Impact of taxation on FDI flows into European Union countries: empirical evidence from a gravity approach

Svetlana Raudonen

Global Business and Economics Review, 2016, vol. 18, issue 3/4, 402-419

Abstract: We analyse the impact of taxation among other determinants of FDI flows to European Union countries. The aim of this study is to measure the impact of tax variables on bilateral flows over the period from 1998 to 2011. Our results suggest a negative relationship between the tax rates and the amount of FDI for EU countries. Our findings also indicate a double taxation treaty between the host and home country not to be a significant determinant; therefore, the treaty does not affect EU FDI. Our results indicate that FDI are sensitive to the corporate tax rate and the total tax burden of the host country.

Keywords: foreign direct investment; FDI inflows; taxation; gravity model; European Union; EU countries; tax variables; tax rates; double taxation treaties; corporate tax rate; total tax burden. (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:ids:gbusec:v:18:y:2016:i:3/4:p:402-419

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