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

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  • Svetlana Raudonen

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.

Suggested Citation

  • Svetlana Raudonen, 2016. "Impact of taxation on FDI flows into European Union countries: empirical evidence from a gravity approach," Global Business and Economics Review, Inderscience Enterprises Ltd, vol. 18(3/4), pages 402-419.
    • Handle: RePEc:ids:gbusec:v:18:y:2016:i:3/4:p:402-419
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