The role of headquarters in multinational profit shifting strategies

Dischinger, Matthias, Knoll, Bodo and Riedel, Nadine (2014) The role of headquarters in multinational profit shifting strategies. International Tax and Public Finance, 21 (2). pp. 248-271.


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 has a lower corporate tax rate than its subsidiary and profit is thus shifted towards the headquarter firm. This result is in line with recent empirical evidence which suggests that MNEs bias the location of profits and highly profitable assets in favor of the headquarter location.

Item Type: Article
Keywords: Multinational firms· Profit shifting · Headquarter location
Subject(s): Taxation
Centre: Oxford University Centre for Business Taxation
Date Deposited: 25 Apr 2013 09:00
Last Modified: 23 Oct 2015 14:08
Funders: ESRC

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