The paper investigates the hypothesis that multinational corporations use international trade in services related to intangible assets and intellectual property in order to shift profits to more favourable tax jurisdictions. The paper empirically analyses a representative sample of Italian firms.
The analysis shows that international trade in services related to intangibles largely involves resident affiliates of foreign multinational groups and it often occurs vis-à-vis tax havens. Although this is compatible with the possible existence of underlying profit shifting strategies, there is no strong correlation between services transactions and estimates of unreported profits at the firm level.
