknow-how, trademark, business name, patents and all industrial property.Failure to obtain proper protection prior to making commitments may not only result inlengthy disputes and court procedures but actually in a loss of such rights. For instancethe trademark “Land Rover” was lost in Brazil to a local company which registered “LandRover” for itself. In Austria an electronics shop registered “Apple” as a trademark and forseven years Apple Macintosh had to fight in the courts before recapturing its owntrademark.The full and enforceable protection of know-how and industrial property rights istherefore absolutely essential for a foreign investor. This is therefore covered in chapterfour of this Guide.5. Lost in LabourIn the host jurisdiction, the foreign investor usually requires workers to carry out thebusiness. Local labour is usually used for this purpose. Additionally, some people mayalso be seconded directly by the foreign investor to the host jurisdiction. Both groupscome under the local labour law; the main aim of that law is very often to protect theemployee and not the employer.- 10 -