More documents from Overesch, Michael; Wamser, Georg
More documents from Applied Economics

Export to your Reference Manger

Please Copy & Paste



Bookmark and Share

Corporate tax planning and thin-capitalization rules: evidence from a quasi-experiment

[journal article]

Overesch, Michael; Wamser, Georg

fulltextDownloadDownload full text

(620 KByte)

Citation Suggestion

Please use the following Persistent Identifier (PID) to cite this document:

Further Details
Abstract 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.
Classification Public Finance; Financial Planning, Accountancy
Free Keywords Corporate Income Tax; Multinationals; Thin-Capitalization Rule; Difference- in-Differences Estimation; Firm-Level Data
Document language English
Publication Year 2010
Page/Pages p. 563-573
Journal Applied Economics, 42 (2010) 5
Status Postprint; peer reviewed
Licence PEER Licence Agreement (applicable only to documents from PEER project)