Avoiding Taxes: Banks' Use of Internal Debt
Dominika Langenmayr () and
No 8525, CESifo Working Paper Series from CESifo
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)
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)
Journal Article: Avoiding taxes: banks’ use of internal debt (2021)
Working Paper: Avoiding Taxes: Banks' Use of Internal Debt (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
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 ().