Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/104263
Authors: 
Dischinger, Matthias
Riedel, Nadine
Year of Publication: 
2008
Series/Report no.: 
Munich Discussion Paper 2008-11
Abstract: 
Intangible assets are one major source of profit shifting opportunities due to a highly intransparent transfer pricing process. Our paper argues that multinational enterprises (MNEs) optimize their profit shifting strategy by locating shifting–relevant intangible property at affiliates with a low statutory corporate tax rate. Using panel data for European MNEs and controlling for unobserved time–constant heterogeneity between affiliates, we find that the lower a subsidiary’s tax rate relative to other affiliates of the multinational group the higher is its level of intangible asset investment. This effect is statistically and economically significant, even after controlling for subsidiary size and accounting for a dynamic intangible investment pattern.
Subjects: 
corporate taxation
multinational enterprise
profit shifting
intangible assets
micro level data
JEL: 
H25
F23
H26
C33
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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