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CBS Tax Seminar 4 ”Hot off the press” Firm Mobility and Jurisdictions´ Tax Rate Choices: Evidence from Immobile Firm Entry by Dominika Langenmayr

2 maj, 2022 @ 13:00 - 14:30


Seminar 4 – Firm Mobility and Jurisdictions´ Tax Rate Choices: Evidence from Immobile Firm Entry by Dominika Langenmayr and Martin Simmler

Convener: Yvette Lind, Assistant professor in tax law at Copenhagen Business School


Capital mobility is one of the key determinants of corporate tax rates. We first show theoretically that governments will set higher tax rates on firm profits after an immobile firm has entered. We then test this prediction in a well-identified setting, using the rapid growth of wind power plants (a very immobile industry) and the large variation in local business taxes across Germany for identification. We confirm that municipalities increase corporate tax rates by up to 24% after immobile firm entry. The effect is stronger when immobile firms make up a larger share of the overall tax base.

Governments cannot tax highly mobile firms at high rates. If a government tries to do so, mobile firms will move to other jurisdictions. While economic theory has long argued along these lines, there is little direct empirical evidence for this fundamental relationship.1 In this paper, the authors contribute to filling this gap. We exploit the evolution of a new, immobile industry (wind turbines) in Germany and provide direct evidence for the effect of capital mobility on corporate tax rates. As is argued in the paper, wind turbines provide an ideal testing ground, as their relocation costs are prohibitively high, and exogenous, observable factors such as wind speed mostly determine their location decision. Thus, the contribution of our paper is to show in a well-identified setting that corporate tax rates increase in response to declining capital mobility.

You may freely download the paper (click here)



Dominika Langenmayr is Professor of Economics, esp. Public Finance, at KU Eichstätt-Ingolstadt in southern Germany, and a CESifo research fellow. She is also a guest professor in the DIBT – Doctoral Program in International Business Taxation at WU Vienna and a member of the scientific advisory council of the German Federal Ministry of Finance. Her research evolves around different aspects of taxation, especially its international aspects, such as tax havens or the taxation of multinational firms.

CBS discussant

Florian M. Hollenbach is an associate professor in the department of International Economic, Government, and Business at Copenhagen Business School. He received his PhD in political science at Duke University. Prior to joining CBS, Florian was an assistant professor at Texas A&M University and research associate at Princeton University. His primary research focusses on the political economy of taxation, state capacity, corruption, and the influence of money in politics. He is also on the steering committee of the Anti-Corruption Data Collective, a new initiative bringing together journalists, data analysts, academics and policy advocates to expose corruption in developed countries.

External discussant

Prof. Dr. Eva Eberhartinger is full professor and holds a chair in Business Taxation (Betriebswirtschaftliche Steuerlehre) at the Department of Finance, Accounting, and Statistics at WU, Vienna University of Economics and Business. From 2006 until 2011 she was the Vice-Rector, Financial Affairs at WU.

In her research, she focuses on the effect of tax on management decisions, in particular in multinational groups. Current projects include the effect of heuristics on the decision making process in international tax planning, the effect of co-operative compliance programs and advanced tax audit on the firm, and tax avoidance of state owned entities. Prior to her position at WU, she was a full professor for tax accounting at the University of Münster (Germany). She held visiting positions at the University of Exeter (UK), the University of Urbana-Champain (US), HEC Paris (France), McGill University (Canada), HEC Montréal (Canada), the University of Malta and Macquarie University, Sydney

Feel free to contact organizer Yvette Lind at


Datum / Date:
2 maj, 2022
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13:00 - 14:30
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Arrangör, plats och språk

Arrangör / Organizer
Copenhagen Business School - Yvette Lind
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