Does Exchange of Information between Tax Authorities Influence Multinationals’ Use of Tax Havens?

SAFE Working Paper No. 89

43 Pages Posted: 5 Mar 2015

See all articles by Julia Braun

Julia Braun

Vienna University of Economics and Business - Department of Economics; ZEW – Leibniz Centre for European Economic Research

Alfons J. Weichenrieder

Goethe University Frankfurt - Department of Applied Econometrics and International Economic Policy; Vienna University of Economics and Business; CESifo (Center for Economic Studies and Ifo Institute)

Multiple version iconThere are 3 versions of this paper

Date Written: February 23, 2015

Abstract

Since the mid-1990s, countries offering tax systems that facilitate international tax avoidance and evasion have been facing growing political pressure to comply with the internationally agreed standards of exchange of tax information. Using data of German investments in tax havens, we find evidence that the conclusion of a bilateral tax information exchange agreement (TIEA) is associated with fewer operations in tax havens and the number of German affiliates has on average decreased by 46% compared to a control group. This suggests that firms invest in tax havens not only for their low tax rates but also for the secrecy they offer.

Keywords: Tax havens, tax information exchange agreements, location decisions, international taxation

JEL Classification: F21, F23, H87

Suggested Citation

Braun, Julia and Weichenrieder, Alfons J., Does Exchange of Information between Tax Authorities Influence Multinationals’ Use of Tax Havens? (February 23, 2015). SAFE Working Paper No. 89. Available at SSRN: https://ssrn.com/abstract=2573596 or http://dx.doi.org/10.2139/ssrn.2573596

Julia Braun

Vienna University of Economics and Business - Department of Economics ( email )

Welthandelsplatz 1
A-1020 Wien
Austria

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Alfons J. Weichenrieder (Contact Author)

Goethe University Frankfurt - Department of Applied Econometrics and International Economic Policy ( email )

United States

HOME PAGE: http://www.uni-frankfurt.de/fb02/weichenrieder/

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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