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dc.contributor.authorJuranek, Steffen
dc.contributor.authorSchindler, Dirk
dc.contributor.authorSchneider, Andrea
dc.date.accessioned2020-09-09T14:02:21Z
dc.date.available2020-09-09T14:02:21Z
dc.date.issued2020-09-09
dc.identifier.issn1500-4066
dc.identifier.urihttps://hdl.handle.net/11250/2677117
dc.description.abstractMultinational corporations increasingly use royalty payments for intellectual property rights to shift profits globally. This threatens not only the tax base of countries worldwide, it also affects the nature of competition for foreign direct investment (FDI). Against this background, our theoretical analysis suggests a surprising solution to the problem of curbing profit shifting without suffering major FDI losses: A strictly positive withholding tax on royalty payments is both the Pareto-efficient solution under international coordination and the optimal unilateral response. If internal debt is sufficiently responsive, governments can even implement Paretooptimal targeting. Then, the royalty tax closes the profit-shifting channel, while all competition for FDI is relegated to internal-debt regulation. Our results question the ban of royalty taxes in double tax treaties and the EU Interest and Royalty Directive.en_US
dc.language.isoengen_US
dc.publisherFORen_US
dc.relation.ispartofseriesDiscussion paper;11/20
dc.subjectSource tax on royaltiesen_US
dc.subjectforeign direct investmenten_US
dc.subjectmultinationalsen_US
dc.subjectprofit shiftingen_US
dc.subjectinternal debten_US
dc.subjectEU Interest and Royalty Directiveen_US
dc.titleRoyalty Taxation under Profit Shifting and Competition for FDIen_US
dc.typeWorking paperen_US
dc.source.pagenumber51en_US


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