Austrian tax law contains two major anti-avoidance provisions dealing with foreign-based companies: the switch-over from the exemption to the credit method which deals with the prevention of secondary sheltering (sec 10 para 4 and 5 Austrian Corporate Income Tax Act [CITA]), and a special regulation whose objective is to counteract the use of cross-border qualification conflicts and hybrid instruments (sec 10 para 7 CITA). Thomas Kollruss shows that these major anti-avoidance provisions do not work in cases of dual resident domestic subsidiaries having their tax residence abroad (Art 4 para 3 OECD Model Convention). Moreover, the article illustrates how current law needs to be revised to cover such dual resident subsidiaries.