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Tax-Treaty Effects on Foreign Investment: Evidence from European Multinationals

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  • Mário Marques
  • Carlos Pinho

Abstract

This paper reexamines the effects of bilateral tax treaties on investment location decisions, using a large panel of European countries. It provides evidence that tax treaties induced a positive and significant impact on the number of foreign subsidiaries incorporated in the last decade. Findings also suggest positive effects of treaty features other than withholding tax rates and double-taxation relief methods. When they are analyzed separately, we also find evidence confirming that the host country´s corporate tax rate is a determining factor in the location of foreign subsidiaries.

Suggested Citation

  • Mário Marques & Carlos Pinho, 2014. "Tax-Treaty Effects on Foreign Investment: Evidence from European Multinationals," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 70(4), pages 527-555, December.
    • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(201412)70:4_527:teofie_2.0.tx_2-2
    DOI: 10.1628/001522108X685474
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    Citations

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    Cited by:

    1. Evers, Andrea & Matthaei, Eva Kristina, 2021. "Steuerplanung unter Unsicherheit: Eine Befragungsstudie zum Brexit," Discussion Papers 2021/10, Free University Berlin, School of Business & Economics.
    2. Elisabeth Bustos Contell & Salvador Climent-Serrano & Gregorio Labatut-Serer, 2018. "The evolution of the tax burden for EU companies," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 12(4), December.
    3. Overesch Michael, 2016. "Steuervermeidung multinationaler Unternehmen: Die Befunde der empirischen Forschung," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 17(2), pages 129-143, July.
    4. Elisabeth Bustos-Contell & Salvador Climent-Serrano & Gregorio Labatut-Serer, 2017. "Offshoring in the European Union: a Study of the Evolution of the Tax Burden," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 11(2), June.
    5. Kunka Petkova & Andrzej Stasio & Martin Zagler, 2020. "On the relevance of double tax treaties," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(3), pages 575-605, June.
    6. Marques, Mário & Pinho, Carlos & Montenegro, Tânia Menezes, 2019. "The effect of international income shifting on the link between real investment and corporate taxation," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 36(C), pages 1-1.

    More about this item

    Keywords

    investment location; bilateral tax treaties; effective tax rate; corporate taxation; panel data;
    All these keywords.

    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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