The Taxation of Passive Foreign Investment - Lessons from German Experience

Martin Ruf, Alfons J. Weichenrieder and Alfons Weichenrieder
Authors registered in the RePEc Author Service: Alfons J. Weichenrieder

No 2624, CESifo Working Paper Series from CESifo

Abstract: The paper evaluates the working of German CFC rules that restrict the use of foreign subsidiaries located in low-tax countries to shelter passive investment income from home taxation. While passive investments make up a significant fraction of German outbound FDI, we find that German CFC rules are quite effective in restricting investments in low-tax jurisdictions. We find evidence that the German 2001 tax reform, which unilaterally introduced exemption of passive income in medium- and high-tax countries, has led to some shifting of passive assets into countries for which the exemption was previously limited.

Keywords: foreign direct investment; CFC regulation; passive investment (search for similar items in EconPapers)
JEL-codes: H25 H73 (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Related works:
Journal Article: The taxation of passive foreign investment: lessons from German experience (2012)
Journal Article: The taxation of passive foreign investment: lessons from German experience (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_2624

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