EconPapers    
Economics at your fingertips  
 

Avoiding Taxes: Banks' Use of Internal Debt

Franz Reiter, Dominika Langenmayr () and Svea Holtmann

No 196, Working Papers from Bavarian Graduate Program in Economics (BGPE)

Abstract: This paper investigates how multinational banks use internal debt to shift profits to low-taxed afiliates. Using regulatory data on multinational banks headquartered in Germany, we show that banks use this tax avoidance channel more aggressively than non-financial multinationals do. We find that a ten percentage points higher corporate tax rate increases the internal net debt ratio by 5.7 percentage points, corresponding to a 20% increase at the mean. Our study also takes into account the existence of conduit entities, which simply pass through financial flows. If conduit entities are systematically located in low-tax countries, previous studies may have underestimated the extent of debt shifting

Keywords: Profit Shifting; Internal Debt; Multinational Banks; Taxation (search for similar items in EconPapers)
JEL-codes: F23 G21 H25 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2020-05
New Economics Papers: this item is included in nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.bgpe.de/texte/DP/196_Reiter_Langenmayr_Holtmann.pdf First version, 2020 (application/pdf)

Related works:
Journal Article: Avoiding taxes: banks’ use of internal debt (2021) Downloads
Working Paper: Avoiding Taxes: Banks' Use of Internal Debt (2020) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bav:wpaper:196_reiterlangenmayrholtmann

Access Statistics for this paper

More papers in Working Papers from Bavarian Graduate Program in Economics (BGPE) Contact information at EDIRC.
Bibliographic data for series maintained by Jennifer Feichtmayer ().

 
Page updated 2021-10-23
Handle: RePEc:bav:wpaper:196_reiterlangenmayrholtmann