Tax Avoidance through Cross-Border Mergers and Acquisitions
Proceedings of Paris December 2021 Finance Meeting EUROFIDAI - ESSEC
89 Pages Posted: 9 Jul 2020 Last revised: 3 Dec 2023
Date Written: June 30, 2020
We provide the first comprehensive analysis of tax avoidance through cross-border, tax-haven mergers and acquisitions (M&A). Using novel tax residence data, we investigate 13,307 such transactions from 1990 to 2017, totaling $4.1 trillion in deal value, or 29% of cross-border M&A volume. $2.4 of the $4.1 trillion exceeds our prediction based on a gravity model with economic fundamentals. Small havens such as Bermuda alone make up $1.0 trillion or 8% of cross-border M&A volume. Tax haven M&A enables profit-shifting on intellectual property and the relocation of headquarters to havens, and results in $30.6 billion in recurring annual tax savings.
Keywords: Cross-border mergers and acquisitions, tax avoidance, tax havens
JEL Classification: G34, H26, H73
Suggested Citation: Suggested Citation