In today's era of globalization, arises even more the need to regulate situations in which international double taxation occurs. Treaties that seek to avoid or limit international double taxation are widely used, but in practice, many problems arise in the interpretation and application of certain provisions of the treatise. In general, international double taxation occurs because states are sovereign and free to decide on tax regulations on their territory and for their citizens. Therefore, most of today's countries tax their citizens, i.e. tax residents, according to the principle of worldwide income. According to this principle, tax residents are subject to unlimited tax liability in the country of residence and are obliged to pay tax on all their domestic and foreign income. On the other hand, the country in which the non-resident earns income, according to the principle of territoriality, is obliged to pay tax on that income earned on the territory of that country. The collision of the principle of world income and the principle of territoriality leads to the emergence of international double taxation. So, the same taxpayer, for the same tax period, pays tax in two countries on the same income. Such a situation discourages the international economy. Therefore, countries try to eliminate or limit international double taxation, and they do this mainly by concluding bilateral international treaties. Croatia, like most European countries, uses the Organization for International Cooperation and Development's Model Contract as the basis for concluding such contracts. It provides a basis for negotiation, and states adapt it according to their needs and economic goals. An example of a contract, which was concluded based on the OECD model contract, is: "Agreement between the Republic of Austria and the Republic of Croatia for the Avoidance of Double Taxation with respect to Taxes on Income and on Capital". This agreement determines who is considered a tax resident, and also contains provisions on resolving cases of dual residency, i.e. situations when both countries consider a person to be their tax resident. Furthermore, the treaty prescribes the ways in which double taxation will be avoided or limited between the contracting states and how the right to tax will be divided with regard to certain types of income.