Tax haven investments for Profit-Shifting: evidence from Spanish multinationals

Ángela Castillo-Murciego and Julio López-Laborda

Applied Economics, 2023, vol. 55, issue 53, 6250-6263

Abstract: Tax havens may play a key role in the Profit-Shifting (P-S) activity of Multinational Companies (MNCs), since, among other characteristics, they are the territories with the most beneficial taxes for foreign investors. This article shows that Spanish MNCs facing higher tax rates in non-tax havens, and therefore those that stand to gain the most from P-S, are more likely to invest in tax havens. This outcome is robust to at least two different tax haven lists and various definitions of the non-haven tax rate. The size of the MNCs’ activity, their use of intangible assets, and belonging to the Ibex 35 stock index also positively affect the probability of investing in tax havens. By economic sectors, once the endogeneity problem is controlled for, the incentive is greater for manufacturing than for service firms, but it is especially high for financial firms. Additionally, while non-haven tax rates positively influence the number of different tax havens used by firms, they have no effect on the number of affiliates located within them. Finally, the article estimates that Spanish MNCs have been able to save about 4 billion euros per year in Corporate Income Tax in the period 2013–2018 as a result of P-S.

Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/00036846.2022.2141464 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:applec:v:55:y:2023:i:53:p:6250-6263

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEC20

DOI: 10.1080/00036846.2022.2141464

Access Statistics for this article

Applied Economics is currently edited by Anita Phillips

More articles in Applied Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().