Does Lowering Dividend Tax Rates IncreaseDividends Repatriated? Evidence of Intrafirm Cross-Border Dividend Repatriation Policiesby German Multinational Enterprises

Christian Bellak and Markus Leibrecht

FinanzArchiv: Public Finance Analysis, 2010, vol. 66, issue 4, 350-383

Abstract: This paper explores the effect dividend taxes exert on dividends repatriated from foreign affiliates to their German parent companies. The empirical analysis based on firm-level data from the Microdatabase Direct Investment provided by the Deutsche Bundesbank first signals the validity of the original Lintner model for cross-border intrafirm dividend payments of German affiliates abroad. Second, results imply that high dividend taxes indeed have a statistically significant negative effect on dividends repatriated. Our calculations suggest that a one-percentage-point decrease in the dividend tax rate would increase dividends repatriated by about 3.75%. Evaluated at the mean of positive dividend payments, a semielasticity of -1.71 is derived.

Keywords: dividend policy; taxes; Lintner model; multinational enterprise (search for similar items in EconPapers)
JEL-codes: G35 H25 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (7)

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DOI: 10.1628/001522108X540847

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