Jakob Miethe, LMU Munich

This paper studies profit shifting behavior across the size distribution of multinational enterprises (MNEs) to evaluate policies - such as the Global Minimum Tax (GMT) - that apply only to the largest groups. Using German administrative data with universal coverage, including tax havens, and a novel group level measure of profit shifting, we document steep, positive size gradients for the likelihood of using tax havens, the amount of shifted profits, and profit shifting aggressiveness. Large groups targeted by the GMT account for 95% of total profits shifted and for these firms potential revenue gains dominate costs. Beyond its tax revenue implications, our results highlight the potential of the GMT to curtail the tax advantage of large MNE groups – a finding with direct implications for market concentration and ultimately market power.