EconPapers    
Economics at your fingertips  
 

Avoiding Taxes: Banks' Use of Internal Debt

Franz Reiter, Dominika Langenmayr () and Svea Holtmann

No 8525, CESifo Working Paper Series from CESifo

Abstract: This paper investigates how multinational banks use internal debt to shift profits to low-taxed affiliates. 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)
Date: 2020
New Economics Papers: this item is included in nep-ban and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp8525.pdf (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:ces:ceswps:_8525

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().

 
Page updated 2021-09-27
Handle: RePEc:ces:ceswps:_8525