The design of corporate income tax systems and thus the taxation of (cross-border) dividends are encompassed within the sovereignty of the Member States of the European Union (EU). However, these rules are restricted by the EU regulatory framework and the case law of the European Court of Justice (ECJ) which prohibit discrimination of foreign- against domestic-sourced dividends. Therefore, five EU Member States abolished their discriminatory imputation systems in favour of shareholder relief systems between 1999 and 2019 which had not only legal but also economic implications. In this simulation study, the authors assess how and to what extent the abolishment of discriminatory imputation systems in the EU Member States affected a country’s tax location attractiveness for capital investments and tax competition. The analysis is based on the cost of capital (CoC) and effective average tax rates (EATR) using the Devereux/Griffith methodology. Overall, under the discriminatory imputation systems, the authors find lower CoC and EATR for investments located in the shareholder’s residence country compared to foreign investment alternatives. The advantageousness is, on average, reversed after the switch to the shareholder relief systems and places additional tax competition pressure on the affected Member States.