Group Taxation, Asymmetric Taxation and Cross-Border Investment Incentives in Austria

Rainer Niemann and Corinna Treisch

No 1506, CESifo Working Paper Series from CESifo

Abstract: In 2005, Austria modified its group taxation regime and now provides an option for cross-border loss-offset. We analyse the combined impact of Austria's new group taxation and loss-offset limitations on cross-border investment decisions of domestic corporations. Monte Carlo simulations in an inter-temporal setting reveal that the impact on foreign real investment induced by the new group taxation is ambiguous. Whereas marginal investment projects with decreasing cash flows tend to benefit from group taxation, innovative projects with initial losses and increasing cash flows may be discriminated against. Investors should consider domestic income and repatriation policy simultaneously before opting for group taxation.

Keywords: group taxation; investment decisions; Monte Carlo simulations; international taxation; loss-offset rules (search for similar items in EconPapers)
JEL-codes: G31 H25 (search for similar items in EconPapers)
Date: 2005
New Economics Papers: this item is included in nep-cmp, nep-eec, nep-fin and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_1506

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