International Tax and Public Finance

, Volume 21, Issue 2, pp 248–271 | Cite as

The role of headquarters in multinational profit shifting strategies

  • Matthias Dischinger
  • Bodo Knoll
  • Nadine Riedel


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 firms Profit shifting Headquarter location 

JEL Classification

H25 H26 C33 



We are indebted to John Wilson and two anonymous referees as well as Johannes Becker, Ronald Davis, Michael Devereux, Clemens Fuest, Andreas Haufler, Harry Huizinga, Joel Slemrod and Johannes Voget for valuable comments and suggestions. Financial support of the German Research Foundation (DFG) and the Economic and Social Research Council (ESRC Grant RES−060-25−0033) is gratefully acknowledged.


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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

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