Multinational Firms and Tax Havens

50 Pages Posted: 12 Sep 2016

See all articles by Anna Gumpert

Anna Gumpert

Ludwig Maximilian University of Munich (LMU); CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

James R. Hines Jr.

University of Michigan; NBER

Monika Schnitzer

University of Munich - Department of Economics; Centre for Economic Policy Research (CEPR)

Date Written: September 2016

Abstract

Multinational firms with operations in high-tax countries can benefit the most from reallocating taxable income to tax havens, though this is sufficiently diffcult and costly that only 20.4 percent of German multinational firms have any tax haven affiliates. Among German manufacturing firms, a one percentage point higher foreign tax rate is associated with a 2.3 percent greater likelihood of owning a tax haven affiliate. This is consistent with tax avoidance incentives, and contrasts with earlier evidence for U.S. firms. The relationship is less strong for firms in service industries, possibly reflecting the difficulty of reallocating taxable service income.

Keywords: multinational firms, tax havens

JEL Classification: F23, H87

Suggested Citation

Gumpert, Anna and Hines, James Rodger and Schnitzer, Monika, Multinational Firms and Tax Havens (September 2016). CEPR Discussion Paper No. DP11495. Available at SSRN: https://ssrn.com/abstract=2837707

Anna Gumpert (Contact Author)

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, Bavaria 80539
Germany

HOME PAGE: http://www.en.compecon.econ.uni-muenchen.de/staff/postdocs/gumpert/index.html

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

James Rodger Hines

University of Michigan ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States

NBER

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Monika Schnitzer

University of Munich - Department of Economics ( email )

Ludwigstrasse 28
Munich, D-80539
Germany
+49 89 2180 2217 (Phone)
+49 89 2180 2767 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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