Discussion Paper
No. 2016-28 |
June 24, 2016
Are Spanish Companies Involved in Profit Shifting? Consequences in Terms of Tax Revenues
(Published in Recent Developments in Applied Economics)
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.
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