The Role of Headquarters Firms in Multinational Profit Shifting Strategies

Arbeitspapier

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).

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Munich Discussion Paper ; No. 2010-12

Classification and Topics

• Classification: Wirtschaft ; Business Taxes and Subsidies including sales and value-added (VAT) ; Tax Evasion and Avoidance ; Multiple or Simultaneous Equation Models: Panel Data Models; Spatio-temporal Models
• Subject: multinational firm ; profit shifting ; headquarters location ; Multinationales Unternehmen ; Konzern ; Strategisches Management ; Gewinnverlagerung ; Europa

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dischinger, Matthias ; Riedel, Nadine
• Event: Veröffentlichung
• (who): Ludwig-Maximilians-Universität München, Volkswirtschaftliche Fakultät
• (where): München
• (when): 2010

Further information

• DOI: doi:10.5282/ubm/epub.11352
• Handle: http://hdl.handle.net/10419/104327
• URN: urn:nbn:de:bvb:19-epub-11352-4
• Last update: 10.03.2025, 11:42 AM CET