Out of Germany: The New Function Shifting Regime

This is a short tale of those who play the gameand those who don’t. The name of the game is‘‘function shifting,’’ often played moderately, sometimesaggressively, by multinational corporations,but always under the alert eyes of the tax authorities.Those who play the game argue that functionshifting (that is, moving production and know-howabroad) is necessary in a global market environmentto build up market volume abroad. Frequently, it issimply used to cut costs. Those who do not participatein this game are small and midsize companies,which are subject to lifelong taxation on any assetthey purchase or develop, with no chance of relief orat least a lower tax rate.[...]