|Dischinger, Matthias; Riedel, Nadine (28. July 2008): Corporate Taxes and the Location of Intangible Assets Within Multinational Firms. Discussion Papers in Economics 2008-15|
This is the latest version of this item.
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.
|Item Type:||Paper (Discussion Paper)|
|Keywords:||multinational enterprise, intangible assets, tax planning, micro level data|
Economics > Munich Discussion Papers in Economics
Economics > Munich Discussion Papers in Economics > Public Finance
Economics > Chairs > Seminar for Economic Policy
|Subjects:||300 Social sciences > 300 Social sciences, sociology and anthropology|
300 Social sciences > 330 Economics
|JEL Classification:||H25, F23, H26, C33|
|Deposited On:||31. Jul 2008 07:24|
|Last Modified:||29. Apr 2016 20:12|
Alesina, A., R. J. Barro, and S. Tenreyro (2002): “Optimal Currency Areas,” NBER Working Papers, Working Paper No. 9072, National Bureau of Economic Research.
Anderson, T. W., and C. Hsiao (1982): “Formulation and Estimation of Dynamic Models Using Panel Data,” Journal of Econometrics, 18, 47–82.
Arellano, M., and S. Bond (1991): “Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations,” Review of Economic Studies, 58, 277–97.
Becker, J., and C. Fuest (2007): “Quality versus Quantity - The Composition Effect of Corporate Taxation on Foreign Direct Investment,” CESifo Working Paper Series, No. 2126, CESifo Munich.
Brand Finance plc (2008): “The Increasing Importance of Branding,” Brand Finance Report - Brands and tax planning, Issue 3, Twickenham (UK).
Bresnahan, T. F., E. Brynjolfsson, and L. M. Hitt (2002): “Information Technology, Workplace Organization, and the Demand for Skilled Labor: Firm-Level Evidence,” Quarterly Journal of Economics, 117(1), 339–376.
Budd, J. W., J. Konings, and M. J. Slaughter (2005): “Wages and International Rent Sharing in Multinational Firms,” The Review of Economics and Statistics, 87, 73–84.
Collins, J. H., D. Kemsley, and M. Lang (1998): “Cross-Jurisdictional Income Shifting and Earnings Valuation,” Journal of Accounting Research, 36, 209–230.
Desai, M. A., C. F. Foley, and J. R. Hines (2006): “The Demand for Tax Haven Operations,” Journal of Public Economics, 90(3), 513–531.
Devereux, M. P., and R. Griffith (1998): “Taxes and the Location of Production: Evidence from a Panel of US Multinationals,” Journal of Public Economics, 68, 335–367.
Dischinger, M. (2007): “Profit Shifting by Multinationals: Indirect Evidence from European Micro Data,” Munich Economics Discussion Papers, No. 2007-30, University of Munich.
Dischinger, M., and N. Riedel (2008): “Corporate Taxes, Profit Shifting and the Location of Intangibles Within Multinational Firms,” Munich Economics Discussion Papers, No. 2008-11, University of Munich.
Dischinger, M., and N. Riedel (2008b): “Corporate Taxes, Profit Shifting and the Location of Multinational Headquarters,” mimeo, University of Munich.
Edmans, A. (2007): “Does the Stock Market Misvalue Intangibles? Employee Satisfaction and Equity Prices,” mimeo, MIT Sloan School of Management.
European Commission (2006): “Structures of the Taxation Systems in the European Union,” Directorate Generale Taxation and Customs Union, Brussels.
Gattai, V. (2005): “Firm’s Intangible Assets and Multinational Activity: Joint-Venture Versus FDI,” Fondazione Eni Enrico Mattei Working Paper Series, No. 122.2005, Bocconi University and ISESAO.
Grubert, H. (2003): “Intangible Income, Intercompany Transactions, Income Shifting, and the Choice of Location,” National Tax Journal, 56(1), 221–242.
Grubert, H., and J. H. Mutti (2007): “The Effect of Taxes on Royalties and the Migration of Intangible Assets Abroad,” NBER Working Paper Series, Working Paper No. 13248.
Grubert, H., and J. Slemrod (1998): “The Effect of Taxes on Investment and Income Shifting to Puerto Rico,” The Review of Economics and Statistics, 80(3), 365–373.
Hall, R. E. (2001): “The Stock Market and Capital Accumulation,” The American Economic Review, 91(5), 1185–1202.
Hejazi, J. (2006): “Assessing the Risks of Intangibles Migration,” Tax Management - Transfer Pricing, 15(10), 399–401, The Bureau of National Affairs.
Hilary, G., and C. Lennox (2005): “The Credibility of Self-Regulation: Evidence from the Accounting Professions Peer Review Program,” Journal of Accounting and Economics, 40, 211–229.
Huizinga, H., and L. Laeven (2008): “International Profit Shifting Within Multinationals: A Multi-Country Perspective,” Journal of Public Economics, 92(5-6), 1164–1182.
KPMG International (2006): “KPMGs Corporate Tax Rate Survey,” Corporate Income Tax Rate - A Trend Analysis, 304-250(October 2006).
Markusen, J. R. (1995): “The Boundaries of Multinational Enterprises and the Theory of International Trade,” Journal of Economic Perspectives, 9, 169–189.
Markusen, J. R. (2002): Multinational Firms and the Theory of International Trade. The MIT Press, Cambridge.
Morgan Lewis & Bockius LLP (2007): “Optimising Brand Value Through Strategic Tax Planning,” Intellectual Asset Management - Brands in the Boardroom 2007, April 2007, Washington DC (USA).
Plassmann, F., and T. N. Tideman (2001): “Does the Right to Carry Concealed Handguns Deter Countable Crimes? Only a Count Analysis Can Say,” The Journal of Law and Economics, 44, 771–98.
Simpson, G. R. (2005): “Irish Unit Lets Microsoft Cut Taxes in U.S. and Europe,” The Wall Street Journal, November 7, 2005, p. A1.
Sullivan, M. A. (2004): “International Tax Planning: A Guide for Journalists,” Tax Notes, published by taxanalysts.
Weichenrieder, A. J. (2008): “Profit Shifting in the EU: Evidence from Germany,” International Tax and Public Finance, forthcoming.
Zingales, L. (2000): “In Search of New Foundations,” Journal of Finance, 55(4), 1623–1653.
Available Versions of this Item
- Corporate Taxes and the Location of Intangible Assets Within Multinational Firms. (deposited 31. Jul 2008 07:24) [Currently Displayed]