Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/104327
Authors: 
Dischinger, Matthias
Riedel, Nadine
Year of Publication: 
2010
Series/Report no.: 
Munich Discussion Paper 2010-12
Abstract: 
This paper stresses the special role of multinational headquarters in corporate profit shifting strategies. Using a large panel of European firms, we show that multinational enterprises (MNEs) are reluctant to shift profits away from their headquarters even if these are located in high-tax countries. Thus, shifting activities in response to corporate tax rate differentials between parents and subsidiaries are found to be significantly larger if the parent observes a lower corporate tax rate than its subsidiary and profit is thus shifted towards the headquarters firm. This result is in line with recent empirical evidence suggesting that MNEs bias the location of profits and highly profitable assets in favor of the headquarters location (for agency cost reasons among others).
Subjects: 
multinational firm
profit shifting
headquarters location
JEL: 
H25
H26
C33
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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