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Trade in services related to intangibles and the profit shifting hypothesis

Author

Listed:
  • Nadia Accoto

    (Bank of Italy)

  • Stefano Federico

    (Bank of Italy)

  • Giacomo Oddo

    (Bank of Italy)

Abstract

This paper focuses on the international trade in services related to intangible assets and intellectual property products (IPP) and explores to what extent they might be used as a channel to shift the profits of multinational firms to tax havens. Using survey data on Italian firms, we first provide a geographical and sectoral analysis of Italy's trade in IPP services. We then estimate the amount of profit shifted abroad by foreign-owned firms in our sample, applying the methodology initially put forward by Tørsløv et al. (2018) at various levels of aggregation. Finally, we look for a correlation at the firm level between estimated shifted profits and imports of IPP services. We find that, while the overall correlation is very low, there is a small cluster of firms displaying a positive correlation between these two variables.

Suggested Citation

  • Nadia Accoto & Stefano Federico & Giacomo Oddo, 2023. "Trade in services related to intangibles and the profit shifting hypothesis," Temi di discussione (Economic working papers) 1414, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:wptemi:td_1414_23
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    File URL: https://www.bancaditalia.it/pubblicazioni/temi-discussione/2023/2023-1414/en_tema_1414.pdf
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    References listed on IDEAS

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    Cited by:

    1. Malin Andersson & Nina Blatnik & Stephen Byrne & Lorenz Emter & Valerie Jarvis & Belén Gonzalez Pardo & Martin Schmitz & Nico Zorell & Christoph Zwick, 2024. "Intangible assets of multinational enterprises in Ireland and their impact on euro area activity," IFC Bulletins chapters, in: Bank for International Settlements (ed.), External statistics in a fragmented and uncertain world, volume 62, Bank for International Settlements.

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    More about this item

    Keywords

    trade in services; intellectual property products; MNEs; profit shifting;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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