Corporate Taxes and the Location of Intangible Assets Within Multinational Firms

Arbeitspapier

Intangible assets, like patents and trademarks, are increasingly seen as the key to competitive success and as the drivers of corporate profit. Moreover, they constitute a major source of profit shifting opportunities in multinational enterprises (MNEs) due to a highly intransparent transfer pricing process. This paper argues that for both reasons, MNEs have an incentive to locate intangible property at affiliates with a relatively low corporate tax rate. Using panel data on 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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Munich Discussion Paper ; No. 2008-15

Classification and Topics

• Classification: Wirtschaft ; Business Taxes and Subsidies including sales and value-added (VAT) ; Multinational Firms; International Business ; Tax Evasion and Avoidance ; Multiple or Simultaneous Equation Models: Panel Data Models; Spatio-temporal Models
• Subject: multinational enterprise ; intangible assets ; tax planning ; micro level data ; Immaterielle Werte ; Standortwahl ; Multinationales Unternehmen ; Unternehmensbesteuerung ; Steuerwirkung ; Schätzung ; 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): 2008

Further information

• DOI: doi:10.5282/ubm/epub.5294
• Handle: http://hdl.handle.net/10419/104253
• URN: urn:nbn:de:bvb:19-epub-5294-3
• Last update: 10.03.2025, 11:42 AM CET