The allocation of risk and of the income from risky investment and activities belongs to the central topics of international tax policy today. This fact is highlighted by the current BEPS initiative of G20 and OECD which casts doubt on the recognition of contractual risk allocation within multinational groups and its impact on profit allocation between separate entities within these groups. It is largely felt that “risk shifting” provides the basis for “profit shifting” by multinationals to the detriment of states and domestic competitors.This article tries to address the topic in a generalized fashion. Starting from the findings of economic research with respect to the interaction of risk and taxes in a domestic setting, it draws conclusions for the international situation. It analyses the fiscal interests of source states and residence states and points out that – while risk shifting is essentially tax-neutral – there are three major areas of concern which have to be discussed: asymmetrical risk allocation (i.e. lack of balance between upside and downside potential), taxation of risk premiums and the tax treatment of “hidden intangibles”, i.e. the distinction between risky income and rents. Furthermore the article supports the relevance of ownership and funding for the allocation of risk and income and warns against overstating the notion of “control” and “real activities” when it comes to the recognition of risk. Finally, it should not be overlooked that states benefit from the lack of full loss-compensation in their national tax systems which allows them to tax volatile profits while not giving full credit for volatile losses.