International taxation and the organizational form of foreign direct investment

• 成果类型: Article
• 署名作者: Amberger, Harald J.; Kohlhase, Saskia
• 署名单位: Vienna University of Economics & Business; Erasmus University Rotterdam - Excl Erasmus MC; Erasmus University Rotterdam
• 刊物名称: JOURNAL OF INTERNATIONAL BUSINESS STUDIES
• ISSN/ISSBN: 0047-2506
• DOI: 10.1057/s41267-023-00614-1
• 发表日期: 2023
• 页码: 1529-1561
• 关键词: International taxation; Multinational corporations (MNCs); multinational enterprises (MNEs); Real effects; Multiple regression analysis; organizational form choice; Withholding taxes

摘要

We investigate the relation between international taxation and the organizational form of foreign direct investment (FDI). Using micro-level data on inbound FDI relations in Germany, we find that a higher tax burden on income earned in a corporate subsidiary increases the probability that a multinational corporation (MNC) conducts foreign investment through a non-corporate flow-through. This effect is economically meaningful and varies with the relative importance of tax-motivated income shifting, a subsidiary's non-tax benefits of limited liability and legal independence, and an MNC's local knowledge. Moreover, we examine potential real effects of organizational form choices and document that affiliates established as flow-throughs exhibit a lower loss propensity and are less profitable than affiliates established as subsidiaries. Taken together, our findings inform policy makers about the potential response of MNCs to tax-law changes and suggest that the chosen organizational form can shape the future characteristics of investments abroad.