Taxation and Corporate Group Structure – Evidence from a Sample of European Multinationals

Schmalenbach Business Review, Vol. 64, October 2012, pp. 254-280

27 Pages Posted: 1 Dec 2012

See all articles by Andreas Oestreicher

Andreas Oestreicher

University of Goettingen (Göttingen)

Reinald Koch

Catholic University of Eichstaett-Ingolstadt

Date Written: 2012

Abstract

We empirically analyze the influence of tax considerations on the structure of investments of a parent company based in one EU member state that holds subsidiaries in a different member state. We show that group taxation, deductibility of financing expenses, or participation write-downs and additional taxes on intragroup dividends may factor into the parent company’s decision on the structure of investments as tax parameters. We find empirical evidence that a vertical structure with a pure holding interposed is implemented more often if a domestic parent entity is required for the formation of a tax group, the semi-elasticities being 0.568 and -0.343.

Keywords: Corporate Group Structure, Corporate Income Tax, Firm-Level Data, Multinationals

JEL Classification: F23, H25, K34

Suggested Citation

Oestreicher, Andreas and Koch, Reinald, Taxation and Corporate Group Structure – Evidence from a Sample of European Multinationals (2012). Schmalenbach Business Review, Vol. 64, October 2012, pp. 254-280, Available at SSRN: https://ssrn.com/abstract=2182115

Andreas Oestreicher (Contact Author)

University of Goettingen (Göttingen) ( email )

Platz der Gottinger Sieben 3
Gottingen, D-37073
Germany

Reinald Koch

Catholic University of Eichstaett-Ingolstadt ( email )

Auf der Schanz 49
Ingolstadt, D-85049
Germany

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