In this study, we estimate the impact of differences in international tax rates on the probability of choosing a location for an affi liate of a multinational fi rm. In particular, we distinguish between the tax sensitivity of Greenfi eld and Mergers and Acquisitions (M&A) investments. Based on a novel fi rm-level dataset on German outbound foreign direct investment (FDI), we fi nd evidence that location decisions of M&A investments are less sensitive to differences in tax rates than location decisions of Greenfi eld investments. According to our logit estimates, after controlling for fi rm and country-specifi c characteristics, the tax elasticity for Greenfi eld investments is negative and in absolute value signifi cantly larger than that associated with M&A investments. This fi nding is consistent with (partial) capitalization of taxes in the acquisition price when the FDI project takes the form of a M&A.