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Headquarter Relocations and International Taxation

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  • Johannes Voget

    () (Oxford University Centre for Business Taxation, CentER, Tilburg University)

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.

Suggested Citation

  • Johannes Voget, 2010. "Headquarter Relocations and International Taxation," Working Papers 1008, Oxford University Centre for Business Taxation.
  • Handle: RePEc:btx:wpaper:1008
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    File URL: http://www.sbs.ox.ac.uk/sites/default/files/Business_Taxation/Docs/Publications/Working_Papers/Series_10/WP1008.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    international taxation; headquarter relocation; multinational; corporate inversion; controlled foreign corporation;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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