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: 26 May 2024

See all articles by Jean-Marie Meier

Jean-Marie Meier

The Wharton School, University of Pennsylvania; University of Texas at Dallas - Naveen Jindal School of Management

Jake Smith

Securities and Exchange Commission (SEC)

Date Written: June 30, 2020

Abstract

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 13,330 such transactions from 1990 to 2017, totaling $4.2 trillion in deal value, or 29% of cross-border M&A volume. $2.4 of the $4.2 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 $30.8 billion in recurring annual tax savings.

Keywords: Cross-border mergers and acquisitions, tax avoidance, tax havens

JEL Classification: G34, H26, H73

Suggested Citation

Meier, Jean-Marie and Smith, Jake, Tax Avoidance through Cross-Border Mergers and Acquisitions (June 30, 2020). Proceedings of Paris December 2021 Finance Meeting EUROFIDAI - ESSEC, Available at SSRN: https://ssrn.com/abstract=3639640 or http://dx.doi.org/10.2139/ssrn.3639640

Jean-Marie Meier (Contact Author)

The Wharton School, University of Pennsylvania ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States

HOME PAGE: http://www.jean-mariemeier.com

University of Texas at Dallas - Naveen Jindal School of Management ( email )

Jindal School of Management
800 W. Campbell Road
Richardson, TX 75080
United States

HOME PAGE: http://www.jean-mariemeier.com/

Jake Smith

Securities and Exchange Commission (SEC) ( email )

1961 Stout Street
Suite 1700
Denver, CO 80294
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
1,044
Abstract Views
5,512
Rank
40,861
PlumX Metrics