University of Frankfurt & CESifo
A large part of government policy making with respect to international taxes on business is devoted to identifying where profit is located,
and preventing excessive shifting of profits between jurisdictions. A number of recent academic papers have appeared recently which
have attempted to estimate the relationship between tax rates and the location of profit. None of these has specifically addressed the
This paper will use detailed data, originally collected by the Bundesbank, on the activities of firms located in Germany, which includes
the ownership structure of those firms. Thus, for example, it is possible to compare rates of profit of German subsidiaries of foreign
multinational companies (further split by nationality of the parent and the existence of subsidiaries in other countries) with the rates of
profit of domestic firms.