International Tax and Public Finance

, Volume 21, Issue 2, pp 248–271

The role of headquarters in multinational profit shifting strategies


DOI: 10.1007/s10797-012-9265-5

Cite this article as:
Dischinger, M., Knoll, B. & Riedel, N. Int Tax Public Finance (2014) 21: 248. doi:10.1007/s10797-012-9265-5


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.


Multinational firmsProfit shiftingHeadquarter location

JEL Classification


Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  • Matthias Dischinger
    • 1
  • Bodo Knoll
    • 2
  • Nadine Riedel
    • 2
  1. 1.Public Finance GroupUniversity of MunichMunichGermany
  2. 2.Institute of Economics (520D)University of HohenheimStuttgartGermany