This paper analyzes the influence of tax aspects on offshoring decisions. The study is based on aggregated data from the pharmaceutical industry. The findings suggest that offshoring decisions can be biased when the expected tax benefit of tax incentives is not considered in the transfer price. It can be shown that these tax effects vary depending on the type and the design of the respective tax incentive. The paper also shows that misevaluations of the transfer price result in substantial tax effects.