Headquarter Relocations and International Taxation

Johannes Voget ()
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Johannes Voget: Oxford University Centre for Business Taxation, CentER, Tilburg University

No 1008, Working Papers from Oxford University Centre for Business Taxation

Abstract: This paper examines the extent of international headquarter relocations worldwide. About 6 percent of all multinationals relocated their headquarter to another country in the 1997-2007 period. The paper presents empirical evidence on the role of tax in these relocation decisions. It considers a sample of 140 multinationals that relocated their headquarters over the past decade and compares them to a control group of 1943 multinationals that have not done so. It is found that the additional tax due in the home country upon repatriation of foreign profits has a positive effect on the probability of relocation. The empirical results suggest that an increase in the repatriation tax by 10 percentage points would raise the share of relocating multinationals by 2.2 percentage points, equivalent to an increase in the number of relocations by more than one third. Furthermore, the introduction of controlled foreign corporation legislation also has a positive effect on the number of relocations.

Keywords: international taxation; headquarter relocation; multinational; corporate inversion; controlled foreign corporation (search for similar items in EconPapers)
JEL-codes: F23 H25 H32 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-acc
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