Italy's ACE tax and its effect on a firm's leverage

Paolo Panteghini, Maria Laura Parisi and Francesca Pighetti

No 2012-31, Economics Discussion Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: This article describes the new ACE-type system implemented in Italy since 2012. The authors first show that this system reduces but does not eliminate the financial distortion due to interest deductibility. Using a dataset of Italian companies, the authors analyze the impact of this relief on Italian firm capital structure. Despite the permanence of a tax advantage and its gradual implementation, the ACE relief is estimated to reduce significantly leverage. By decreasing default risk it is also expected to reduce systemic risk.

Keywords: ACE; business taxation; leverage (search for similar items in EconPapers)
JEL-codes: H25 H32 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-acc and nep-rmg
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Citations: View citations in EconPapers (7)

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https://www.econstor.eu/bitstream/10419/59589/1/718694260.pdf (application/pdf)

Related works:
Working Paper: Italy's ACE Tax and its Effect on a Firm's Leverage (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:201231

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