This paper assesses the redistribution of foreign direct investments (FDI) and tax revenues among countries due to multinationals’ response to international differences in corporate tax systems. The paper briefly reviews the literature on the tax sensitivity of FDI and uses a consensus estimate of this sensitivity in combination with bilateral FDI data to compute hypothetical bilateral FDI positions in the absence of tax rate differences. In a second step, tax revenue effects are estimated by assuming a conventional rate of return on investment. For most OECD countries, the effects of tax rate differentials on FDI positions range between -15% and 15% of current FDI positions. The calculated effects of taxes on FDI reflect real investments as well as tax planning behaviours and the methodology cannot distinguish between these two channels. The methodology only captures part of the tax planning activities of multinationals, since some of these activities are not reflected in the size of the FDI positions.