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Are Spanish companies involved in profit shifting? Consequences in terms of tax revenues

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  • Castillo Murciego, Ángela
  • López Laborda, Julio

Abstract

In this paper the authors analyze the existence of profit shifting by companies located in Spain. Using a sample of 1,380 Spanish subsidiaries owned by foreign OECD and EU parent companies from the AMADEUS Database for the period 2005-2014 and a simple tax rate difference as a measure of the profit shifting tax incentive, the authors obtain a negative effect of corporate income taxes on reported profits, which is consistent with the profit shifting activity of corporations and matches the empirical results in the literature. Furthermore, they derive a negative effect from this profit shifting activity in terms of tax revenues for Spain.

Suggested Citation

  • Castillo Murciego, Ángela & López Laborda, Julio, 2016. "Are Spanish companies involved in profit shifting? Consequences in terms of tax revenues," Economics Discussion Papers 2016-28, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwedp:201628
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    Cited by:

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    2. Julio López Laborda & Jorge Onrubia, 2019. "Los retos de la fiscalidad societaria en la era de la economía digital: el estado de la cuestión," Policy Papers 2019-04, FEDEA.

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    More about this item

    Keywords

    profit shifting; multinational corporations; tax revenues; Spain;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F69 - International Economics - - Economic Impacts of Globalization - - - Other
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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