The impact of tax planning on forward-looking effective tax rates

Spengel, Christoph ; Heckemeyer, Jost H. ; Nusser, Hannah ; Streif, Frank ; Klar, Oliver

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Document Type: Working paper
Year of publication: 2016
The title of a journal, publication series: Taxation Papers
Volume: 64
Place of publication: Luxembourg
Publishing house: Office for Official Publ. of the Europ. Communities
ISBN: 978-92-79-61830-7 , 978-92-79-61829-1
ISSN: 1725-7557 , 1725-7565
Publication language: English
Institution: Business School > ABWL u. Betriebswirtschaftliche Steuerlehre II (Spengel 2006-)
Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
Subject: 330 Economics
Abstract: Multinational companies have the opportunity to apply profit shifting strategies to reduce their tax payments in high-tax countries and minimize the overall effective tax burden on their global profits. Both the European Commission and the OECD have taken action to counter such tax planning strategies. This study provides a general insight into the effect of different profit shifting strategies on effective tax rates for cross-border investments between the 28 EU member states and the US. In particular, this study enhances the baseline findings of ongoing research conducted by ZEW on behalf of the European Commission. Specifically, this report presents the cost of capital (CoC) and the effective average tax rates (EATR) for cross-border investments between the 28 EU member states and the US distinguishing between scenarios that involve seven different tax planning strategies. The calculations are based on tax law data for the year 2015. The tax planning strategies considered use different forms of profit shifting via interest and royalty payments. To put the effectiveness of these tax-driven indirect investment strategies into perspective, this study compares the resulting CoC and EATR to corresponding results for the most tax-efficient way of directly financing the cross-border investment.

Dieser Eintrag ist Teil der Universitätsbibliographie.

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