Quotation Reineke, Rebecca, Weiskirchner-Merten, Katrin. 2021. Transfer Pricing and Location of Intangibles - Spillover and Tax Avoidance through Profit Shifting. Journal of Management Accounting Research. 33 (1), 129-148.




This study examines how spillovers affect a multinational company's choice of an intangible's location and the corresponding transfer price for using this intangible. Our model uses a company with a domestic division in a high-tax country and a foreign division in a low-tax country, where each division's activities generate spillovers on the other division's income. In contrast to previous studies, our analysis incorporates an intangible's optimal location when the company trades off tax minimization and efficient activities. By locating the intangible abroad, the company reduces its tax liability, whereas locating the intangible domestically yields more efficient domestic division activities. For a high spillover of the domestic division, the company locates the intangible domestically. Our model supports empirical evidence regarding intangibles' location that is interpreted as "home bias". Additionally, we show how variations in regulatory parameters-arm's length range and tax rate differential-affect the divisions' activities and the intangible's location.


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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Journal of Management Accounting Research
WU Journalrating 2009 A
WU-Journal-Rating new FIN-A, STRAT-B, VW-D, WH-B
Language English
Title Transfer Pricing and Location of Intangibles - Spillover and Tax Avoidance through Profit Shifting
Volume 33
Number 1
Year 2021
Page from 129
Page to 148
Reviewed? Y
URL https://meridian.allenpress.com/jmar/article/33/1/129/449595/Transfer-Pricing-and-Location-of-Intangibles
DOI https://doi.org/10.2308/JMAR-19-052
Open Access N


Weiskirchner-Merten, Katrin (Details)
Reineke, Rebecca (Leibniz Universität Hannover, Germany)
Management Accounting and Control Group AB (Details)
Research areas (ÖSTAT Classification 'Statistik Austria')
5307 Business and management economics (Details)
5327 Accounting (Details)
5359 Controlling (Details)
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