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| Author: | Overesch, M. Wamser, G. |
| Title: | The effects of company taxation in EU accession countries on German FDI |
| Journal: | Economics of transition
2010 : VOL. 18:3, p. 429-457 |
| Index terms: | company taxation foreign investment direct investment Germany multinational companies Eastern Europe European Union |
| Freeterms: | FDI |
| Language: | eng |
| Abstract: | This article examines how corporate taxation (henceforth as: c-taxtn.) affects German foreign direct investment (FDI) in European Union (EU) accession countries (here as: a-ctrs). In 2004 and 2007, 10 former socialist Eastern European (here as: E-E.) countries joined the EU. A-ctrs. also engage in active strategies to attract foreign firms. Especially, c-taxtn. on income has been significantly reduced during the last decade. It is analyzed whether c-taxtn. policies of E-E. countries affect three aspects of multinational activity: 1. the location decision, 2. the investment decision and 3. the capital structure choice. It is suggested that local taxes are negatively related to 1. and 2. By the capital structure analysis, it is confirmed that higher local taxes imply higher debt-to-capital ratios. |
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