The Big Short (Interest): Closing the Loopholes in the Dividend-Withholding Tax

Elisa Casi-Eberhard, Evelina Gavrilova, David Murphy and Floris Zoutman

No 2022/7, Discussion Papers from Norwegian School of Economics, Department of Business and Management Science

Abstract: We study the effect of stricter enforcement of the dividend-withholding tax (DWT). We focus on a 2016 Danish enforcement reform and compare Denmark to its Nordic neighbors. Throughout Nordic stock markets, shares on loan spike sharply around dividend dates. These spikes are consistent with so-called cum-cum and cum-ex trading. Post reform, spikes in Denmark disappear, and annual DWT revenue increases by 130 percent. Enforcement does not harm the investment climate, as measured by Danish stock returns, investment rate, and dividend yield.

Keywords: Tax Enforcement; Dividend Tax; Security Lending; Economic Effects (search for similar items in EconPapers)
JEL-codes: F23 G18 H26 K22 M21 (search for similar items in EconPapers)
Pages: 64 pages
Date: 2022-02-22, Revised 2024-09-02
New Economics Papers: this item is included in nep-eur and nep-pbe
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https://hdl.handle.net/11250/2980688 Full text (application/pdf)

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Working Paper: The Big Short (Interest): Closing the Loopholes in the Dividend-Withholding Tax (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:nhhfms:2022_007

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