The effects of multinationals' profit shifting activities on real investments
In: Discussion paper 07-071
In: Public finance and corporate taxation
38 Ergebnisse
Sortierung:
In: Discussion paper 07-071
In: Public finance and corporate taxation
In: Canadian Journal of Economics/Revue canadienne d'économique, Band 50, Heft 4, S. 965-994
SSRN
In: Discussion paper 08-020
This paper empirically analyses whether both personal and corporate taxation have an impact on companies' capital structure decisions. We investigate the effect of the difference in taxation of debt and equity financing on capital structures. Our empirical results, based on a comprehensive panel of European firm-level data, suggest that a higher tax benefit of debt has the expected significant positive impact on a company's financial leverage. Particularly, we find evidence that the capital structures of smaller companies respond more heavily to changes in the tax benefit of debt. Additional analysis confirms that not only corporate taxes are relevant for corporate financial planning, but variation in capital income tax rates at the shareholder level implicates significant capital structure adjustments as well. Moreover, we find substitutive relationships between non-debt tax shields and the effect of the corporate tax rate on capital structures.
In: Discussion paper 06-75
This paper investigates tax planning behavior by means of inter-company finance and the effectiveness of fighting back via thin-capitalization rules. A simple theoretical model, which considers the financing decision of a multinational company, is used to obtain empirical implications. The empirical analysis, based on German inbound investment data from 1996 until 2004, supports a significant impact of tax rate differences on the use of intra-company debt. The effectiveness of the German thin-capitalization rule is tested by using legal amendments as natural experiments. The results suggest that the German thin-capitalization rule induces significantly lower intra-firm debt-levels of inbound investments. Hence, tax planning via intra-firm finance is effectively limited.
In: RSIT Working Paper 05/2022
SSRN
In: Overesch, Michael and Wolff, Hubertus (2021). Financial Transparency to the Rescue: Effects of Public Country-by-Country Reporting in the European Union Banking Sector on Tax Avoidance*. Contemp. Account. Res., 38 (3). S. 1616 - 1643. HOBOKEN: WILEY. ISSN 1911-3846
We analyze the effect of mandatory financial transparency on corporate tax avoidance. The effectiveness of comprehensive tax transparency, in the form of a public country-by-country reporting, to mitigate corporate tax planning is largely unknown. Capital Requirements Directive IV by the European Commission required multinational banks to publish key financial and tax data in the form of public country-by-country reporting. We examine tax avoidance of banks around the reform. Our focus is on multinational banks newly required to report activities in tax havens that had not been publicly disclosed before the country-by-country reporting mandate. We predict and find that these exposed banks increased their tax expense relative to multinational banks with no activities in tax havens to disclose, as well as relative to domestic banks unaffected by the new mandate. In additional tests, we compare our sample of exposed multinational banks to several control groups from the financial sector and other industries. Our results suggest that country-by-country reporting can serve as an additional policy instrument to curb corporate tax avoidance, but only when the reporting exposes the firms' tax sheltering activities to public scrutiny.
BASE
In: Overesch, Michael and Pflitsch, Max (2021). CROSS-BORDER EFFECTS OF A MAJOR TAX REFORM - EVIDENCE FROM THE EUROPEAN STOCK MARKET. Natl. Tax J., 74 (1). S. 75 - 107. CHICAGO: UNIV CHICAGO PRESS. ISSN 1944-7477
We analyze the effects of the major US tax reform of 2017 on European firms. Although foreign firms that are active in the respective country should be directly affected, other foreign firms could also be indirectly affected through competition. With an event study design, we analyze stock market returns in Europe around key dates in the legislative process leading to the Tax Cuts and Jobs Act. We find positive market returns for the European firms that are active in the United States. Moreover, our results suggest an indirect effect through competition. European firms that face strong competition from US firms in their domestic markets exhibit significantly lower returns.
BASE
In: Contemporary Accounting Research, Forthcoming
SSRN
SSRN
Working paper
SSRN
Working paper
SSRN
Working paper
In: ZEW - Centre for European Economic Research Discussion Paper No. 13-045
SSRN
Working paper
In: Economics of transition, Band 18, Heft 3, S. 429-457
ISSN: 1468-0351
AbstractThis article investigates how company taxation affects German foreign direct investment (FDI) in European Union (EU) accession countries. In 2004 and 2007, 10 former socialist eastern European countries joined the EU. Although the EU integration is associated with increasingly favourable investment conditions, accession countries also pursue active strategies to attract foreign firms. In particular, taxes on corporate income have been significantly reduced during the last decade. We analyse whether corporate tax policies of eastern European countries affect three aspects of multinational activity: the location decision, the investment decision and the capital structure choice. The results suggest that local taxes are negatively related to both location and investment decisions. The analysis of the capital structure confirms that higher local taxes imply higher debt‐to‐capital ratios.
International audience ; This paper investigates tax-planning behaviour by means of inter-company finance and the effectiveness of government countermeasures via thin-capitalization rules. A simple theoretical model which considers the financing decision of a multinational company is used to obtain empirical implications. The empirical analysis, based on German inbound investment data from 1996 to 2004, confirms a significant impact of tax-rate differentials on the use of inter-company debt. The effectiveness of the German thin-capitalization rule is tested by using legal amendments as natural experiments. The results suggest that thin-capitalization rules induce significantly lower internal borrowing. Hence, tax planning via internal finance is effectively limited by thin-capitalization rules.
BASE
In: Applied Economics, Band 42, Heft 5, S. 563-573
This paper investigates tax-planning behaviour by means of inter-company finance and the effectiveness of government countermeasures via thin-capitalization rules. A simple theoretical model which considers the financing decision of a multinational company is used to obtain empirical implications. The empirical analysis, based on German inbound investment data from 1996 to 2004, confirms a significant impact of tax-rate differentials on the use of inter-company debt. The effectiveness of the German thin-capitalization rule is tested by using legal amendments as natural experiments. The results suggest that thin-capitalization rules induce significantly lower internal borrowing. Hence, tax planning via internal finance is effectively limited by thin-capitalization rules.