Publication: Tax incentives and their influenceon company relocation
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Type
Thesis
Degree
BA
Date
2025
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Published Version
Abstract
The aim of this paper is to research how corporate tax rates incentivize and influence
organizational leaders when choosing where to relocate their company to. And what other factors
also influence the decision making process. This research is significant, because it will help
lawmakers and management to make more informed decisions. The chosen methodology method
is the systematic literature review, because there already exist a lot of studies on the subject and
the aim of this paper is to highlight the results and create an overall conclusion to the research
question. Those research papers include European papers that have been published after the
2000s, so that the information is still somewhat current and can be applied to a modern setting.
The main finding of the study is that Effective Average Tax Rate for corporations does not seem
to be a very significant factor taken into account by organizational leaders when choosing where
to relocate to. In the two main studies used for this paper, namely the ones from Kinkel (2004)
and Dachs (2012), “tax and subsidies” were only mentioned as being the 5th and 7th most
significant reason respectively, for companies relocating internationally. With 28.2% and 7% of
companies respectively stating that “tax and subsidies” was a significant reason for the
relocation. In conclusion it has been found that there are many more considerations that
organizational leaders take into consideration. And taxes are far from being one of the most
significant ones. Additionally the size of the company, the original location, the business sector
and the personal needs of organizational leaders also all play a significant role in the decision
making process.