Economics
Mário Marques, Carlos Pinho
Tax-Treaty Effects on Foreign Investment: Evidence from European Multinationals
Volume 70 (2014) / Issue 4, pp. 527-555 (29)
This paper reexamines the effects of bilateral tax treaties on investment location decisions, using a large panel of European countries. It provides evidence that tax treaties induced a positive and significant impact on the number of foreign subsidiaries incorporated in the last decade. Findings also suggest positive effects of treaty features other than withholding tax rates and double-taxation relief methods. When they are analyzed separately, we also find evidence confirming that the host country's corporate tax rate is a determining factor in the location of foreign subsidiaries.