Cross-border Income Shifting of Multinational Corporations: Measurement, Countermeasures, and Real-Economic Effects

Project Details


Firms’ shifting of taxable income across borders and the associated reduction in their global tax burden are a primary concern for policymakers, the public, and the society as a whole. Despite the broad relevance of the topic and far-reaching reforms proposed over the last years, we still lack consensus about the magnitude of income shifting and the extent to which legislative actions curb this behavior. In addition, the economic effects of income shifting are not well understood. Drawing on administrative corporate tax-return data, this project addresses these voids in three steps. First, the project quantifies cross-border income shifting in a small open economy by estimating the difference in taxable income reported by subsidiaries of multinationals and comparable domestic firms. It also assesses the extent to which financial statement data used in the extant literature is suitable in measuring income shifting. Second, the project uses the adoption of anti-abuse provisions as quasi-exogenous shocks to study their effect on income shifting. Finally, the project examines how income shifting may shape investment incentives. Overall, the project advances our understanding of the magnitude of income shifting and the suitability of available data sources, the effectiveness of reform provisions, and associated investment effects, speaking to researchers interested in the tax strategies of multinational firms and informing policymakers around the globe in their reform efforts.
Effective start/end date1/07/2430/06/26


  • AMDC - Austrian Micro Data Center