We provide indirect empirical evidence of profit shifting behavior by multinational enterprises. This issue is analyzed in an econometric panel study for the years 1995 to 2005 and additionally in a cross-section for 2004 using a large micro database of European subsidiaries of multinationals (AMADEUS) which includes detailed balance sheet items. Our results show a decrease in the unconsolidated pre-tax profits of an affiliated company of approximately 7% if the difference in the statutory corporate tax rate of this affiliate to its parent increases by 10 percentage points. Various robustness checks support our profit shifting evidence. Furthermore, the results suggest an overall shift of profits out of the European Union. In addition, we provide evidence that a higher parent's ownership share of its subsidiary leads to intensified profit shifting behavior.