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Profit-shifting from Czech multinational companies to European tax havens

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  • Petr Janský
  • Ondřej Kokeš

Abstract

Although tax havens have been affecting other countries for decades, only in recent years have the associated challenges been subject to intensive scrutiny in both research and policy areas. We contribute to the growing evidence of corporate tax base erosion and profit-shifting by testing multinational companies’ ownership links to individual tax havens rather than to groups of them, as is the case with most previous research. Our company-level analysis suggests that profit shifts through debt financing from the Czech Republic to Luxembourg, Switzerland and, to a lesser extent, the Netherlands. We have ascertained that tax havens are not limited to tiny islands and may actually be found among European countries. We also provide rough estimates of the impact of this profit-shifting on tax revenues as well as a policy recommendation.

Suggested Citation

  • Petr Janský & Ondřej Kokeš, 2016. "Profit-shifting from Czech multinational companies to European tax havens," Applied Economics Letters, Taylor & Francis Journals, vol. 23(16), pages 1130-1133, November.
  • Handle: RePEc:taf:apeclt:v:23:y:2016:i:16:p:1130-1133
    DOI: 10.1080/13504851.2015.1137543
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    Cited by:

    1. V t Jedlicka, 2023. "International Tax Planning and Ownership Structure in the Czech Republic," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 25(64), pages 867-867, August.
    2. Swati Verma, . "Intrafirm trade and tax haven linkages: Evidence from Indian manufacturing," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    3. Samer Khouri & Lubos Elexa & Michal Istok & Andrea Rosova, 2019. "A Study from Slovakia on the Transfer of Slovak Companies to Tax Havens and Their Impact on the Sustainability of the Status of a Business Entity," Sustainability, MDPI, vol. 11(10), pages 1-18, May.
    4. Dominika Gajdosikova & Katarina Valaskova & Tomas Kliestik & Maria Kovacova, 2023. "Research on Corporate Indebtedness Determinants: A Case Study of Visegrad Group Countries," Mathematics, MDPI, vol. 11(2), pages 1-30, January.
    5. Dobranschi, Marian & Nerudová, Danuše & Solilová, Veronika & Litzman, Marek, 2023. "An alternative measure of profit shifting and corporate income tax losses," Journal of Multinational Financial Management, Elsevier, vol. 70.
    6. Nerudova, Danuse & Dobranschi, Marian & Solilová, Veronika & Litzman, Marek, 2023. "Onshore and offshore profit shifting and tax revenue losses in the European Union," Economic Modelling, Elsevier, vol. 119(C).

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