Arbeitspapier
Cross-border loss offset can fuel tax competition
Following recent court rulings, cross-border loss compensation for multinational firms will likely be introduced, at least in Europe. This paper analyzes the effects of introducing a coordinated cross-border tax relief in a setting where multinational firms choose the size of a risky investment and host countries endogenously choose tax rates. We show that coordinated cross-border loss compensation is likely to intensify tax competition when, following current international practice, the parent firm's home country bases the tax rebate for a loss-making subsidiary on its own tax rate. In equilibrium, tax revenue losses will then be even higher than is implied by the direct effect of the reform. In contrast, tax competition will be mitigated when the home country bases its loss relief on the tax rate in the subsidiary's host country.
- Sprache
-
Englisch
- Erschienen in
-
Series: Munich Discussion Paper ; No. 2013-2
- Klassifikation
-
Wirtschaft
Fiscal Policies and Behavior of Economic Agents: Firm
Multinational Firms; International Business
Business Taxes and Subsidies including sales and value-added (VAT)
- Thema
-
cross-border loss relief
tax competition
profit shifting
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Haufler, Andreas
Mardan, Mohammed
- Ereignis
-
Veröffentlichung
- (wer)
-
Ludwig-Maximilians-Universität München, Volkswirtschaftliche Fakultät
- (wo)
-
München
- (wann)
-
2013
- DOI
-
doi:10.5282/ubm/epub.14362
- Handle
- URN
-
urn:nbn:de:bvb:19-epub-14362-5
- Letzte Aktualisierung
-
10.03.2025, 11:46 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Haufler, Andreas
- Mardan, Mohammed
- Ludwig-Maximilians-Universität München, Volkswirtschaftliche Fakultät
Entstanden
- 2013
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